LIANG CURRENT TIEN TZU v. HUTCHISON GLOBAL COMMUNICATIONS HOLDINGS LTD

HCA 15/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 15 OF 2003

(TRANSFERRED FROM LABOUR TRIBUNAL

CASE NO. LBTC 9780/2002)

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J U D G M E N T

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Introduction

1. This case is about a claim for unpaid performance bonus which the plaintiff, Mr Liang, says is owed to him by the defendant, his former employer, which at the time of the employment in question was named Vanda Systems & Communications Holdings Ltd, and which since has been renamed Hutchison Global Communications Ltd.  For ease of reference I will henceforth refer to the defendant company simply as ‘Vanda’.

2. The amount at issue for which the plaintiff sues in this case is the sum of HK$872,718.00, which it is alleged is the bonus payment to which he is entitled under the terms of his employment contract.

3. Conversely, the defendant denies liability as alleged or at all, and in turn contingently counterclaims against the plaintiff in the amount of HK$409,395.00, which is the sum actually paid to the plaintiff, in June 2002, in purported settlement of his performance bonus claim.

4. In its present form this case began life in the Labour Tribunal on 11 October 2002, when Mr Liang filed his claim in that jurisdiction (an earlier action commenced in the High Court, HCA 3667 of 2002, having been discontinued by reason of Vanda taking the jurisdiction point that any such employment case must commence in the Labour Tribunal).

5. The instant proceedings, however, were transferred to the High Court, by Order of the President of the Labour Tribunal, pursuant to the provisions of section 10 of the Labour Tribunal Ordinance.

6. So much, then, for the broad shape of this litigation.  At this juncture it may assist to provide a little of the factual background which has led to this unfortunate (and doubtless highly costly) disagreement.

The background

7. The plaintiff, Mr TT Liang, is a Chartered Accountant by profession, and in 1998 he also was registered in Hong Kong as an Investment Adviser with the SFC.

8. His expertise lay in the area of operational finance management and corporate finance matters, with specialization, inter alia, in equity and debt fund raising and Initial Public Offerings (IPO’s).  Mr Liang has an impressive CV, and before joining the defendant held senior positions in significant companies in Hong Kong and the Mainland.

9. The defendant, Vanda, at that time was listed on the main board in Hong Kong in 1995, and was the holding company of that which was known as the ‘Vanda Group’ of companies.

10. The Vanda Group is in the business of providing information technology solutions, with emphasis upon network integration and customized software development.  The Group itself then consisted of some 31 subsidiary and 3 associated companies, and was divided into four main operations : PRC System Integration, ASEAN Hardware distribution, Software Group, and E-Commerce related businesses.  Further detailed description is unnecessary.

11. Mr Liang wished to participate in a high growth technology related company, he understood that Vanda was looking for a senior corporate finance person, and thus it was that on 19 October 2000 he met, and was interviewed by, Mr Edmund Ma, one of the defendant’s founders and at that time its Managing Director.

12. At this interview Mr Ma told the plaintiff that the defendant was to create a senior position in corporate finance, and that the person who took up this position would establish a Corporate Finance Department within the defendant and would advise on and deal with corporate finance matters, with particular reference to attracting to the defendant strategic partners who would supply venture capital for new developments, which in turn would cause the share price of the then listed defendant to rise.

13. It is the fund raising endeavours of the defendant which provide the factual backdrop to this action, given that the corporate finance officer who was to be appointed was to be compensated in terms not only of salary but also in terms of a performance bonus payment dependent upon such fund raising and financial deals as had been successfully accomplished.

14. After the interview with Mr Ma the plaintiff met with the then Chairman of the defendant, Mr Lam Hon Nam, and shortly afterwards, on 25 October 2000, Mr Liang received a telephone call from Mr Ma offering him employment.

15. Mr Liang says that the more favourable terms which he was offered over the telephone did not correspond with the lesser terms of the Letter of Appointment with which he was presented when he attended on 1 November 2000 to commence work at the defendant’s office.  However, nothing of significance turns on this, because the hard fact is that Mr Liang accepted the letter as presented to him, not least because at that time he felt he had no option : he already had resigned from his previous position and had moved his family from Shanghai to Hong Kong.

