RAJ KUMAR MAHAJAN v. HCL TECHNOLOGIES (HONG KONG) LTD AND OTHERS

HCA 1510/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1510 OF 2004

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JUDGMENT

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Introduction

1.  In this consolidated action, the Plaintiff (“Mr Mahajan”) claims against the Defendants as his ex-employer(s) for: (1) outstanding bonuses during his employment from 1 July 1999 to 5 February 2004; (2) damages for failure to provide him with adequate business resources to develop the Defendants’ business from which he could derive enhanced remuneration; and (3) damages for wrongful termination of his employment, including sums payable to Mr Mahajan arising from the failure to give him proper notice of termination of employment, damages for unexercised share options as well as long service payment. Additionally, Mr Mahajan claims against the 3rd Defendant (“Mr Nadar”) personally for the alleged breach of two oral agreements reached on 30 December 2001 and 7 January 2002 respectively.

2.  The parties have helpfully provided the Court with a largely agreed List of Issues: I say “largely” because the Defendants’ position is that some of the issues framed by Mr Mahajan’s side are either irrelevant or do not arise. I need not be detained by such relatively minor disagreements. It seems to me reasonably clear that the main issues for determination are as follows:

2.1 What were the terms of Mr Mahajan’s employment? In particular:

(1) Whether his employment terms was agreed (a) orally in a meeting held between Mr Mahajan and Mr Nadar in Amsterdam on 24 February 1999, as contended by Mr Mahajan, or (b) in writing and contained solely in two letters dated 5 March and 12 March 1999 as contended by the Defendants?

(2) The answer to (1) above will determine what were the relevant terms of Mr Mahajan’s employment, including his bonus entitlement and notice period.  In this connection, the major issue of dispute between the parties at trial is whether there was agreement that for the financial years July 1999 to June 2002, Mr Mahajan was entitled to a minimum annual bonus of US$200,000.

(3) Another issue under this head is whether Mr Mahajan was entitled to 1 year’s notice of termination of employment. Mr Mahajan claims that he was so entitled. The Defendants’ position is that Mr Mahajan was only entitled to 1 month’s notice, by reason of section 7 of the Employment Ordinance.

2.2 Who was/were Mr Mahajan’s employer(s)?  There is no dispute that the 1^st Defendant (“HCL Hong Kong”) was an employer of Mr Mahajan.  However, Mr Mahajan’s case is that the 2^nd Defendant (“HCL India”) and Mr Nadar, or either of them, are also his employer.  The Defendants contend that HCL Hong Kong was Mr Mahajan’s only employer.

2.3 Is Mr Mahajan entitled to damages for loss of opportunity to earn enhanced bonus by reason of any breach of contract by his employer(s) to provide promised or adequate support and business resources?

2.4 Is Mr Mahajan entitled to damages in respect of any unexercised share options and the appropriate quantification of that claim?

2.5 Is Mr Mahajan entitled to any long service payment, and if so, what is the amount of such payment?

2.6 Did Mr Nadar incur any personal liability to Mr Mahajan in respect of Mr Mahajan’s bonuses under two alleged oral agreements?

2.7 Are the Defendants entitled to claim or rely upon any set-off in respect of two “loans/advances” totalling US$425,000 made to Mr Mahajan by HCL Hong Kong and HCL Holdings, a Mauritius holding company owned by or connected to Mr Nadar?

Background

3.  In order to put these issues and the parties’ contentions in context, it is necessary to set out the material background facts, which are largely undisputed.  In any case, for the avoidance of doubt, the facts stated in this section are my findings of fact in so far as there is any dispute.

4.  HCL India is a company incorporated in India and has since around January 2000 been listed on the National Stock Exchange of India. It is, and was at all material times, the flagship of the HCL Group of companies (“HCL Group” or “Group”).  Mr Nadar was the founder of the Group and was at all material times its chairman and person in de facto overall control.

5.  The main business of the HCL Group was computer software development, consultancy and related services. Since its relatively humble beginning in the late 1970s, the Group has developed into a multi-national business, operating a number of subsidiaries (in some cases in joint venture with others) in many jurisdictions including India, USA and Canada, Europe and Africa, the Asia Pacific region (covering Australia, New Zealand, Hong Kong, Taiwan, Korea, Mainland China, Philippines and Fiji), Japan, Singapore and Malaysia. These geographical areas are referred to as “Geos” in the trial.

6.  Other than HCL India, entities within the HCL Group involved in this action include HCL Hong Kong, which is an indirect wholly-owned subsidiary of HCL India, and HCL Technologies Limited, which although bearing the same name as HCL India, is a Bermudian company (“HCL Bermuda”).

7.  Mr Mahajan considered himself a protégé of Mr Nadar.  He started working under Mr Nadar from around 1974, when they were both employees of an Indian company called DCM Products. After Mr Nadar had established HCL India (then called Hindustan Computers Limited) in around 1979, Mr Mahajan joined that company at the invitation of Mr Nadar.  Save for about a year from about March or May 1989 to April 1990, he had been working for the HCL Group or a joint venture in which HCL was interested, until the termination of his services on 6 February 2004.  He regarded himself as an employee of Mr Nadar.

8.  In terms of Mr Mahajan’s work history, since joining the HCL Group, Mr Mahajan worked in various positions and enjoyed increasing responsibilities. He became a Corporate Officer (Corporate Vice President) of HCL India in 2000.

9.  In May 1980, Mr Mahajan was one of the first “pioneers” chosen by Mr Nadar to commence the Group’s global business outside India.  Mr. Mahajan was stationed in Singapore where he was tasked to set up Fast East Computers Pte Ltd (“FEC”), a Singaporean company within the HCL Group.

10.  From around May 1981, Mr Mahajan was “transferred” to Fast East Computers Sdn Bhd in Malaysia to set up HCL Group’s operations there. Mr Mahajan remained the Country Manager and CEO of the Malaysian company until December 1987.  In 1988, he was “transferred” back to Singapore to oversee new diversification plans. It would appear from letters issued by FEC dated 17 October 1988 and 28 February 1989 that the Malaysian company was a subsidiary of FEC and Mr Mahajan remained employed by FEC during this period.

11.  In about May 1989, Mr Mahajan left the HCL Group and joined Sybase Australia Pty Ltd, an Australian subsidiary of the American Sybase Inc, as Senior Account Executive.  He was based in Sydney during his employment with Sybase.

12.  Mr Mahajan’s time with Sybase was short-lived. In early 2000, Sybase and HCL Group entered into a joint venture to set up an operation in Singapore.  Mr Mahajan resigned from Sybase and re-joined the HCL Group, becoming the Managing Director of the joint venture company, HCL Sybase Products South East Asia Pte Ltd (“HCL Sybase”). It is not disputed that this joint venture vehicle was initially owned as to 90.5% by HCL America, a US subsidiary of HCL Group, while Sybase owned the remaining 9.5%. In about 1992, HCL Group acquired Sybase’s 9.5% stake and the company became a wholly-owned subsidiary of HCL Group, changing its name to HCL Software Products SEA Pte Ltd (“HCL Software SEA”). Mr Mahajan was based in Singapore during his tenure with HCL Sybase.

13.  In a letter dated 12 May 1990 issued by HCL India’s Corporate Office, one Mr Ajai Chowdhry wrote to Mr Mahajan stating: “Welcome back to HCL! I guess you never really left ….”  Perhaps more significantly, by a letter dated 1 March 1990 issued by HCL America, Mr Mahajan was offered the position of “Managing Director of the Joint Venture with Sybase (HCL Sybase Products South East Asia Pte. Ltd.) to be set up in April 1990. Although formal contract can be signed only after the incorporation of HCL Sybase Products South East Asia Pte. Ltd., I would like to confirm the terms as discussed between us ….” There is no evidence about HCL America, but one can safely infer that it was a subsidiary of HCL Group incorporated in the US.

14.  A few other letters/documents are worth mentioning at this stage.  On 28 March 1991, HCL Sybase issued a letter to the Singapore Immigration Department in support of Mr Mahajan and his family’s application for permanent residence in Singapore.  This letter unequivocally stated that Mr Mahajan was Managing Director and an employee of HCL Sybase.  In April and 1992 and May 1993, Mr Mahajan’s remuneration package was reviewed as documented in letters issued by the chairman of HCL Software SEA (as HCL Sybase has become).

15.  It would therefore appear reasonably clearly, and I so find, that Mr Mahajan was in fact employed by HCL Sybase/HCL Software SEA during his tenure with that entity in Singapore.

16.  The next development in terms of Mr Mahajan’s employment history took place in early 1995, when Mr Mahajan and HCL Hong Kong Ltd (a Hong Kong subsidiary of the HCL Group, not the 1^st Defendant in this action) signed an Employment Contract “effective as of 1 January 1995”. The document stated unequivocally that Mr Mahajan “shall be employed by HCL Hong Kong Limited (hereinafter called ‘the Company’) as Chief Executive, North East Region and Australia, to perform services for the Company.”  This contract provided in clause 4 that the duration of the employment was initially 3 years and subject to renewal on mutually acceptable terms, and might be terminated by either party giving three months’ written notice. 

17.  By another Employment Contract “effective as of 1 April 1996” signed by Mr Mahajan and HCL Hong Kong Ltd, Mr Mahajan was employed by HCL Hong Kong Ltd “as Chief Executive, North East Region, New Zealand and Fiji, to perform services for the Company”, again for a period of 3 years terminable on three months’ written notice.

18.  In around mid-1996, HCL Group had plans to open up the Australian market. Mr Mahajan, the trusted executive who had by then become a member of the Management Council of HCL India, was the candidate chosen for the task. Mr Mahajan’s remuneration package for his posting to Australia was set out in a letter dated 29 July 1996 issued by Mr Sujit Baksi (“Mr Baksi”), HCL India’s Director of Human Resources Development, on HCL India’s letterhead.  As this letter contains a good summary of Mr Mahajan’s work history with the HCL Group up to 1996, I quote the contents of the letter in full below:

“Mr. Raj Mahajan

Managing Director

HCL Asia Pacific Pte Ltd

[address in Singapore]

Dear Mr. Mahajan,

This refers to our discussions. We would like to put on record your valuable contributions to our company especially by way of starting, growing and managing a number of successful HCL Group overseas companies viz. Far East Computers Pte Ltd Singapore, Far East Computers (M) Sdn Bhd Malaysia, HCL Sybase Products South East Asia Pte Ltd Singapore (Now called HCL Asia Pacific Pte Ltd), HCL Hong Kong Ltd. HCL Thailand Ltd. and HCL Asia Pacific Ltd. New Zealand since 1980s. All these require a combination of entrepreneurial and many exceptional skills, multitude of talent and personal strength of moving from place to place and establishing business in new countries.

Being the largest IT group in India and always taking the lead in overseas markets, we have decided to open up an operation in Australia as well for IT related services, contracting/placements, software development and system integration etc. Being a member of the Management Council of HCL Corporation, which is responsible for overseeing and supervising our global operations across various lines of businesses, you are hereby being deputed temporarily to Australia for a maximum period of 18 months to 2 years with effect from November, 1996. At the end of this period, the corporation intends to relocate you and your spouse back to Singapore.

Your special focus for Australia, where we have decided to start new operation now, will essentially be to supervise the start up of operations; appointing the Country Manager and other executives; guide, train and orient them appropriately so that they can continue to run and continue to grow the same in Australia.

As the supervisory member of the Management Council, you will continue to oversee the HCL Group companies’ operations and interests in the market of Hong Kong, Korea, Taiwan, New Zealand etc. and operate by frequent travelling and spending a substantial amount of time as needed in these locations.

We are confirming your deputation terms as under for the time you will spend in Australia. The following remuneration only relates to your responsibilities in Australia. A separate contract with you will govern your responsibilities outside Australia with related remuneration.

1. Designation

You will be designated as the Managing Director.

2. Salary

Your annual salary is A$91,540/- to be drawn monthly in addition to the following perquisites. However this is inclusive of Cost of Living Allowance as given below.

3. Residential Accommodation

You will be provided with accommodation by HCL up to the value of A$2,000/- per week which will be paid direct by HCL to your lessor.

4. Cost of Living Allowance

A cost of living allowance will be incorporated into your remuneration and you will be provided with this allowance based on your family size to compensate you for the additional cost of living in Australia. This will be paid to you net each month in addition to your after-tax salary.

5. Company Maintained Car

You will be provided with a company leased car during your stay in Australia.

6. Medical Benefits

As per the rules of the company, you will also be provided with hospitalisation insurance for yourself and family as per the rules of the company.

7. General

The rest of all the terms and conditions will be as the rules of the company.

Please sign the duplicate copy of this letter indicating your acceptance to accept [sic] this assignment in Australia retaining your responsibility of handling the region mentioned above.

We are sure that your experience of having worked in Australia during 1989-1990 and keeping abreast with the Australian culture by periodic social visits thereafter will help you in establishing fast. We re-emphasise that you have been chosen for this because you are the most appropriate talent for the same within the Group.

With best wishes

Yours sincerely

[Signed]

Sujit Baksi

Director

Human Resources Development

I accept the above

[signed]

Raj Mahajan”

19.  For completeness, I should mention that there is another letter also dated 29 July 1996, also signed by Mr Baksi on HCL India’s letterhead, and in almost identical terms to the letter referred to in the previous paragraph, save in relation to some terms in the remuneration (notably the amount of salary was stated to be A$60,000, and here is no equivalent to item 4 “Cost of Living Allowance” found in the above letter dated 29 July 1996). According to Mr Mahajan’s witness statement, the first-mentioned 29 July 1996 letter was to supercede the other one because “it was felt” – the statement does not say by whom – “that the salary stated in the first one appeared too low for a Managing Director”.  Mr Mahajan was not cross-examined on this point and I accept his evidence that the first-mentioned letter was the effective one for the reason he gave.

20.  Mr Mahajan and his family relocated to Australia in around November 1996.  There is no clear evidence as to whether Mr Mahajan was employed by any specific entity within the HCL Group, although there are documents which suggest that Mr Mahajan was made Managing Director of HCL Technologies (Australia) Pty Ltd, which later became known (at least internally) as “HCL Technologies NAANZ” – “NAANZ” refer to North Asia, Australia and New Zealand.

21.  As things turned out, Mr Mahajan’s stay in Australia took longer than the expected 2 years.  It is unnecessary to go into the details; suffice to say that in around April 1998, Mr Mahajan was tasked by Mr Nadar to help HCL Hewlett-Packard Ltd, which later became known as HCL Infosystems Ltd, to establish its operations in the USA. Because of this development, Mr Mahajan remained based in Australia beyond November 1998. As can be seen from a number of email correspondence in early 1999 passing between Mr Mahajan and various human resources officers of the Australian company and HCL Group headquarter in India, there were issues over potential higher tax payable by Mr Mahajan in Australia arising from him residing there for more than 2 years.

22.  Towards the latter part of 1998 to early 1999, there were plans for Mr Mahajan to relocate to the USA instead of him returning to Singapore after his time in Australia, including discussions between Mr Mahajan and senior officers of HCL India over his remuneration package in the USA.  Eventually, these plans did not materialise, and Mr Mahajan was instead relocated to Hong Kong in March 1999.  The terms of his employment in Hong Kong gave rise to the main issues in dispute in this action.

23.  It was against the above background that the events central to this action took place, to which I turn.

The Amsterdam Meeting and Amsterdam Note – Mr Mahajan’s bonus entitlement for 1999 – 2002

24.  Mr Mahajan’s case is that the terms of his employment with effect from 1 March 1999 were agreed between him and Mr Nadar in Amsterdam on 24 February 1999.

25.  Mr Mahajan wrote out, in his own handwriting in pencil, a 5 pages document which he claims contained most, but not all, of the matters agreed with Mr Nadar on that occasion. This document has been referred to as the “Amsterdam Note” in the course of the trial.

26.  There is no dispute that Mr Nadar did meet with Mr Mahajan in Amsterdam on 24 February 1999.  There is also no dispute that following the meeting, Mr Mahajan was appointed HCL Hong Kong’s Managing Director – North Asia & Australia/New Zealand (collectively NAANZ). What the Defendants contend is that there was no concluded agreement reached, and that the Amsterdam Note was merely a non-binding record of the matters discussed between the two men and no more than that.

27.  I note in passing that in an affidavit made by the Defendants’ previous solicitor and filed on their behalf, it was claimed that Mr Nadar had never been provided with copies of the Amsterdam Note, and had only seen it after these proceedings were commenced in 2004. One would imagine that the solicitor’s instruction could only have come from Mr Nadar himself. Mr Mahajan, however, explained that after writing out the Amsterdam Note, he had 5 copies of it made at the business centre of the hotel where both he and Mr Nadar were staying, and gave 3 copies to Mr Nadar for further action. He then wrote on his own copy “3 copies given to Mr Nadar on 24/2/99 Copy given to SW on 1/3/99” – “SW” referred to Mr Shiv Walia (Mr Walia”), whose involvement will be addressed later. He was also able to produce a copy of the hotel bill, which included charges for photocopying for 25 sheets. I am satisfied that the Amsterdam Note was indeed written by Mr Mahajan on 24 February 1999 in the circumstances described by him in his evidence, and that copies were given to Mr Nadar on that occasion.

28.  Turning to the content of the Amsterdam Note, it is necessary to set out the entire document, as follows (excluding handwritten remarks added onto the original by Mr Mahajan after copies had been made):

“DISCUSSIONS WITH MR. NADAR ON 24 FEBRUARY 1999 IN AMSTERDAM REGARDING MY TRANSFER & REVISED SALARY PACKAGE

1.	PLACE OF POSTING	:	HONG KONG
2.	EFFECTIVE DATE OF POSTING	:	1stMAY MARCH 1999
3.	RESPONSIBILITY FOR	:	Existing & future operations of HCLT in NAANZ
4.	BASIC FIXED SALARY/MONTH TO BE DRAWN FROM HONG KONG Wef 1/5/1999	:	US$25,000
5.	VARIABLE SALARY/ BONUS TO BE DRAWN FROM HONG KONG Wef 1/5/1999 till 30/6/2002 [the words “till 30/6/2002” were added]	:	THIS WILL BE CALCULATED AS UNDER AND WILL HAVE NO UPPER LIMIT.  IT IS TO BE DRAWN ON QUARTERLY BASIS FOR CONVENIENCE.

(A) Basis of calculation of Bonus for May – June1999 and for F/Y July 1999 – June 2000

The total amount of variable salary/bonus applicable to me will be sum total of following amounts:

	Area of Business	%age of commission (bonus) of total billing of NAANZ
(i)	Offshore Projects	2.5% of total billings uncapped
(ii)	On-site Projects	1.25%“
(iii)	On-site high value / high margin services (e.g. networking area)	1.25%“
(iv)	Balance T & M	0.75%“

Notes

(a) Any business which involves work/billing in multiple locations, the following rule applies for calculating billing amount

-  Billed in NAANZ but implemented in other Geo 50%

-  Billed in other Geo but implemented in NAANZ 50%

(b) The bonus applicable for May–June 99 will be calculated as above %age rates of the billing for respective areas of business and for F/Y July 99 – June 2000 it will be done on quarterly basis.

(B) Basis of Calculation of total bonus amount applicable for F/Y July 2000 – June 2001, July 2001 – June 2002, etc.

(a) The base billing values for respective areas of business for purposes of arriving at the desired commission expected to be earned during F/Y 1999 – 2000 are given as under:

Area of Business	Base Billing Values in US$	%age of commission rate irrespective of billing amount	Total amount of bonus on Base billing values US$
- Offshore Projects	8m	2.5%	200,000
- On-site Projects	2m	1.25%	25,0000
- On-site high value /high margin services	1m	1.25%	12,500
- Balance T & M	7m	0.75%	52,500
	18m		290,000

The total amount actually earned at above %age of commission basis can be lower or higher (uncapped) based on actual billing amounts in respective areas of business.

(b)   The base billing values will be increased by 40% from the preceding year in every year to earn the same total amounts from F/Y 2000 – 2001 onwards.  For example, the calculation of commissions (bonus) in F/Y 2000-2001 will be as under

Area of Business	Base Billing Value in US$ in F/Y 2000 – 2001 (1.4 x Value in 1999 – 2000)	%age Commission rate upto Base Billings Value	%age Commission rate on billing amounts higher than base billing value
(1)	(2)	(3)	(4)
- Offshore Projects	11.2	200,000/11.2m x 100 = 1.78%	2.5% on amounts > 11.2m
- On-site Projects	2.8	25,000/2.8m x 100 = 0.89%	1.25% “> 2.8m
- On-site high value / high margin services	1.4	12,500/1.4m x 100 = 0.89%	1.25% “> 1.4m
- Balance T & M	9.8	52,500/9.8m x 100 = 0.53%	0.75% “> 9.8m
	25.2m

Note

Column (3) can also be arrived at by dividing respective %ages of F/Y 99 – 2000 by 1.4 e.g. for offshore projects %age commission rate applicable upto base billing value of 11.2m = 2.5%/1.4 = 1.78%

(C) For calculating commissions (bonus) applicable during F/Y 2001 – 2002 the base billings values will increase by 40% from respective values of F/Y 2000 – 2001 e.g.

For Offshore Projects, the base billing value will be 1.4 x 11.2m = 15.68m \ The commission rate applicable for billing value upto 15.68m will be 1.78%/1.4 = 1.27% (so that I earn US$200,000 on total billing amount of 15.68m) and the commission rate applicable for billing value above 15.68m will be 2.5% of the incremental billing.

Note (i) The %age of commission (bonus) basis can be changed by Mr. Nadar anytime based on company needs and my place of posting or change in responsibilities with the understanding that my earnings won’t get negatively affected subject to my and co performance.