16. On 8 November 2000 he signed the Letter of Appointment as proffered, and returned it to Mr TK Ho, the Chief Financial Officer of Vanda.

17. In sum, therefore, Mr Liang was employed by Vanda as Deputy General Manager during his probationary period from 1 November 2000 until 1 February 2001, upon which date he was promoted to General Manager of the Corporate Finance Division, and he remained in that position until he left Vanda’s employment on 8 August 2002.

18. This case turns principally upon the construction of certain terms of this Letter of Appointment, and also upon that which subsequently occurred at a meeting with Mr Ma which took place at the beginning of April 2001.  I shall be referring to both matters in some detail.

The evidence

19. This is not a case which ultimately stands or falls upon evaluation of oral evidence, much of which was but tangentially relevant to the primary issues as they emerged in this case.

20. I shall not therefore be saying a great deal about the entirety of this evidence, and in any event much of primary fact is not in dispute.  Where necessary, however, I make factual findings when such findings impact upon the submissions pressed upon the court by counsel, but for immediate purposes I content myself simply with listing who appeared for whom, and in what capacity.

21. In terms of viva voce testimony, but one witness was called on behalf of the plaintiff, and that was Mr Liang himself.

22. For the defendant employer, four witnesses attended and gave evidence.

23. They were, in the order in which they were called : Mr TK Ho, Chief Financial Officer of Vanda, Mr Tuan Lam, now a non-executive director of Vanda, but at the material time Managing Director of DBS Private Equity, the private equity and venture capital unit of the Development Bank of Singapore Ltd, Mr Edmund CK Ma, then Managing Director of Vanda and responsible for the marketing and management of the Vanda Group, and Mr HN Lam, at the material time Chairman of Vanda.

24. In addition, by consent of the plaintiff’s counsel, Mr Cheung, the witness statements of a further three witnesses on behalf of the defendant were admitted into evidence without the need for formal attendance and cross-examination.

25. These were the witness statements of Mr Ernest MY Choy, President of the Vanda Group, including the defendant company, Mr KS Li, Company Secretary and Group Financial Controller of Vanda, and Mr Dominic KM Lai, at the material time a non-executive director of Vanda and also a director of Hutchison International Ltd, and the person responsible for the restructuring of the HIL bonds first issued by Vanda to HIL on 7 April 2000.

26. As I have earlier indicated, this is not a case which is particularly ‘evidence sensitive’, nor is this a situation requiring comparative credibility to be extensively examined, although, as we will see, on certain key aspects I have accepted the defendant’s version of events, and in general terms, and save where the contrary is expressed, I prefer the evidence led on behalf of the defendant.

27. I wish to add, however, that this is not a case wherein I detected dissembling on the part of either side.  The witnesses who gave viva voce evidence struck me as essentially straightforward, and the existing differences between these parties seem to me to represent no more than a genuine difference of understanding as to the factual and legal merits of this claim.

28. In short, therefore, in my judgment this is not the sort of situation a situation in which a defendant is or was attempting to ‘weasel’ out of a clear obligation to pay, nor is this a case of an obviously ‘grasping’ plaintiff who is insisting on rights he must know or realise are unsustainable, and who, therefore, effectively is ‘trying it on’.

29. During the trial it became apparent to me that the respective parties each had the conviction that they were in the right, hence the necessity for third party decision, although the particular circumstances of this case – in which, in modern commercial terms, not a great deal of money is at stake – regrettably necessitated several days of argument in this court.

Constituent elements of the plaintiff’s claim

30. At this stage I should perhaps also say a few words about the specific make-up of the plaintiff’s claim to the performance bonus to which he insists he was contractually entitled.

31. As earlier indicated, the sum presently in issue is HK$872,818.00, but in itself this figure simply represents the balance outstanding between the bonus amount as originally claimed from Vanda by Mr Liang, and the amount that ultimately Vanda saw fit to pay him consequent upon such claim, namely, HK$409,395.00.

32. I advert hereafter to the precise contractual terms underpinning the plaintiff’s employment.  For present purposes, however, suffice it to say that one of the plaintiff’s duties in his employment by the defendant was the attraction of third party funds, that is, equity fund raising, to be invested within Vanda, and this represents the subject-matter of his performance bonus claim.