(ii) If any billing gets reversed or the payment is not received from the client, the bonus amount relating to the same will be reversed and will be adjusted from the amounts payable to me in future

6.	ESOP of HCLT :	:	It will be decided by Mr. Nadar and communicated to me.
7.	Stay in Hong Kong and Travel :	:
	To Australia	:
	::Any expenses incurred by me for my stay at [sic] Hong Kong will be to my account.  I will be considered on tour when outside Hong Kong on company business.  Since I will be staying at my family’s rented accommodation in Sydney, I can claim for my lodging expenses in Sydney an amount equivalent to the proportionate total rental arrived at by the following formula:
	No. of days of stay in Sydney in Sydney in rented accommodation     X  Monthly rental X  1.25
		30
	On current rental basis, this is approximately US$125/day.  I will not charge for any meals at home. Rest of expenses while in Sydney will be as per TA/DA rules plus I’ll charge for car rental expenses.

(iv) Medical/Hospitalization Insurance for family + life/PA Insurance for Self

This will continue to be applicable in addition to above package.  The maximum limit per year w.e.f. 1/5/99 will be US$6000.

(v) Co. Car Benefit

Not applicable during posting in Hong Kong

(vi) LTA

No extra LTA benefits applicable.

Notes to file

Mr. Nadar will handle/communicate the following

(i) New ESOP of HCLT applicable to me

(ii) Reporting – Informal reporting to Raman

(iii) Acquisition of Co in Australia up to US$10-12m

(iv) Exposure of tax on “Resident” basis in Australia for co because of stay in Australia > 2 years as per communications sent to Sujit Baksi.”

29.  Mr Mahajan claims that in addition to the rates of bonuses set out in the Amsterdam Note, he and Mr Nadar had agreed that he would be entitled to a minimum bonus of US$200,000 per annum for the 3 years from July 1999 to June 2002.  The Defendants deny that this was the case. Amongst the many issues in dispute between the parties, this was the most hotly disputed issue at the trial.

30.  Another issue of some importance is whether there was any agreed period of notice of termination.  The Amsterdam Note contains nothing concerning notice period. I will return to this issue in a later section in this Judgment.

31.  Following the Amsterdam meeting, three letters were issued to Mr Mahajan, all from HCL Bermuda, the intermediate holding company of HCL Hong Kong, and signed by Mr Baksi as “Executive Vice President Human Resources Development”.  The first is a letter dated 5 March 1999, the material parts of which provided as follows:

“This refers to our discussions and your subsequent meeting with Mr Nadar in Amsterdam on 24^th February 1999. I am confirming the following as discussed and agreed:-

i) … we require you to relocate to Hong Kong instead [of USA]. This is in view of changed circumstances/priorities of the company since we need to focus on the growth of North Asia in addition to overseeing the operations in Australia, New Zealand etc since we could not find a suitable replacement for you.

ii) You are being transferred to Hong Kong with effect from 1^st April 1999. You will be designated as Managing Director – North Asia and Australia/New Zealand based in Hong Kong …

iii)          Your revised compensation package while based in Hong Kong will be communicated to you separately …”

32.  Another letter, also dated 5 March 1999, is in the following terms:

“Dear Raj,

We are pleased to offer you the following terms of appointment as the Managing Director – North Asia and Australia / New Zealand with HCL Technologies (Hong Kong) Limited based in Hong Kong.

i) You will be entitled to a basic salary of US$25,000 per month. In addition you will be entitled to a variable bonus. This variable bonus will be as per the company’s incentive plan applicable to you from time to time. You will also be covered under the ESOP scheme of the company, which will be communicated to your separately.

ii) In addition to Hong Kong, you will be responsible for company’s businesses in Korea, Taiwan, China, Australia, New Zealand, Philippine and Fuji.

iii) Your above assignment will be for a period of 3 years.

iv) The Company shall cover you and your family under suitable medical/ hospitalization insurance. You will also be covered for life and personal accident insurance. The total cost to company on these benefits will be subject to a maximum of US$6,000 p.a.

v) The income tax on your remuneration will be borne by you.

vi) You will be paid an initial settling allowance of 10 days base salary.

vii) You will be entitled to 30 days annual leave, which can be availed on prorated basis. In addition, you will be entitled to medical and hospitalization leave.

viii) You will be governed by the rules and regulations of HCL Technologies (Hong Kong) Limited during your posting in Hong Kong.

Naturally, the above appointment is subject to you being granted the employment visa by the Hong Kong Emigration [sic] Department.

With best wishes [etc]”

33.  The third letter is dated 12 March 1999.  It stated as follows:

“Dear Raj,

This refers to your discussions with Mr. Nadar at Amsterdam on 24^th February 1999. I am pleased to confirm the revised terms of your appointment as the Managing Director-North Asia & Australia/New Zealand while based in Hong Kong.

i)	Place of posting:	Hong Kong
ii)	Effective date of posting:	1st March 1999
iii)	Responsible for:	Existing and future operations of HCL T in NAANZ
iv)	Basic Fixed salary per month:	US$25,000.00
v)	Variable salary/Bonus:	This is to be drawn from Hong Kong w.e.f. 01.03.99 till 30.06.2002 as per the incentive scheme enclosed. It is to be drawn in end June 1999 for March 99 – Jun 99 and thereafter on quarterly basis for convenience.
vi)	ESOP:	You will be entitled to the ESOP scheme.  It will be communicated to you shortly.
vii)	Accommodation in Hong Kong:	You will make your own arrangements for stay in Hong Kong at your expense.
viii)	Leave Entitlement:	You will be entitled to 30 days annual leave which can be availed on prorated basis.  In addition you will be entitled to medical and hospitalization leave.
ix)	Other Benefits:	You and your family will be entitled to the medical expenses and medical/hospitalization insurance. You will also be entitled for life/PA insurance.  The maximum limit per year with effect from 01.03.99 will be US$6,000 p.a.
x)	Travel Rules:	As per the travel policy communicated to you on 1st April 1998 and subsequent modifications agreed upon on 20th April 1998. For travel to Sydney; you can charge lodging charges per day at 1.25* daily rental of your rented house.  In addition you can charge car rental and other expenses as per the travel rules.

We appreciate your extra ordinary [sic] efforts and valuable contributions in commencing the Australian operations, growing it to the current level and positioning the company at a very respectable level in the market place during your stay in Australia.  We are sure that the business will grow in your Geo under your able guidance and leadership.

With best wishes [etc]”

34.  Attached to the 12 March 1999 letter is a schedule which substantially replicated the contents of the Amsterdam Note. However, there were some differences, the material ones are as follows:

34.1  UNDER THE HEADING “B) BASIS OF CALCULATION FOR July 99 to June 2000”, the column for commission percentage stated: “% Commission of total billing of Geo under you” – in other words, the words “irrespective of billing amount” in the corresponding part of the Amsterdam Note are missing.

34.2  UNDER THE HEADING “C)BASIS OF CALCULATION FOR July 2000 to June 2001”, the column for commission percentage again stated: “% Commission of total billing of Geo under you” – the words “up to” in the corresponding part of the Amsterdam Note (see column (3) under (B)(b) in the Amsterdam Note) are not there.

35.  There is no evidence that Mr Mahajan signed any employment contract with HCL Hong Kong.  However, on 9 March 1999, HCL Hong Kong wrote a letter to the Hong Kong Immigration Department applying for an employment visa for Mr Mahajan.  In this letter, HCL Hong Kong described Mr Mahajan as “Managing Director of our company viz HCL (Hong Kong) Limited” and “We plan to base Mr Mahajan in Hong Kong as the Managing Director of our company.”  There is no dispute that an employment visa was issued to Mr Mahajan shortly thereafter and he commenced his posting in Hong Kong (although physically he spent most of his time in Australia).

36.  Additionally, Mr Alan Leong SC (appearing with Mr Jenkin Suen) on behalf of Mr Mahajan pointed out that under the section “E) GENERAL” on page 3 of the schedule attached to the letter dated 12 March 1999, it was stated that:

“The percentage commission (bonus) basis can be changed by Mr Nadar any time based on company’s needs and my place of posting or change in responsibilities with the understanding that my earnings will not get negatively affected subject to my and company’s performance” (underlining added).

In other words, an exact reproduction of the corresponding parts in the Amsterdam Note without even changing “my earnings” into “your earnings”, etc, indicating that the schedule was intended to be a reproduction of the same terms as recorded in the Amsterdam Note. 

37.  Mr Leong also relied on Mr Mahajan’s unchallenged evidence that there had been no further negotiation between 24 February and 12 March 1999, so that the two March 1999 letters were intended to record formally the terms which had already been agreed in the Amsterdam Meeting and recorded in the Amsterdam Note without seeking to depart from those terms.

38.  On behalf of the Defendants, Mr Ashley Burns SC (appearing with Miss Janet Ho) argued that Mr Mahajan’s terms of employment were exclusively recorded in the (second) 5 March and 12 March 1999 letters. Furthermore, on a proper construction of the terms of those letters, Mr Mahajan was not entitled to any bonus unless he had reached the amounts stated in the schedule attached to the 12 March 1999 letter – these were “gates” or “targets” which Mr Mahajan must achieve in order to get any bonus.

39.  Naturally, both counsel deploy their admirable forensic skills with a view to bolstering their case and undermining their opponents’ case. It is unnecessary to rehearse all the arguments here. In my judgment, neither side’s case is entirely right. I accept, and so find, that Mr Mahajan did reach agreement with Mr Nadar on the terms recorded in the Amsterdam Note. These are plainly not just a record of matters discussed between the two. However, plainly the two men intended those terms would be formally recorded, and the letter dated 12 March 1999 was the formal letter setting out the agreed terms. The differences in wording between the Amsterdam Note and the 12 March 1999 letter do not, viewed objectively, indicate any intention to change the terms which had been agreed in Amsterdam. 

40.  In my judgment, reading the Amsterdam Note and the 12 March 1999 letters objectively, they are not inconsistent with each other.  In my view, both documents provided that Mr Mahajan was entitled to bonuses based on the actual amount of sales achievedunder the various categories calculated by reference to the applicable percentages. Neither document mentioned any minimum amount of bonus, or any “targets” or “gates” the achievement of which must be met before any bonus would be payable.

41.  I am fully conscious that in coming to that view, I am not accepting fully either side’s pleaded case on Mr Mahajan’s bonus entitlement.  However, in my judgment I am entitled to come to that conclusion, it being a question of construction of contract: see Mak Kang Hoi v Ho Yuk Wah (2007) 10 HKCFAR 552, paras 101-106. Indeed, it should be recorded that although I drew counsel’s attention to this authority, and expressly invited counsel to make submissions if they considered that this conclusion was not open to me, neither counsel accepted the invitation.

42.  In coming to that conclusion, I have also taken into account the following considerations.

43.  First, as Mr Burns pointed out in the course of cross-examination, Mr Mahajan is plainly a very careful person at least insofar as matters relating to his compensation package were concerned. The evidence shows that he had a habit of making contemporaneous notes or records of important matters discussed or agreed concerning his remuneration.  I do not find it credible that on such an important matter (to him) as his minimum bonus entitlement, he would have failed to record it in the Amsterdam Note or some other contemporaneous document, or raise queries about it when he received the 12 March 1999 letter.  I do not accept the reason he gave, namely, that Mr Nadar had asked him not to record that aspect of the agreement to avoid external directors knowing about his high compensation package: on his own case the Amsterdam Note was for Mr Nadar and Mr Baksi’s use only, and there was no reason why the alleged agreement could not be recorded in some side letter or even in his own personal notes.