33. In outline, the total sum claimed by Mr Liang by way of contractual performance bonus was HK$1,282,158.19, which amount comprised that which Mr Liang maintained was his bonus entitlement arising out of capital funds raised for Vanda within the terms of two separate deals involving Hutchison International Limited and DBS Nominees Private Limited.

34. I shall refer to these deals in the manner in which they were described at trial, that is, ‘the HIL deal’ and the ‘DBS deal’, which transactions represented the only concluded corporate finance deals within the period of the plaintiff’s employment with Vanda : as I understand the position, both such deals were concluded in February/March 2002.

35. Fortunately, given their complexity, there is no need for present purposes to become embroiled in the details of these two transactions, and broad description will suffice.

36. Both involved the issuance of convertible bonds by Vanda.

37. In April 2000, the defendant originally had issued two year convertible bonds in the amounts of US$25.5 million and US$10 million respectively to HIL and to the Li Ka Shing Foundation; these bonds were due for redemption in April 2002.

38. Thereafter, on 3 April 2002, HIL had subscribed for replacement convertible bonds issued by the defendant in the amount of HK$197,966,638.00 (equivalent to approximately US$25.5 million), pursuant to an agreement made with Vanda on 15 February 2002, and the original convertible bonds as had been issued to HIL in April 2000 were cancelled : this is the ‘HIL deal’.

39. Also on 3 April 2002, the ‘DBS deal’ came to fruition. It was thus.  DBS Nominees Private Ltd subscribed for convertible bonds issued by the defendant in the amount of HK$136,456,000.00 (equivalent to approximately US$17.5 million), pursuant to an agreement made on 15 February 2002.

40. Out of the funds raised from the convertible bonds issued to DBS, HK$10 million was utilized to redeem the convertible bonds earlier issued to the Li Ka Shing Foundation.

41. The plaintiff, Mr Liang, had participated in or been privy to both the ‘HIL deal’ and the ‘DBS deal’, and thus it was that on 5 May 2002 Mr Liang formally requested, by means of a Payment Requisition Form, that Vanda pay him a performance bonus of HK$1,282,133.19 – this sum resulting from a calculation utilizing the formula set out in his Letter of Appointment of 1 November 2000.

42. In May 2002, after some deliberation, in response to his claim Vanda paid to the plaintiff the sum of HK$409,395.00, which sum was calculated to represent his bonus entitlement arising from the ‘DBS deal’, representing 0.3% of HK$136,456,000.00.

43. However, the management of Vanda declined to pay any sum in respect of performance bonus in relation to the ‘HIL deal’, which sum is that which effectively is in issue in this case.

44. Mr Liang asserts that he is contractually entitled to this further amount; to the contrary, Vanda says, for a variety of reasons, that most definitely he is not.

45. Accordingly, the sole question for this court is : who is right?

The contractual position

46. It is at this stage that I should turn to the contractual situation as it prevailed between these parties, at least in written form.

47. This took the form of a five-page Letter of Appointment dated 1 November 2000, which document was signed by Mr Edmund Ma of Vanda, and “accepted and confirmed” by Mr Liang.

48. The letter in itself is in not unusual, and where necessary I will refer to particular provisions.

49. Given the issue for present decision, however, the key clause is Clause 7 thereof, entitled ‘Performance Bonus’.  I reproduce it in full hereunder :

“7. Performance Bonus:    Your performance bonus will be calculated based on the amount of any equity related fund raising including but not limited to:

(a) Placement of new or old shares of the Company, its subsidiaries or associated companies and

(b) Issue of convertible bonds or similar instruments for the Company, its subsidiaries or associated companies.

Excluded from your performance bonus calculation are the following items:

(a) Proceeds from IPO or spinning-off of the Company’s subsidiaries, associates and related companies;

(b) Syndication loans or loans of a similar nature and

(c) Trade financing, loans or credit facilities from commercial banks granted to the Company or any of its group companies.

The bonus is calculated as:

0.3% on any amount of funds raised of less than US$25 million

0.5% on the amount in excess of an aggregate of US$25 million

The bonus shall only be applicable to the total of such funds raised during the period from the Date of Commencement of your employment to the Company’s financial year ending on 31 March, 2001.  This performance bonus scheme will be reviewed and if necessary, revised on an annual basis.”