44.  Secondly, I also agree with Mr Burns’ submissions that the alleged minimum bonus is inconsistent with subsequent letters and emails sent by Mr Mahajan to Mr Nadar. The following are some examples.

45.1  In his handwritten letter to Mr Nadar dated 31 December 2001, Mr Mahajan referred to a loan of US$200,000 (which loan was advanced to Mr Mahajan to reverse bonus drawings he had drawn up to May 2001) and asked to defer the repayment of the loan until 30 June 2002, stating that “My bonus for current FY (2001-2002) can be adjusted against the same and I will pay the balance in case of any shortfall” when, on his own case, there would not have been any shortfall. 

45.2  Similarly, in a handwritten letter to Mr Nadar dated 7 January 2002, Mr Mahajan did not suggest any minimum amount of bonus for the two previous financial years but instead stated that “I can draw the outstanding bonus of US$424,871 applicable for FY 1999-2000 and FY 2001-2201 from HCLT Hongkong during January 2003” when the sum of US$424,871 included US$50,000 bonus for Japan for 2000-2001, so that the contractual bonus was only US$374,871 (US$214,374 for 1999-2000 and US$160,497 for 2000-2001).

45.3  In a letter dated 12 September 2002 to Mr Nadar, Mr Mahajan again stated that “I have earned bonus of US$214,374 in 1999-00 and US$160,497 in 2000-01 (excluding Japan bonus of US$50,000 approved by you for 2000-2001.)” He then referred to his bonus for 2001-2002 and mentioned that “When finalizing my new package during Amsterdam meeting on 24/02/99, my minimum bonus amount was assumed to be US$200K per annum based on my tax free package of US$392,469 effective since 1 July 98” (underlining added). This statement is plainly inconsistent with any agreed minimum bonus, and Mr Mahajan was not able to provide any credible explanation of his choice of the word “assumed”.  Further, in this letter, he did not assert that for the years 1999-2000 and 2001-2002 he was entitled to any minimum bonus.

45.  Thirdly, Mr Mahajan’s case is inconsistent with the way Mr Mahajan had claimed his bonus. The evidence shows that he used to collect his bonus from time to time on the basis of the actual amount of sales achieved. Mr Mahajan was unable to give any reason as to why, if he had thought that he was entitled to a minimum bonus of US$200,000 per year, he did not draw that minimum amount in equal monthly or other periodic instalments (it will be remembered that the 12 March 1999 letter provided that his bonus was to be paid quarterly).

46.  At the same time, there is no dispute that Mr Mahajan did not reach the “base targets” or “gates” for any of the years in question. There are many documents in the hearing bundles which set out the amount of bonus to which Mr Mahajan was entitled for the 2001 to 2003 financial years.  One of these documents is the letter from Mr Mahajan to Mr Nadar dated 31 December 2001 referred to above, in which Mr Mahajan asked Mr Nadar to remit his bonuses for 1999-2000 (in the sum of US$214,374), 2000-2001 (in the sum of US$160,497) and US$50,000 for Japan, to a bank account held in Hong Kong. There can be no doubt that Mr Nadar knew full well that Mr Mahajan had been claiming entitlement to these bonuses even though he had not achieved the alleged “gates” sales.  If Mr Mahajan were not entitled to any bonus without achieving the base targets, it is most surprising that he was nevertheless allowed to claim bonus payments without question up to the termination of his employment in February 2004.

47.  In order to explain this anomaly, the Defendants called Mr Walia, who was responsible for finance matters under Mr Mahajan, to give evidence to the effect that everything was done in accordance with Mr Mahajan’s instructions, and that the emails and correspondence sent by him to HCL India corporate HR concerning Mr Mahajan’s pay and bonus were all dictated by him. As I understand his evidence, Mr Walia did not suggest that Mr Mahajan had tried to hide any relevant financial information from HCL India. In any case, Mr Walia cannot explain the letter to Mr Nadar dated 31 December 2001.

48.  I do not accept Mr Walia’s evidence, which is inconsistent with the contemporaneous documents. The following instances are illuminating.

49.1  For the financial year 1999 to 2000, Mr Mahajan had drawn US$167,443 in bonus in respect of sales of US$11,884,590 (excluding revenues from Japan). These were reversed and Mr Mahajan received a corporate loan of US$200,000 instead, which I have already mentioned above. These figures are found in Bonus Tables prepared by Mr Walia contemporaneously, and he accepted the accuracy of these figures in his evidence.  In other words, if the Defendants’ position were correct, Mr Mahajan would not have been entitled to any bonus and had been drawing purported bonuses wrongfully.  Yet, while his bonus drawings had to be reversed – apparently for tax purposes and not because he had been found to be wrong for drawing the bonus – he was given a larger sum by way of an interest free loan. In an email to Mr Anil Chanana dated 5 September 2000, Mr Walia reported to him on the reversal of the bonus withdrawn by Mr Mahajan and the US$200,000 loan and stated unequivocally that: “Just to let you know that the bonus payable to Mr Mahajan for the period Jul 99 to June 00 is US$214,374.” Mr Walia then repeated the same information to Mr Baksi in an email dated 8 September 2000.  Mr Walia was not able to give any convincing answer as to why he would so report to Mr Baksi and Mr Chanana, at a time when there was no dispute in sight.

49.2  In June 2002, Mr Nadar requested from Mr Baksi a comparative statement of compensation of all Corporate Officers (ie including Mr Mahajan) over the past 5 years.  Mr Baksi then asked Mr Dalbir Singh, a Manager in the Corporate Human Resources office of HCL India, for the details.  Mr Singh in turn asked Mr Walia for such details concerning Mr Mahajan.  In an email 11 June 2002, Mr Walia sent Mr Mahajan’s remuneration details to Mr Singh, stating that “As discussed, I could not show these figures to Mr Mahajan as he is travelling to Singapore and HK.”  The details sent by Mr Walia to Mr Singh stated that Mr Mahajan’s variable bonus for 1999-2000 was US$214,374 with a notation: “Bonus for 99-00 not drawn. Interest free loan of $200K against his bonus.”  In relation to 2000-2001, the amount of variable bonus payable was stated to be US$210,497, which was “Including Japan Bonus of $50K – Bonus not yet drawn” – ie US$160,497 net.  Upon receiving this information, Mr Singh asked Mr Walia to clarify whether any loan had in fact been made to Mr Mahajan (no doubt because of the reference to the US$200,000 loan) and Mr Walia replied to Mr Singh on 13 June 2002 that: “There is no loan. However, pl refer to comment under 1999-00 bonus regarding advance of $200K against bonus of 214K.” Again, all these correspondence took place at a time when there was no dispute in sight. Although Mr Walia in his oral evidence tried to downplay the significance of the correspondence by claiming that Mr Mahajan had in fact been shown the figures before they were supplied to Mr Singh, which suggestion Mr Mahajan denied, I do not accept Mr Walia’s evidence as I cannot see any reason why Walia should have, in effect, lied to the corporate office in India.

49.3  The same exercise was repeated the following year.  In June 2003, one Ms Mona Dutta of Corporate Human Resources department of HCL India again asked Mr Walia to supply the remuneration details of Mr Mahajan for the past 5 years.  In an email to her dated 12 June 2003, copied to Mr Shantanu Dhar of HCL India, Mr Walia stated that “Mr Mahajan’s … salary detail is already available with Corporate HR” and attached his email correspondence with Mr Dalbir Singh in June 2002 which Mr Walia said was “self-explanatory”. Again, Mr Walia was not able to provide any answer, let alone a convincing one, as to why he not only failed to correct the alleged erroneous data given to Mr Singh in June 2002 but further compounded that error by repeating it to Ms Dutta a year later.

49.  Fourth, I am unable to accept the evidence of Mr Anil Chanana, HCL India’s current Chief Financial Officer who was Corporate Vice-President, Finance from 1996 to 2004, to the effect that he had been told by Mr Nadar shortly after the Amsterdam meeting that Mr Mahajan’s bonus entitlement was subject to “base billing targets”.  Mr Chanana, however, was at pains to point out in his testimony that he had not read the Amsterdam Note, and was only told about what (allegedly) had been relayed to him by Mr Nadar. The objective facts are inconsistent with Mr Chanana’s hearsay evidence, and I do not accept his evidence.

50.  Mr Nadar did not give oral evidence. Towards the end of the trial, Mr Burns applied to adduce Mr Nadar’s witness statement as hearsay evidence. Mr Leong, understandably, strongly objected to the application. Counsel, however, sensibly agreed that I should rule on the application in my Judgment. I need not rehearse the arguments advanced by either side. I would have no hesitation in rejecting the application if there had been any hint of a tactical manoeuvre designed to spring any surprise on Mr Mahajan. However, I think it must have been fairly obvious to Mr Leong from the procedural history of this action that Mr Nadar would not be giving oral evidence.  The witness statement is admissible as hearsay evidence, and Mr Nadar being beyond the seas I would exercise my discretion to admit it. However, having admitted it, I am not prepared to place any weight on it insofar as it contradicts Mr Mahajan’s evidence or is inconsistent with contemporaneous documents.  In my view, plainly Mr Nadar is able to give evidence if he had minded to do so, and it would be wrong to attach any weight to his unsworn and untested evidence.

51.  Before leaving this issue, I should record that Mr Leong placed considerable reliance on an argument that throughout Mr Mahajan’s employment history with HCL Group, whenever he received a new posting his net of tax remuneration package would increase.  In particular, he contended that he had been receiving minimum bonuses since 1995.  I am unable to accept that argument.  First, I do not think the evidence supports the assertion that the bonuses received by Mr Mahajan were “guaranteed” minimum bonuses. Secondly, whilst it is probably correct that the total value of the compensation received by Mr Mahajan had been increasing since 1995, the fact is that for the Hong Kong posting Mr Mahajan was expected to receive a higher fixed salary than for previous years, and in addition he would be entitled to a variable bonus which depended on his performance.  Furthermore, under the March 1999 package Mr Mahajan was to receive share options to be given by HCL India following its expected listing, which in fact materialised. Indeed, it was put to Mr Mahajan in cross-examination, and he has not denied the suggestion, that he had made some US$2 million in profits from exercising his share options. Thus even if the contractual remuneration Mr Mahajan expected to receive might be potentially less than the total remuneration he had received up to 1999, the prospects of material benefits from his share options provided an objective reason for him to agree to the package.

Who was Mr Mahajan’s Employer?

52.  I turn next to the question of Mr Mahajan’s employer.  As stated above, there is no dispute that HCL Hong Kong was Mr Mahajan’s employer. The issue is whether HCL India and Mr Nadar, or either one of the two, is also Mr Mahajan’s employer.

53.  I think the claim that Mr Nadar is an employer of Mr Mahajan can be disposed of relatively quickly. In my judgment, Mr Mahajan has not proved that Mr Nadar was his employer, whether in addition to HCL Hong Kong or otherwise.  In my view, the evidence reveals no more than Mr Nadar representing an entity within HCL Group, or an entity to be incorporated under the HCL Group umbrella, in his dealings with Mr Mahajan. It makes no sense to suggest that in a modern day multi-national business, the chairperson is personally employing someone to work in the corporate group. The claim against Mr Nadar as employer therefore fails.