The parties’ respective contentions

50. The plaintiff maintains that on its proper construction Clause 7 of the contract provides that the performance bonus will be subject to review after 31 March 2001, but was to remain unchanged until any such review. 

51. Mr Liang says, further, that as a matter of fact the performance bonus scheme never was reviewed with him, and thus he contends that it had remained unchanged throughout the period of the plaintiff’s employment with Vanda.

52. Accordingly, the contention put forward on his behalf is that the issue of convertible bonds to DBS and HIL in April 2002 is ‘equity related fund raising’ within the meaning of Clause 7 of the Letter of Appointment, that in terms of such fund raising the plaintiff had performed his duties under the employment contract with the defendant, and having thus performed, he is entitled to his performance bonus of HK$1,282,113.00, calculated on the total amount of funds raised in accordance with the extant contractual formula under Clause 7.

53. For its part the defendant company disagrees.  It raises several main (and some minor) arguments by way of defence.

54. In outline, Vanda says that the terms of Clause 7 of the Letter of Appointment cover the specific limited period only, namely from 1 November 2000 to 31 March 2001, and that it does not apply to funds raised after 31 March 2001, that the performance bonus scheme in fact was revised by oral agreement between Mr Liang and Mr Edmund Ma, on behalf of Vanda, at the beginning of April 2001, that as a consequence the plaintiff’s performance bonus entitlement (as against any discretionary allotment by the Board of Vanda) was confined to funds raised in the period 1 April 2001 to 31 March 2002 in respect of certain designated companies only within the Vanda group, and finally, and in any event, that, in May 2002, the plaintiff had accepted the sum of HK$409,395.00 which had been proffered in full and final settlement of his performance bonus claim as rendered by his formal Payment Requisition of 5 May 2002.

55. There are other, incidental matters also raised by Vanda, but the foregoing at any rate provides an indication of the main lines of defence that have been mounted by Mr Carolan, who appeared on behalf of the defendant.

56. Accordingly, I examine each of these main defences in turn under the following heads.

(i)      The construction issue

57. I ventured the view at the outset of this case that the threshold issue in this action revolves around the construction of Clause 7 of the Letter of Appointment, and I have had no reason to alter that opinion.

58. Clause 7 is structured in four subparagraphs : the first specifies that the performance bonus is based on the equity related fund raising, and that the issue of convertible bonds represents one of the particular inclusions, the second subparagraph dealing with the particularized exclusions from any such calculation; the third subparagraph is solely concerned with the bonus calculation formula, with the differential percentages of 0.3% and 0.5% dependent upon achievement of the median figure of US$25 million, whilst the fourth and final subparagraph remains the operative part of the clause, which for ease of reference I reproduce again hereunder (with emphasis added) :

“This bonus shall only be applicable to the total of such funds raised during the period from the Date of Commencement of your employment to the Company’s financial year ending on 31 March, 2001.  This performance bonus scheme will be reviewed and if necessary, revised on an annual basis.”

59. Essentially the construction argument put forward by Mr Cheung on behalf of the plaintiff is that the initial phrase ‘This bonus’ must be taken to refer to the bonus as calculated in accordance with the formula within the preceding subparagraph, and that the reference to the ‘financial year ending on 31 March 2001’ demonstrates that the intention is solely to use that date as the reference point for the purpose of calculation of that bonus; thus, he says, the use of the word ‘only’ in the first sentence serves to emphasize that the financial year end is the reference point for the calculation, and that funds raised after 31 March 2001 are to be separately counted for bonus calculation.

60. In other words, the construction propounded is that the temporal restriction within the clause is limited to the relevant arithmetical calculation, and that so far as the final sentence of this subparagraph is concerned, it is argued that its thrust is that unless revised upon annual review, the terms of the performance bonus are to continue unchanged.

61. For the defendant, Mr Carolan disagrees with this reading of the subparagraph.

62. He says simply that the defendant’s interpretation rests on the ordinary meaning of the express language in this final paragraph of Clause 7.

63. Thus it followed, he said, that no funds having been raised within the 5 month period to which specific reference is made – it is common ground that no such relevant funds were raised in that period – the contractual bonus arrangement did not apply thereafter unless it had been reviewed and renewed in like terms.

64. Absent such a review, Mr Carolan argued, this contractual provision necessarily would lapse, and the plaintiff would not have had any relevant bonus provision.  What had happened in fact was that there was a review, and a different bonus arrangement was made, although this subsidiary factual element of the case is nothing to the point in terms of the pure construction argument.

65. I agree with the construction of this subparagraph as thus advanced by the defendant.  When I first considered the point this was the view that I took, and persuasively though Mr Cheung has argued his corner, I have been unable to change my mind.

66. To a large extent any issue of construction is impressionistic, but I am wholly unable to construe this final subparagraph, within Clause 7 as a whole, as meaning anything other than that the performance bonus arrangement described therein will apply only to the total of the relevant classes of funds raised within the specified period 1 November 2000 to 31 March 2001.

67. These words say what they mean and mean what they say.  It seems to me, also, that the final sentence of the subparagraph dealing with the issue of annual review/revision serves to underpin the conclusion to which I have come. 

68. The bonus question was to be the subject of annual review, and, if necessary, revision – indeed this, as we shall shortly see, is that which transpired in the form of an April 2001 meeting between Mr Liang and Mr Edmund Ma – but even if such meeting had not occurred, in light of the particular wording adopted in this subclause I fail to grasp why it should be thought that, absent such review, the terms of Clause 7 would continue to operate indefinitely within this contractual relationship; to the contrary, in my view the situation would have been that, absent any such review/revision, as a matter of contract no performance bonus scheme then would have been in place.

69. As a practical matter, of course, such a lacuna was highly unlikely to have occurred, given the obvious importance that Mr Liang attached to his bonus within the overall scheme of his remuneration package, but this is not an aspect which, I think, affects the primary construction analysis.

70. Moreover, if (as the plaintiff would have it) it was to be only the calculation formula which was not to be applicable after 31 March 2001, what, it may be asked, was to be the ensuing arithmetical formula to be attached to such allegedly continuing primary contractual entitlement?

71. It follows from the foregoing that I am unable to accept the construction of Clause 7 as pressed upon the court by the plaintiff, and if this conclusion be correct, as I believe that it is, the plaintiff’s case necessarily must fall at this first hurdle, and his claim dismissed upon this basis alone.

72. I so find.  In my judgment the specific contractual bonus provisions within and under Clause 7 did not extend to funds raised in the period beyond 31 March 2001.

73. Should I be wrong on the point, however, I proceed briefly to consider the other issues of significance which have been thrown up by this case.

(ii)     The revision/review issue

74. I characterize this issue in this fashion because it is the defendant’s case that, as a matter of fact, there was a meeting between Mr Liang and Mr Edmund Ma, in which a different bonus arrangement was arrived at, in the form either of an oral agreement between the two, alternatively, that absent such agreement there was a unilateral revision of such terms by the defendant.

75. It is at this stage that I need to refer to perhaps the only other relevant document out of the hundreds (if not thousands) of pages which have been painstakingly assembled within the 12 box files prepared (in triplicate) for this case.

76. This document is in the form of a contemporaneous handwritten note – referred to throughout the course of the trial as ‘D1’, the exhibit number accorded to the original document as produced to the court – which the evidence (which I accept) demonstrates was made by Mr Edmund Ma of Vanda at or very shortly after the meeting which he had held with Mr Liang on 1 April 2001, or within a day or so thereof.

77. The reason for the production of the original document is that although the relevant handwritten note is undated, the reverse side of the original contains an unrelated advertising fax to Mr Lam Hon Nam, the Chairman of Vanda, which bears the date of 1 April 2001 together with the beguiling title of ‘The “Secret” to giving your customers what they want.’

78. Both Mr Ma and Mr Liang gave evidence about, and were closely questioned in terms of that which this document represents.

79. In this regard Mr Ma was in no doubt about the position.  His evidence was that on or around 1 April 2001 he had invited Mr Liang for a discussion in his office, and that the handwritten notes on the reverse of this fax represented an outline of the main points of such discussion.