54.  As to whether HCL India was an employer of Mr Mahajan, the answer is less straight forward. 

55.  Clearly HCL India was the nucleus of the HCL Group and its officers were in overall management and supervision of its subsidiaries. There is nothing unusual about that in a modern multi-national business group. It was therefore not surprising that important corporate decisions were made in India and then implemented through the relevant subsidiaries.

56.  At the same time, Mr Mahajan was, and was held out to the public as, a Corporate Officer of HCL India.  Also, the letters dated 5 March and 12 March 1999 were issued by HCL Bermuda, not HCL Hong Kong.

57.  None of these factors is, in my view, determinative. What in my judgment is critical is that during the course of Mr Mahajan’s employment within the HCL Group, he was always “attached” to a subsidiary, usually with an employment letter issued by the subsidiary. It was invariably that subsidiary which had applied for working permissions for Mr Mahajan when required. Furthermore, Mr Mahajan’s remuneration was paid by those subsidiaries in accordance with the local laws applicable, including employment laws and revenue laws. This fact is reinforced in the 5 March 1999 letter, which offered him employment “with HCL Technologies (Hong Kong) Limited based in Hong Kong”, and expressly stated that “You will be governed by the rules and regulations of [HCL Hong Kong] during your posting in Hong Kong.” This is in my view significant because it shows, objectively, that Mr Mahajan’s employment was anchored at a particular place and was subject to the applicable local laws.

58.  In this connection, it may be worth pointing out that Mr Mahajan accepts in his own pleading that his employment was governed by Hong Kong law: see Re-Amended Statement of Claim paras 11(d), 40, 45, 46,47, 49-52. It is difficult to see how HCL India could have employed Mr Mahajan on the basis of Hong Kong law. In the circumstances, it seems to me to be rather odd to suggest that HCL India was an employer of Mr Mahajan. For example, was he employed by HCL India under Indian law, co-existent with or in addition to his employment with HCL Hong Kong under Hong Kong law?  Mr Leong was not able to provide any convincing answer.

59.  Mr Leong relied heavily on the Court of Appeal’s judgment in an interlocutory appeal in this action, when the Court of Appeal allowed an appeal against a decision to strike out Mr Mahajan’s claim that HCL India and/or Mr Nadar was/were his employers. Mr Leong emphasised that the Court of Appeal did not find any in principle objection to Mr Mahajan having more than one employer. In my view, all that the Court of Appeal had decided was that it was arguable that HCL India and Mr Nadar could be Mr Mahajan’s employers.  I do not think, and Mr Leong has not suggested, that the Court of Appeal’s judgment could be taken further than that.

60.  Accordingly, in my judgment, Mr Mahajan was employed by HCL Hong Kong alone.

Bonuses for 1999 to 2002

61.  For the reasons set out above, I find Mr Mahajan was entitled to be paid bonuses based on the actual billing achieved by NAANZ for the years 1999-2000, 2000-2001 and 2001-2002. There is no dispute between the parties as to these in terms of mathematical calculation, and are as follows before any deductions:

61.1  For 1 July 1999 – 30 June 2000: US$214,374;

61.2  For 1 July 2000 – 30 June 2001: US$160,497;

61.3  For 1 July 2001 – 30 June 2002: US$113,767.

Bonus after 1 July 2002

62.  Neither the Amsterdam Note nor the 12 March 1999 letter contained any express provision as to what bonus, if any, was to be payable to Mr Mahajan after July 2002. Both documents only mentioned the formula for calculation of bonus up to June 2002. Mr Burns therefore argued that no bonus was payable as a matter of contractual entitlement.

63.  I do not accept that argument.  It is plain that Mr Mahajan continued to be employed by HCL Hong Kong after June 2002. Moreover, from Mr Mahajan’s employment history, it is reasonably clear that he was always entitled to a performance (sales) based variable bonus. It could not have been the intention of the parties that Mr Mahajan would only be entitled to his basic salary of US$25,000 per month after 2002 without any bonus.

64.  I agree with Mr Leong’s argument that the contract of employment continued after June 2002, but the parties anticipated that the bonus computation would have to be agreed, in light of business and circumstances closer to time: in Mr Mahajan’s own words, when he discussed his remuneration package with Mr Nadar in February 1999, matters beyond June 2002 were “too distant in the future”. That way of looking at the matter is, in my view, far more realistic and reasonable.

65.  That said, Mr Leong did not explore the matter further and did not advance any argument as to how Mr Mahajan’s bonus beyond July 2002 should be determined. In both his opening and closing submissions, Mr Leong only relied on his primary case that Mr Mahajan was entitled to an agreed minimum package of US$500,000. I have already rejected Mr Mahajan’s case in that regard. Mr Leong has not advanced any fall back case.

66.  Nevertheless, the Defendants have very helpfully (although I may add after considerable persuasion from the Court) provided the likely bonus figures for July 2002 to June 2003 and July 2003 to February 2004 calculated on two bases: first, on the basis that the base billing values would have “followed the trend” of the previous 3 years and increased by 40% over the figures for 2001-2002; and secondly without the 40% increase. The total bonus figure on the first (40% increase) basis for the two periods are US$88,508.64 and US$39,417.58 respectively, whereas the figures calculated on the second (no 40% increase) basis are US$$123,912.10 and US$77,258.46.

67.  It is noted that in the Amsterdam Note, under section (B)(b), there is an express reference to bonus for years subsequent to June 2000, in these terms: “The base billing values will be increased by 40% from the preceding year in every year to earn the same total amounts from F/Y 2000–2001 onwards. For example, the calculation of [bonus] for F/Y 2000-2001 will be as under …”.  This statement was omitted from the schedule to the 12 March 1999 letter, although the schedule did apply the 40% increase formula for 2001-2002.  It seems to me that in the absence of contrary evidence, it would be fair to apply the same formula for the years subsequent to 2001–2002, but discount the amount calculated on that basis by a reasonable margin to account for the uncertainty.

68.  On that basis, doing the best I can, I assess Mr Mahajan’s bonus entitlements from July 2003 to February 2004 at US$90,000, which is roughly 70% of the first set of figures based on 2002 percentages with 40% increase.

Deductions

69.  From the above sums, Mr Mahajan must give credit for the US$200,000 and US$225,000 he has in fact received on account of his bonus for the years 1999-2000 and 2000-2001.

70.  Mr Mahajan advanced an argument that the loans are time-barred, and in any case HCL Holdings is not a party to this action. In my view, no limitation argument arises. Mr Mahajan simply cannot have his cake and eat it. Because he had received these sums on account of his bonus payments, there is no reason why he could enjoy a windfall by claiming the entire sum of bonus he was to receive for those years without giving credit for the loans. Even Mr Mahajan himself regarded the US$200,000 “loan” represented in substance his bonus for the 1999-2000 financial year: see his email to Mr Baksi and Mr Walia dated 8 January 2001. To allow him full recovery of the bonuses and to keep the loans would over-compensate him, and wrong in principle.

Bonus for Japan

71.  Mr Mahajan claims bonuses arising from business derived from Japan, which was originally not a Geo under his care.  Mr Burns again argued that no such bonus was payable as a matter of contractual entitlement.

72.  In my view, the matter has to be looked at realistically. It is not disputed, and I do so find, that in about July 1999, Mr Nadar instructed Mr Mahajan to look after or promote the business in Japan in addition to the other Geos under his responsibility. Mr Mahajan did spend time and energy in promoting the business in Japan, until about December 2000, apparently with success.  In other words, for about 18 months Mr Mahajan did in fact worked on Japan, which inevitably would mean that he would have less time and energy for NAANZ.

73.  Contrary to Mr Burns’ submissions, Mr Mahajan’s claim for Japan bonus was in fact raised and acknowledged in a number of contemporaneous documents. I will refer to the following examples.

73.1  In an email dated 8 January 2001 to Mr Baksi and copied to Mr Walia, Mr Mahajan proposed 3 options for calculating his bonus for Japan. 

73.2  In an email to Mr Baksi dated 1 August 2001, copied to various persons including Mr Nadar himself, Mr Mahajan referred to a conversation with Mr Baksi in Noida on 6 March 2001 in which “you had confirmed that my Japan bonus was approved by Mr Nadar in principle and you were to get back to me on which option (out of the possible three options) I should claim the Japan bonus.”

73.3  In the 31 December 2001 letter to Mr Nadar, the requested remittance of US$424,871 included US$50,000 “Japan bonus”. The same request was repeated a number of times, including an email to Mr Nadar date 4 August 2003.

73.4  There is also the 12 September 2002 letter to Mr Nadar, in which Mr Mahajan stated that Mr Nadar had approved US$50,000 bonus for Japan for 2000-2001.

73.5  There is no suggestion that Mr Nadar or Mr Baksi disputed these statements.

73.6  As already mentioned above, the US$50,000 Japan bonus for 2000-2001 was included in the Bonus Tables prepared by Mr Walia and that sum was included in the remuneration package details communicated to Corporate HR of HCL India in June 2002 and June 2003.

74.  It is thus reasonably clear that Mr Nadar had agreed – objectively on behalf of HCL Hong Kong – to pay Mr Mahajan appropriate bonuses for Japan, but the exact amount had not been agreed.

75.  Mr Mahajan’s claim is for more than US$50,000: he claims that he should be entitled to more because he had been in charge of Japan for some 18 months, from July 1999 until December 2000. The 3 options Mr Mahajan put forward between about March and August 2001 were: (1) bonus calculated on the basis of revenue for both financial years on whole year basis; (2) bonus only for the year 2000-2001 (although the figure claimed for this year is higher than the figure for the same year under option 1 and it is unclear how the difference arose) and (3) bonus based on actual time when Japan was under Mr Mahajan, ie from July 1999 to December 2000. In his closing submissions, Mr Leong submitted that option 3 is the fairest basis. Mr Burns has not suggested any basis to assess the Japan bonus.

76.  According to the email dated 1 August 2001, the figures put forward were prepared by Mr Walia based on audited revenue for the financial years 1999-2000 and 2000-2001.  Under Option 3, the amount of bonus calculated, based on the “Amsterdam” formula, was US$103,300 for 1999 to 2000 and US$43,760 for July to December 2000. There is no challenge to these figures.

77.  In my view, option 3 is a reasonable and fair way of assessing Mr Mahajan’s Japan bonus which I accept. I also accept the calculation contained in the 1 August 2001 email and so find for Mr Mahajan.

Other bonus claims

78.  Additionally, Mr Mahajan claims bonus in respect of billings arising from a number of clients/projects.  These include:

78.1  Redington Private Ltd for June 1999 to July 2000;

78.2  Esco Audio Visual Pte Ltd for July 2000 to June 2001; and

78.3  St George Bank for July 2001 to June 2002.

79.  I can deal with these relatively quickly.  Mr Mahajan did not advance any claim for bonus arising from these billings prior to this action.  It was, in fact, his own evidence that he had instructed Mr Walia to exclude these billings when calculating his bonuses at the material times.  The reason was that these were not businesses done by the NAANZ Geo under Mr Mahajan, and the billings were invoiced through HCL Hong Kong for administrative and other reasons.  These claims therefore fail.