80. He noted that he and his Board at the time had not been particularly happy about Mr Liang’s fund-raising efforts to-date, and I gathered from what he said that he and his management colleagues then took the view that whilst they were indeed willing to maintain Mr Liang in the new corporate finance position which had been created, they felt that his efforts in the fund-raising area had been too diffuse; accordingly, the handwritten note listed three specific corporate leads to be pursued, namely ‘Digital Logistics’, ‘Software Group’ and ‘Asean Group’, against each such abbreviated name being the quota amount that was targetted to be raised in each instance, alternatively, a combined total figure of HK200 million was cited thereunder.  The fourth category stipulated, ‘IPO’, was a reference to the possibility of bringing these entities to market, and for any other category of fund-raising any consequential bonus was to be decided on a “case by case basis” to be agreed by the Board of Directors. 

81. This new scheme was specified to cover the calendar period 1 April 2001 to 30 March 2002, and a note at the foot of the page indicated “Within Quota – 0.3%” and “Above Quota – 0.5%”, such being a reference to the manner of calculation of the bonus on such sums as were raised, so that if funds in excess of a total of HK$200 million were raised, the multiplier of 0.5% would be applicable instead of the figure of 0.3% for funds raised below that line.

82. Save for such general description further detail does not greatly matter; suffice to say that Mr Ma left the court in no doubt that in his view it was this new bonus scheme, as outlined in this note, which henceforth was to prevail within the newly-designated period.

83. For his part Mr Liang did not, I think, quibble with the fact that indeed there had been a meeting with Mr Ma at about this time; however, and in so far as he was able to recall, although these or similar matters had been discussed or adverted to in general terms, as far as he was concerned this merely had formed part of a general discussion of his ongoing duties, and in no sense had Mr Liang understood that such discussion was to constitute any variation to, or replacement of, that which he continued to regard to be his ongoing contractual bonus entitlement in terms of the provisions of Clause 7 in the Letter of Appointment of 1 November 2000.

84. As his counsel, Mr Cheung, expressed the position, so far as Mr Liang was concerned this essentially had been a working meeting with Mr Ma, with no intrinsic significance in terms of bonus as such; this was simply an occasion in which Mr Ma had shared his thoughts with Mr Liang about how much investment various groups of companies might attract, namely $40 million each for ‘Digilogistics Division’ and ‘Software Group’, and $80 million for ‘Asean Group’, and it was not the plaintiff’s understanding that Mr Ma had meant these to be specific fund-raising projects from which bonus entitlement exclusively was to accrue, nor that this meeting had constituted, or was meant to constitute, a review of the existing performance bonus scheme.

85. There is thus in this regard a direct evidential clash which requires a finding of fact, and, as earlier noted, I approach such finding without taking the view in this regard that either side was attempting to mislead the court; after hearing the evidence and seeing the witnesses I formed the firm view that the genesis of this case is founded upon a misunderstanding or misapprehension on the part of the plaintiff as to the prevailing contractual position.

86. In this connection I observe also that when questioned Mr Liang was minded to accept that although at the meeting with Mr Ma he did not think that there had been any review of the bonus position – “to the best of my recollection, no” – nevertheless he was unable to represent the position as positively as did Mr Ma as to that which had occurred on that day.

87. I find as a fact that this meeting took place on or about 1 April 2001.  In my view it would have been entirely logical at or around that date for Mr Ma to have taken the opportunity to review/discuss the state of play with Mr Liang in light of the fact that the existing bonus scheme under the original letter of employment had lapsed on 31 March 2001, and – significant in the circumstances – I am impressed by the fact that there is in existence that which I accept is a contemporaneous note made by Mr Ma at or immediately consequent upon such interview.

88. It seems to me that when one is dealing with the assessment of differing memories of a meeting which took place fully some five years previously that considerable weight should be ascribed to any genuine written record thereof, even in such attenuated form as the ‘Ma memo’, if I may so term it.

89. I am further impressed by the fact that the content of this memo obviously was intended to be acted upon in a corporate sense : at the top right hand corner of this document ‘D1’ there is inscribed, also in Mr Ma’s handwriting, the legend ‘T.K.  Please issue new agment’, followed by Mr Ma’s scribbled initials.