80.  There is also a claim for billings in “multiple Geos”.  No particulars have been given and the relief sought is for assessment of damages.  It was made clear to Mr Leong during his opening that since there was no order for split trial of liability and damages, all damages claims must be assessed at the trial.  Whilst Mr Leong acknowledged that point, no evidence was adduced to support this claim.  This claim is therefore dismissed.

81.  Another aspect of Mr. Mahajan’s claim is for loss of an opportunity to achieve higher bonuses.  The claim is brought on the basis of an implied term in his employment contract to the effect that his employer (which I find to be HCL Hong Kong) was obligated to provide Mr Mahajan with sale and support staff and resources proportionate to increased budgets for each year, to enable him to promote more business. It is said that since the obligation was not honoured, Mr Mahajan was deprived of an opportunity to earn more bonuses than he had in fact been able to achieve.

82.  Again, this claim can be dealt with very quickly.  There is no such term in the employment letter dated 12 March 1999. Nor is there anything in the letter dated 12 March 1999 or the Amsterdam Note imposing such an obligation.  There was a simple statement in the Amsterdam Note which stated “Acquisition of Co in Australia upto US$10-12m”. That simple and ambiguous statement is in my view no more than a statement of intention and far too vague to be enforceable. In my view no binding contractual obligation could be implied. There is simply no basis for this claim.

Notice of termination

83.  Mr Mahajan was dismissed with immediate effect on 6 February 2004 upon HCL Hong Kong agreeing to pay him 3 months’ base salary in lieu of notice. No payment has actually been made, but nothing turns on this.

84.  Mr Mahajan claims that his dismissal was wrongful because he had agreed with Mr Nadar when they met in Amsterdam on 23 February 1999 that the notice period would be 1 year. The Defendants disagreed with that assertion.

85.  It is noteworthy that no notice period is stated in the Amsterdam Note or the 12 March 1999 letter. Mr Mahajan’s evidence is that after the conclusion of the meeting in the hotel in Amsterdam, and after he had prepared and given copies of the Amsterdam Note to Mr Nadar, the two of them went for shopping.  In the course of that shopping trip, Mr Nadar asked Mr Mahajan how much notice he (Mr Mahajan) would have given if he were to leave HCL.  Mr Mahajan replied at least 1 year, which was accepted by Mr Nadar.  He said that the conversation took place when the two were in a “sentimental mood” and the talk was “moral” and “spiritual”. I would also observe that Mr Mahajan was noticeably less certain and more uncomfortable during this part of his cross-examination.

86.  It is, however, evident from Mr Mahajan’s own evidence that he regarded the terms of his employment as recorded in the Amsterdam Note to be complete. It was only after the conclusion of the discussion about his employment package that he and Mr Nadar went shopping. On Mr Mahajan’s own evidence, the talk was in the nature of a casual talk between the two during a “after work” shopping trip.

87.  I do not accept that there was intention to create a contractually binding agreement on the matter. The lack of any contractual intention is corroborated by the fact that no such term found its way into the Amsterdam Note (even by way of a post-script or a personal note by Mr Mahajan) or the 12 March 1999 letter. Mr Mahajan did not raise any issue about the lack of any reference to the notice period – and a 1 year notice period must be considered unusual – when he received the 12 March 1999 letter. Furthermore, there is no written record of or reference to it until early 2004 when relationship between Mr Mahajan and Mr Nadar became strained. And when Mr Mahajan raised this point with Mr Nadar in a recorded conversation in early 2004, Mr Nadar’s response was that he could not remember having agreed to 1 year’s notice period, and he did not think he did.

88.  Thus Mr Mahajan’s claim that the applicable notice period was 1 year is rejected. Two consequences follow from this conclusion:

88.1  First, there is no question of any Long Service Payment payable to Mr Mahajan, because his employment was terminated on 6 February 2004, less than 5 years from the date he was employed by HCL Hong Kong. Counsel have not referred me to any authority to suggest that anything arises from the fact that Mr Mahajan was dismissed less than 1 month to the 5^th anniversary of his employment with HCL Hong Kong.

88.2  Secondly, since Mr Mahajan’s employment was lawfully terminated on 6 February 2004, he was not entitled to exercise any share option exercisable after that date.

88.3  These two claims are accordingly dismissed.

89.  But that is not the end of the matter on termination. The Defendants contend that despite having offered to pay Mr Mahajan 3 months’ salary, which had not been paid, as a matter of law only 1 month’s salary was payable pursuant to section 7 of the Employment Ordinance. This is put on the basis that Mr Mahajan’s contract of employment was for a term of 3 years, and upon expiry of the 3 years on 30 June 2002 Mr Mahajan’s employment became a monthly contract renewable from month to month, which required only 1 month’s notice of termination.

90.  I reject that argument. First, in my view the employment contract was not for a fixed term of 3 years. There is no term stated in the 12 March 1999 letter or, for that matter, the Amsterdam Note. Secondly, HCL Hong Kong considered 3 months to be the appropriate notice period. That is a reasonable assessment given Mr Mahajan’s position and responsibilities. I do not see why HCL Hong Kong should be allowed to blow hot and cold on this issue. I also take into account the fact that in the previous employment contract with HCL Hong Kong Ltd dated April 1996, the notice period was 3 months.  This provides a good indicator of a reasonable notice period.

91.  There is no dispute that Mr Mahajan had not been paid the 3 months’ fixed salary.  Thus he is entitled to US$75,000 in lieu of notice.

Other Claims

92.  Additionally, Mr Mahajan makes a number of what I may call miscellaneous claims. First, there is a claim for outstanding fixed salary from 1 February to 6 February 2004, in the sum of US$5,172.41. Secondly, Mr Mahajan claims payment in lieu of accrued annual leave of 59.5 days, amounting to US$49,583.33.  Thirdly, there is a claim for unclaimed expenses in January and February 2004, in the sum of US$7,065.

93.  The Defendants do not dispute these claims.

Did Mr Nadar incur any personal liability to Mr Mahajan in relation to his bonus entitlement?

94.  Mr Mahajan relied on two alleged oral agreements he had reached with Mr Nadar concerning the payment of his bonus. These were referred to as “1^st Oral Agreement” and “2^nd Oral Agreement” in the course of the trial.

95.  The 1^st Oral Agreement was, according to Mr Mahajan, reached on 30 December 2001. The substance of the agreement was, according to Mr Mahajan, recorded in his letter to Mr Nadar dated 31 December 2001. I have already referred to the content of this letter when considering the bonus issue. 

96.  The 2^nd Oral Agreement was allegedly made about a week later, on 7 January 2002.  The substance of this agreement was, accordingly to Mr Mahajan, recorded in his letter to Mr Nadar on the same date.  This is said to be a “continuation of my note dated 31/12/2001 given to you”, and referred (amongst other things) to a proposed loan of US$225,000 from Mr Nadar’s holding company, HCL Holdings.

97.  It seems to me quite plain that insofar as Mr Nadar incurred any personal liability to Mr Mahajan, these had been fulfilled.  In relation to the 1^st Oral Agreement, I cannot discern any personal liability on Mr Nadar’s part to pay Mr Mahajan’s bonus.  All that was agreed was the amount of bonus that Mr Mahajan was entitled to, without any indication that Mr Nadar had assumed any personally liability to pay them.  Under the 2^nd Oral Agreement, Mr Nadar might well have assumed personal liability in relation to arranging the US$225,000 loan from his own holding company, but that obligation (if any) had been discharged because Mr Mahajan did in fact receive the money from HCL Holdings.

98.  Accordingly, in my judgment, Mr Mahajan’s claim against Mr Nadar under the 1^st and 2^nd Oral Agreements fails.

Counterclaim and set-off

99.  For the reasons already explained above, it is unnecessary to address the Counterclaim based on set-off of the two “loans/advances” of US$425,000.

100.  On the pleadings, there is also a Counterclaim for Mandatory Provident Fund payments for HK$38,000.  This is not pursued at trial.

Decision

101.  To summarise, Mr Mahajan succeeds on the following claims:

96.1  Outstanding bonus in the sum of US$153,638 (US$488,638 – US$425,000 + US$90,000).

96.2  Bonus for Japan: US$147,060.

96.3  3 months’ salary in lieu of notice: US$75,000.

96.4  Miscellaneous claims: US$61,820.

102.  Interest will be payable on the aforesaid sums, from the dates the sums were due.  Neither side has addressed me on the rate of interest.  In my view, Mr Mahajan probably does not fall within the category of plaintiffs for whom the usual commercial rate (P+1%) would be appropriate.  I propose to order, on a nisi basis, that interest be paid at 2% above the applicable US$ prime rate(s).

103.  All Mr Mahajan’s other claims and the Counterclaims are dismissed.

104.  I also make a costs order nisi that Mr Mahajan will have his costs of the action against the 1^st Defendant, to be taxed if not agreed.  The 2^nd and 3^rd Defendants will have their costs, to be taxed if not agreed, also on a nisi basis.

105.  I will leave it to the parties to agree a final order to be made by the Court, which should address interest and costs.  If no agreement could be reached the parties should inform me so that directions could be given for finalising the order.

HCA 1510/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1510 OF 2004

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BETWEEN

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HCA 954/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 954 OF 2005

____________

BETWEEN

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D E C I S I O N

_____________

1.  This is an application by the defendants for leave to appeal against my dismissal of their application for the evidence of the 3rd defendant to be taken via video conferencing facilities or video link from India or elsewhere in the world. My dismissal was made on 15 September 2010 and the application for leave to appeal was intimated late yesterday afternoon and formally filed this morning. I grant extension of time for the application to be made.

2.  Section 14AA of the High Court Ordinance, Cap.4, provides that I should not grant leave unless there is a reasonable prospect of success of the appeal or there is some other reason in the interests of justice why the appeal should be heard.  I am satisfied that the second limb is not applicable and my task is to assess whether the appeal has a reasonable prospect of success.

3.  The application by the defendants was based on two grounds, namely the 3rd defendant could not come here to attend the trial because he had to attend several meetings of his various companies during the trial days and the law of India requires his physical presence at those meetings, and secondly, his health is not in a condition which would allow him to come here to give evidence in a court of Hong Kong.

4.  In my decision, I disagreed with the view of the law of India as proffered by a solicitor of the defendants, because the article she referred to and relied on did not have the name of the publication, name of the publisher and the date of publication.  The article itself referred to some liberalising measures proposed by the Indian Government in April 2002. However, the article was silent on what happened to those proposals.  There was no indication whether they had been adopted or rejected or some modified versions were adopted.  This application was dealt with in September 2010 and the article does not therefore appear to be up to date.  I therefore did not rely on it.

5.  There was also the evidence produced by the plaintiff showing that the annual reports of some of the companies run by the 3rd defendant indeed showed that meetings had been conducted when not all directors were physically present and there were some directors including the 3rd defendant taking part in the meetings via video conferencing or teleconferencing facilities.

6.  There was also no evidence showing what effort had been made to avoid the conflict of the days of the meetings with the trial dates when the trial dates were fixed some 9 months ago.

7.  On these three grounds, I was not satisfied that the meetings were a sufficient reason for the 3rd defendant not to come to this court to give evidence but to give evidence via conferencing facilities.  I did say that the defendant should come here to take part in the trial and, if need be, he could attend those meetings via video conferencing facilities.

8.  The other ground relied on by the defendants is that the 3rd defendant's health is not good enough for him to come here.  There are two medical reports, one short and one long, produced in support of that proposition.  One medical condition was a heart problem which the 3rd defendant has had since 1993.  I was not satisfied that that was a problem which would make it problematic for him to travel to this court from India because this was a long-standing problem and he has had it since 1993.  He had been travelling around the world since then to monitor his business empire which has a presence in very many countries, employing tens of thousands of employees of over 70 nationalities.

9.  The next health condition was an operation of angioplasty, which was undertaken in May this year.  But again, that is not something that is problematic enough to afford him the special treatment of giving evidence via video link facilities.

10.  The third reason was that he was discovered to have a new illness of diabetes.  But again, it was an illness at the early stage only, and this is a prevalent illness and people suffering from it are travelling frequently.  I did not suppose it would be a problem for him to come here from Delhi, and I suppose he would be flying by first class if he should take the journey.  So I did not think that his medical condition was a problem of sufficient scale to warrant the privileged treatment of giving evidence via video link.

11.  I have perused the grounds of appeal and I do not think these grounds show that there is a reasonable prospect of success of the appeal. 

12.  There is no particular given on where I have erred in relation to my observation on the article on company law. 

13.  There is also a ground of appeal saying that the question of convenience is an important consideration.  However, I think mere convenience is not sufficient.  The 3rd defendant may feel that it is more convenient for him to stay at home to give evidence with or without any schedule of meetings because flying from India to Hong Kong is indeed a journey which would take 5 ½ hours, and if mere convenience is the guide, perhaps this flight would already make it more convenient for him to give evidence from home by video conferencing facilities.  So I do not think mere convenience would be enough.

14.  On his medical conditions, again, I do not think the grounds of appeal has disclosed any reason to show that the appeal has a reasonable prospect of success.

15.  For these reasons, I dismiss this application with costs, and I order that these costs be summarily assessed on the same occasion as for the costs already ordered in the application itself.  I further certify this matter fit for one counsel.

Mr William Wong, instructed by S H Leung & Co., for the Plaintiff

Mr Jonathan Chang, instructed by Messrs Deacons, for the 1st, 2nd and 3rd Defendants

HCA 1510/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1510 OF 2004

____________

________________

HCA 954/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 954 OF 2005

____________

______________

(Consolidated by Order of Master Ko dated the 9^th day of January 2009)

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D E C I S I O N

______________

1.  There are two applications by the three defendants. The first one was made on 22 July 2010 for security for costs. The trial of this action is scheduled to commence on 18 October 2010 and to last for eight days. The second one was made on 27 August 2010 for leave to have the evidence of the 3rd defendant and another defence witness to be taken by a videoconferencing system or a live video link from India or elsewhere abroad and for that part of the trial to be conducted in the Technology Court. The application in relation to the evidence of the other defence witness was abandoned at the hearing. It is now restricted to the evidence of the 3rd defendant only. The plaintiff opposes both applications.

Application for security for costs

2.  The application is based on O. 23 r. 1(1) (a) and (c) of the Rules of the High Court.

3.  O. 23 r. 1(1) (a), (c) and (2) provide:

“(1) Where, on the application of a defendant to an action or other proceeding in the Court of First Instance, it appears to the Court-

(a) that the plaintiff is ordinarily resident out of the jurisdiction or

(c) subject to paragraph (2), that the plaintiff’s address is not stated in the writ or other originating process or is incorrectly stated therein.

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

(2) The Court shall not require a plaintiff to give security by reason only of paragraph (1) (c) if he satisfies the Court that the failure to state his address or the mis-statement thereof was made innocently and without intention to deceive.”

The defendants’ case on security

4.  The defendants’ primarily rely on rule 1(1) (a) that the plaintiff is ordinarily resident out of the jurisdiction.  The burden is on the defendants to prove this.  The defendants filed an affidavit by a Ms Ng, a solicitor of the defendants’ solicitors to support this application.  She said the plaintiff is a citizen of Australia and not ordinarily resident in Hong Kong.  She relied on a number of documents. 

5.  The 1st document is the plaintiff’s résumé attached to an e-mail dated 25 June 1998 which stated that he was a permanent resident of Australia.  This document was disclosed by the plaintiff in these proceedings in a list of documents dated 30 December 2004. 

6.  The 2nd document is a report dated 22 June 2010 by an Australian investigator engaged by the defendants who said that the plaintiff and his wife were enrolled as electors and residing at 66 Willowie Road, Castle Cove, New South Wales on the records of the Australian Electoral Commission. 

7.  The 3rd document is a copy of an Indian Passport of the plaintiff issued in Sydney, Australia on 28 October 1999.  This passport was retrieved by the 1st defendant from its records.  This was probably given by the plaintiff to the 1st defendant when he was in the 1st defendant’s employ. 

8.  The next document is a copy Australian passport of the plaintiff’s wife dated 27 September 1994 which stated that she was an Australian.

9.  The 5th document is a title search dated 20 June 2010 showing that the plaintiff’s wife is the registered owner of the property at 66 Willowie Road, Castle Cove, New South Wales. 

10.  The next document is another title search also dated 20 June 2010 showing that the plaintiff and his wife are the registered joint tenants of a property at 2 Colbarra Place, West Pennant Hills, New South Wales.

11.  Ms Ng therefore believed that the plaintiff and his wife were residing at 66 Willowie Road and have a close connection to Australia.

12.  In respect of the ground under rule 1(1) (c), Ms Ng referred to the plaintiff’s address at Flat J, 14/F, Hennessey Apartments, 488 Hennessey Road, Hong Kong as stated in the writ of summons dated 25 June 2004 and his witness statement dated 28 August 2009.  She produced a land search result dated 11 June 2010 showing that the property had been assigned to a Hanson Property Group Limited on 29 April 2010.  A clerk of the defendants’ solicitors also visited this flat twice on 11 May 2010 and was told by the caretaker that a new owner had moved into the flat in early May 2010.

The plaintiff’s opposition

13.  The plaintiff made an affirmation to dispute the defendants’ grounds.  He also complained the inordinate delay in the defendants’ bringing of the application.  He referred to the defendants’ Timetabling Questionnaire dated 30 April 2009 which said that they did not intend to apply for security for costs.  He said that it would be grossly unjust to him if he should be asked to provide security now.  He said that this is just one of the defendants’ tactical moves as the defendants have made repeated interlocutory applications to thwart the claims against the 2nd and 3rd defendants and they even took the matter to the Court of Appeal where they lost.  He then dealt with the documents used by the plaintiff to support the ground under rule 1(1) (a).

14.  Regarding his résumé, he agreed that he had been a permanent resident of Australia in 1998 as he then had a permanent resident visa of Australia.  But he was no longer of that status.  Furthermore, being a permanent resident of Australia only entitled him to stay and work there without the need to apply for an employment visa and he could enter and leave Australia repeatedly during the period of the visa.  The visa had nothing to do with whether one was residing ordinarily in Australia. He had this status when he was employed by the defendants from 1 November 1996 to 28 February 1999.  Whilst in this employment, he was taxed by the Australian Tax Authorities on non-resident basis.  This was known to the defendants’ as the tax was deducted by them from his salary.  When he was transferred by the defendants on 1 March 1999 to work in Hong Kong, he ceased to have any employment in Australian.  He also continued to be a non-resident of Australia ever since.  He also produced the notices of assessment for the years ending 30 June 1997, 30 June 1998 and 30 June 1999 issued by the Australian Tax Office to confirm his non-resident status.

15.  He then referred to the defendants’ investigation report which merely said that he was an Australian citizen by virtue of the fact that he was enrolled as an elector.  But the Australian investigator did not say that he was a permanent resident of Australia.  He also referred to the website of Australian Electoral Commission which does not say that residency in Australia is required for enrolling as an elector.  One only needs to be an Australian citizen and over 18.  An Australian citizen however is not necessarily a person who resides in Australia ordinarily. 

16.  Regarding his passport dated 28 October 1999 and issued by the Indian Embassy in Sydney, he said he was then working for the defendants.  He refused to comment on the passport of his wife as he said that had nothing to do with him.

17.  Regarding the property at 2 Colbarra Place, West Pennant Hills owned by him and his wife, he said they owned the property since 1990 as an investment and with no building or erection thereon.  He thus denied of having a close connection with Australia.

18.  For the ground under Rule 1(1) (c), his solicitors had in fact explained the situation in a letter dated 24 June 2010 that he was a tenant of the flat in Hennessy Apartments at the issue of the writ on 19 June 2004 and he continued to be so when he made the witness statement on 28 August 2009.  He further said that he remained the tenant of the properties until 18 March 2010 when the tenancy was terminated. He then rented new premises on Prince Edward Road on 1 July 2010.

19.  He then referred to the defendants’ delay in making the application.  His claim was made in June 2004.  The defendants’ Timetabling Questionnaire dated 30 April 2009 confirmed that they had no intention to apply for security for costs.  Furthermore, some of the documents relied on by the defendants were in their custody all along.  They are the plaintiff’s résumé and the copy passports of the plaintiff and his wife.  The Australian citizenship of the plaintiff’s wife was also known to the defendants as demonstrated by a letter dated 9 March 1999 from the 1st defendant to the Director of Immigration of Hong Kong in relation to the plaintiff.  The defendants were also aware of the plaintiff’s address at 66 Willowie Road as proved by a letter sent by the 2nd defendant to the plaintiff at that address and dated 10 February 2004. 

20.  The defendants’ solicitors also learnt on 11 May 2010 that the plaintiff was not living in Hennessy Apartments, but they only wrote and asked for security of costs on 17 June 2010 and applied for the same on 17 July 2010.

21.  The plaintiff also said that the defendants had falsely alleged that there were some recent discussions between the parties in which he said he had relocated to Australia.  His solicitors had asked the defendants’ solicitors to provide the particulars of when and where of such discussions, but the defendants’ solicitors did not even reply to the request.

22.  The defendants are seeking security at HK$4.6 million.  The plaintiff said that if he should be asked to provide security of such a large sum within a short period, he would have to liquidate or charge some of his assets and he will suffer substantial losses.  The delay in the making of the application also deprived him of the choice of not pursuing the defendants and not to have incurred substantial legal costs.

23.  He also said that he had to defend the 1st defendant’s counterclaim which arose out of the same facts.  It would be unfair if his claim should be stayed for security for costs but he still has to face the counterclaim.  He also said his claims have strong merits.  He also challenged the amount of security requested at HK$4.6 million.

The defendants’ reply

24.  Ms Ng made a reply affirmation.  She produced a copy e-mail dated 20 August 2009 by a person having the same name as the plaintiff and written on behalf of one Able Accounting and Taxation Services to a Mr Pereira of HCL Australia.  The e-mail attached an invoice from Forum of Indian IT Companies in Australia for payment of membership and other fees.  Ms Ng relied on this e-mail and the attached invoice to dispute the plaintiff’s assertion that he had no employment in Australia since 1 March 1999.  She said she believed the plaintiff had an employment in Australia at least in August 2009.