90. The evidence from Mr Ma, which I further accept, is that this memo was passed to TK Ho, the CFO of Vanda, for consequential action in the terms of its contents.  For his part, however, Mr TK Ho said in evidence that whilst he had received the document, he had not taken action upon it, and observed somewhat tersely that he had felt at the time that this was a matter for the company’s HR Department, and that it did not rank high on his scale of priorities.  Had of course Mr Ho taken a different view at the time, and had a new agreement duly been engrossed, as obviously had been envisaged by Mr Ma, the opportunity for the current misunderstanding would not have occurred, and in all probability this case never would have seen the light of day.

91. Be that as it may.  The short point is that, when the evidence is assessed overall, I have concluded that the bonus provision within the original letter of appointment indeed was reviewed at the beginning of April 2001, and that the new scheme that was put in place for the forthcoming year was that as described by Mr Ma; in light of my earlier finding as to the construction to be accorded to Clause 7, it seems to me not greatly to matter whether this contractual revision is said to arise by way of mutual agreement or, far more probably in the circumstances (and in the circumstances I so find) by unilateral revision of the terms of the bonus scheme on the part of Vanda against the backdrop wherein the existing contractual bonus scheme already had lapsed.

92. Accordingly, on the review/revision issue I hold in favour of the defendant also.  I find that the performance bonus scheme was reviewed/revised in the manner in which the defendant contends, and that, as a matter of contractual entitlement, the plaintiff continued to perform his duties upon this new and revised basis.

93. It follows therefore that under such terms as thus revised that in any event any bonus in respect of the DBS deal would be subject to the exercise of the discretion of the old Board of Vanda, given that the DBS deal did not fall within one of the three specified categories within the revised bonus scheme.

(iii)    The settlement issue

94. Essentially this constitutes a fall-back position for the defendant and, as we shall see, provides the lead into the defendant’s restitutionary counterclaim for the return of the sum as actually was paid to Mr Liang if and in so far as the defendant’s ‘final settlement’ submission fails to meet with the approval of the court.

95. I am not attracted to this aspect of the defendant’s argument, and I do not hold that in accepting from Vanda the sum of HK$409,395.00, which was sent to Mr Liang under cover of Vanda’s approval document of 23 May 2002, containing the relevant calculation (namely, 0.3% of HK$136,465,000.00) that Mr Liang thereby entered into a binding settlement as to the entirety of the performance bonus claim he had raised with Vanda.

96. To the contrary, I take the view (and so hold) that there was no settlement of Mr Liang’s claim which had the juridical effect of precluding his claim for the balance he currently says that he is owed.

97. That this is the case strikes me as tolerably clear on the documents : on 24 May 2002 Mr Liang returned, duly signed, the bonus remittance document, but the acknowledgment clause in its original form under which Mr Liang’s signature is appended has been amended to reflect acceptance of this sum of $409,395.00 in ‘partial’ amount of his claimed bonus, the word ‘full’ having been deleted from the document he received and replaced by him with the typewritten word ‘partial’.

98. Against this background I do not think that Mr Carolan went out of his way to press this settlement submission.  However, he made the point that it was one of the ironies thrown up by this case that if and in so far as Mr Liang refuted (as he did) the defendant’s ‘compromise defence’, this left the way open for Vanda to attempt to recoup, by way of counterclaim, the monies that it had paid to Mr Liang as a consequence of the latter’s participation in the DBS deal.  Accordingly, it is to this latter aspect that I now turn.

(iv)    The defendant’s counterclaim

99. As earlier observed, rejection of the ‘compromise’ line of defence is the precursor to the counterclaim pressed by the defendant for the return of the sum of HK$409,395.00 as was paid to, and accepted by, Mr Liang.

100. As I understand it, the constituent elements of the argument propounded on behalf of Vanda in this regard are as follows : that Mr Liang consistently (and solely) has based his case upon a contractual entitlement to a performance bonus in the amount claimed, that although there was no such entitlement, in making its decision upon his claim the ‘old’ Board of Vanda, when meeting in May 2002, nevertheless had exercised its discretion to award the plaintiff the sum in question arising solely on the basis of the plaintiff’s work in the DBS deal, and that in thus exercising its discretion the Board of Vanda had been effecting a compromise of the entirety of the claim (that is, for bonus claimed to be arising from both the DBS and the HIL deals) and had not been approving an individual sum which was capable of constituting a debt due as a matter of right under the revised terms of the plaintiff’s employment. 

101. Accordingly, so this argument goes, if and in so far as the plaintiff declines (as is the case) to accept the contention that there had been an overall settlement of his claim by virtue of his acceptance of this smaller amount, this plainly was not the basis upon which the Board had chosen to exercise its discretion on a case by case basis to offer the sum of money that it had (namely, an offer made with the desire to put the entire controversy to bed), and that since there had been no contractual entitlement to that which had been paid, Vanda therefore now was able to recoup that sum which purportedly had been given, and thought to have been accepted, in settlement of the whole claim.

102. It is fair to say that Mr Carolan did his best to invest this argument with some semblance of enthusiasm, but at the end of the day I reject it. 

103. On the evidence I am not prepared to find that the monies given to Mr Liang by the Board of Vanda as a result of his efforts in terms of the DBS deal should in the circumstances be thus characterized as an offer, and acceptance of, these monies upon an ‘all or nothing’ basis.

104. It follows therefore that in my judgment the defendant’s counterclaim must be dismissed.  I so order.

(v)     Incidental matters

105. Two further matters arise in this case, and for the sake of completeness I now deal with them, even though they have no effect upon the terms of this judgment.

106. First, I formally record that in considering the merits of this claim I have not been asked to evaluate/consider either the quantitative or qualitative input of Mr Liang, the plaintiff, in terms of the two deals which have been the subject of this claim.  This is an element which in any event only would have arisen in the context of the HIL deal, had ultimately this point been pursued, but at the outset Mr Carolan made it clear that he would argue this case upon other grounds, as indeed he did, without venturing into this issue.

107. The second matter requiring resolution, I think, is whether the refinancing aspect of the HIL deal had had the effect – or, more accurately, would have had such effect if otherwise there had been any entitlement to a performance bonus in respect of this deal – of placing this deal outwith the bonus scheme that was in place on the basis that the issue of the convertible bonds to HIL in 2002 did not amount to ‘fund raising’ within the meaning of Clause 7.

108. Perhaps unsurprisingly there is also no consensus on this contingent issue.

109. For the plaintiff Mr Cheung says that the issuing of convertible bonds expressly is included within the rubric of ‘equity related fund raising’ in the original Letter of Appointment, and that there is no express exclusion in terms of the issue of new convertible bonds in circumstances wherein the consideration is the cancellation and consequent replacement of existing bonds.

110. For the defendant Mr Carolan argues that in this instance no new funds were raised by the HIL deal; it was, if you like, ‘new lamps for old’, with no new money being raised, and that if this be right, in any event no claim could otherwise be substantiated by the plaintiff in relation to this deal.

111. This aspect was not as fully argued as may have been the case in other circumstances, but my view on this point, if it be necessary to address it, is that the issue of the HIL convertible bonds in April 2002 clearly was on different terms to those pertaining to the existing convertible bonds as were replaced, and the fact that this was at bottom a refinancing exercise, albeit on different terms, does not seem to me in itself to take the plaintiff’s claim out of court if otherwise he were to have been successful in his contentions in relation to the award of a performance bonus.

112. Accordingly, had this issue been of any relevance to the present decision I would have been in favour of the plaintiff’s view of the HIL deal, that is, as a ‘qualifying fund raising’ activity, although I accept that the point remains a fine one.  No doubt there were benefits accruing to the defendant by virtue of such refinancing, not least, I suppose, that scheduled repayment presumably was able to be postponed and funds originally earmarked for that purpose were able to be reallocated, so that in practice there is, as Mr Cheung pointed out, no great difference between that situation and the situation wherein funds are raised from a third party source in order to pay down the existing debt.

Order

113. It follows from the foregoing that in my judgment the plaintiff has failed in his claim, and in the circumstances I make the following order :

(1) The plaintiff’s claim against the defendant be dismissed;

(2) There is to be an order nisi that the costs of this action are to follow the event, and are to be paid by the plaintiff to the defendant, such costs to be taxed if not agreed.