25.  She also found from the internet, a document of an Indian court dated 28 July 2008 which referred to a witness statement by the plaintiff made in his daughter’s legal proceedings.  The address he gave in the statement was 66 Willowie Road, Castle Cove, New South Wales.  I however note that this address was known to the defendants since February 2004 and was referred to in the report of the defendants’ Australian investigator dated 22 June 2010. 

26.  The defendants’ instruction to the Australian investigator was to enquire about the plaintiff especially with respect to his status as an Australian citizen or permanent resident (Bundle B141).  The report referred to 66 Willowie Road and 2 Colbarra Place.  It also stated that the plaintiff was not listed as a registered Tax Agent and he was not the nominee of Able Accounting and Taxation Services.  The investigator then concluded that the plaintiff was an Australian citizen by virtue of the fact that he was enrolled as an elector.  The investigator did not mention any other fact to support his conclusions.  He also did not give any view on whether the plaintiff was a permanent resident of Australia despite the defendants’ express instruction.

27.  I think it is more likely than not that the investigator should have visited 66 Willowie Road and 2 Colbarra Place to see if the plaintiff was living at either address.  If he could have found anything which might have shown the presence of the plaintiff there, he would have said so.  His failure to express any view on whether the plaintiff was a permanent resident of Australia weighs heavily against the defendants in their discharge of the burden of proof.

Discussion

28.  Counsel for the defendants referred to the facts given by Ms Ng in her affirmations and submitted that the plaintiff is not ordinarily resident in Hong Kong.  Counsel further submitted that the plaintiff now lives in Hong Kong in a rented flat under a 6-month tenancy.  He does not work in Hong Kong and never asserted positively that he ordinarily resides in Hong Kong, and if so, how.  I do not find these submissions attractive.  The burden of proof is on the defendants but not on the plaintiff.  The résumé and copy passport of the plaintiff are historical documents.  They only prove an undisputed fact, namely, the plaintiff was a permanent resident of Australia back in the late 1990s when he was working for one or more of the defendants in Australia until March 1999 when he was relocated by them to Hong Kong.  These documents do not support this application which is on the plaintiff’s present residency.

29.  Regarding the fact that the plaintiff only lives under a 6-month tenancy, this is only a misleading half-truth.  The other half of the truth is that the plaintiff has always been living under a tenancy in Hong Kong since the commencement of this action in 2004. 

30.  The issues of the plaintiff being an elector of Australia and his joint ownership with his wife of 2 Colbarra Place have been properly explained by the plaintiff too.  I also repeat what I have said above on the report by the defendants’ Australian investigator and his failure to opine on whether the plaintiff is currently a permanent resident of Australia.  I therefore hold that the defendants have failed to prove that the plaintiff is ordinarily resident out of this jurisdiction.

31.  Regarding the other limb of the application under rule (1) (c), the plaintiff had given the correct address in the writ at the time of its issue.  He was still living at that address when he made the witness statement in 2009.  He only moved out in March this year when his landlord sold the property to another company.  He then moved to another rented accommodation.  I think he should have applied to amend his address at or shortly after his removal.  However, this is not a case where the plaintiff sold his own flat and moved to rented accommodation shortly before the trial. That kind of situation may require different consideration.  I do not think the plaintiff’s failure to amend the address in the writ herein would warrant any order for security for costs.

32.  The defendants therefore fail under both limbs.

33.  I would go further to find that there has been inordinate and unexplained delay in the part of the application based on rule 1(1) (a).  All the documents produced and information relied on by the defendants under this limb are either in the defendants’ possession or in the public domain for a long time.  There is no explanation on why the application was not made until 23 July 2010 when the eight-day trial will commence on 18 October 2010. 

34.  Furthermore, if an order should be made in favour of the defendants, the plaintiff will have very little time to raise a substantial sum as both sides will be represented by senior counsel at the trial.  Such an order would no doubt prejudice the plaintiff in his preparation for the trial. 

35.  The defendants have also not explained why they should have confirmed in their Timetabling Questionnaire filed on 30 April 2009 that they did not intend to seek security for costs but then made an about turn in July 2010.  On delay and the questionnaire, I would refer to the judgment of A Cheung J in Senior Honor Ltd v Lee Ki Luk & Ors, HCA 4043/2001 at paras. 4, 5 and 10 to 12 where the learned Judge opined on the need of a reasonable explanation for delay and the court’s reliance on the answers given in checklists for use in pre-trial reviews or case management conferences.

Quantum of Security

36.  The defendants have also failed to properly justify the quantum of security sought at HK$4.6 million.  Of this sum, about HK$3 million is in respect of the legal costs paid to the defendants’ previous solicitors for work done since the commencement of the action.  The sum paid was double of this sum.  However, there is no breakdown for this substantial sum or the actual sum paid.  There is no dispute that part of the sum paid was spent on interlocutory applications in which the plaintiff succeeded.  The defendants just took half of the actual sum charged by the previous solicitors and added it to the HK$1.6 million to be incurred as the total quantum of the application.  I do not think this a proper approach.  The proper approach is to provide a breakdown of how the sums are arrived at including those paid to the former solicitors.

Decision on security for costs

37.  For the above reasons, I dismiss the defendants’ application for security for costs.  I also make a costs order nisi that the defendants do pay the plaintiff’s costs of this application with certificate for counsel.

38.  In the light of my analysis above, I take a dim view of this application.  I further provide in my costs order nisi that the costs be assessed by summary assessment by me at a 9:30 a.m. hearing to be fixed by the parties unless an application should be made within the next 14 days for variation of the order nisi.  The assessed costs shall be paid forthwith.

39.  I also direct the plaintiff to amend his address in the writ of summons within seven days (see para. 6/5/5 of Hong Kong Civil Procedure 2010).

Application for Video Link

40.  This application is restricted to the evidence of the 3rd defendant.  It is supported by the 3rd affirmation of Ms Ng.  She said the 3rd defendant is the key figure of the HCL Group which is a multi-billion multi-national corporation listed in India.  The group has more than 70 companies, trusts and foundations and is present in more than 26 countries with more than 64,000 employees of 72 nationalities.  The annual revenue is more than US$5 billion. The 3rd defendant is a vital figure in the decision making process of the group which he controls by chairing and attending meetings.

41.  One of the companies controlled by him is the 2nd defendant, a company listed in India.  Its board meetings are fixed in consideration of the availability of all the directors as the laws of India require physical presence of the directors and videoconferencing is insufficient.  There are eight directors of the 2nd defendant and they are also directors of other companies and have many commitments to these companies.  One of the directors is an American who has to travel to India for the meetings. It is absolutely necessary for the board to meet in October to approve the quarterly financial results for the quarter ending in September.  The audit committee has to meet together with the board and the availability of the statutory auditors has also to be considered.  The investment public expects the board meeting to be held between 15th and the end of October.  The 3rd defendant’s presence at such meeting is essential.  He also has to sign the approved financial results and other corporate papers.

42.  I must say that the environment in which the 2nd and 3rd defendants do business as depicted by Ms Ng appears to be that before the computer and optic fiber have been invented.  Furthermore, the authority on the laws of India as relied on by Ms Ng which says that a director has to be physically present in a board meeting is doubtful.  There is no reference to the name of the publication and its publisher.  It does not appear to be an up to date publication as it refers to some proposed liberalizing measures announced by the Indian Government in some press releases in April 2002 but does not give the update position of such proposals.

43.  Ms Ng then stated that the 3rd defendant had to attend a board meeting of the 2nd defendant on 19 and 20 October and the 2nd defendant’s AGM on 28 October.  He also has to attend meetings of other companies and philanthropic trusts under his control on 22, 25 and 26 October.  But Ms Ng did not say what efforts had been made by the 3rd defendant and his companies to arrange the dates of the meetings so that they would not conflict with the trial dates which were fixed in January 2010.

44.  Ms Ng then referred to the 3rd defendant’s medical condition as a further ground for the application.  She briefly said that the 3rd defendant was recovering from a recent fall and was admitted to a leading hospital in Delhi.  She produced a medical report dated 28 August which merely said that the 3rd defendant had a fall on 17 August 2010 and sustained injuries.  For this reason and a pre-existing medical condition, the 3rd defendant was medically advised not to travel overseas for six to eight weeks.

45.  At the hearing, the defendants produced a fuller medical report also dated 28 August 2010.  The report said that the 3rd defendant had some heart problems since 1993 and had been under the care of physicians since then.  But counsel for the plaintiff immediately pointed out that such problems did not appear to have affected the 3rd defendant’s mobility as he had been travelling round the world since then for business and other purposes.

46.  The report then said that the 3rd defendant had angiography and angioplasty on 1 May 2010 and has since been under observation and close periodic follow up.  But again this did not seem to pose a serious problem as no application was made for him to give evidence via video link until 27 August 2010. 

47.  The report then said that he suffered a fall at home on 17 August 2010 and sustained injuries to his right knee and mouth.  He was admitted to hospital for treatment and investigation.  No other detail was given on the nature and extent of these injuries.  I therefore cannot take them as something serious.

48.  Then the report then said that whilst staying in hospital in August 2010, the 3rd defendant was diagnosed to have new onset diabetes mellitus with fluctuating sugar levels and his sugar level has to be controlled.  This is a new rather than an advanced illness for him.  Diabetes is also a fairly prevalent illness and diabetic patients do travel by plane and mostly in economy class.  If the 3rd defendant is flying in from Delhi, I suppose he would fly first class.

49.  The report finally concluded by saying that the 3rd defendant might get into serious health conditions if an accelerated hypertension, syncope or a hypoglycaemic episode happens unattended outside his home in any stressful or non-stressful situation.  It opined that he needed medical supervision for at least six to eight weeks in order to be considered medically fit.  He was also advised not to travel abroad and not to place himself in a position of extreme stress such as a courtroom environment.

50.  Reading between the lines, the conclusion of the report is simply that he should not travel from Delhi to Hong Kong and to give evidence in a Hong Kong courtroom.  But there is no objection for him to give evidence from home.  However, this conclusion is not justified by the medical condition of the 3rd defendant as discussed above.  His conditions are not serious enough to prevent him from coming to Hong Kong in a plane journey lasting some 5½ hours.  In any case, he at present does not need to stay in a hospital for convalescence.  There is no suggestion that he has suspended his duties because of his health.  On his case, he will also have to attend many meetings at least between 22 and 28 October 2010.

51.  The plaintiff has made an affidavit to oppose the application.  He said the flight from Delhi to Hong Kong only takes 5½ hours and there are at least four flights a day. 

52.  He also produced the annual reports of the 2nd defendant showing that the 3rd defendant did not attend all directors’ meeting of the 2nd defendant and the 2nd defendant also uses teleconferencing facility to enable the participation of directors including the 3rd defendant when they could not be physically present at the meetings.  The statements of Ms Ng that all directors must be present and be physically present at board meetings are thus contradicted by clear statements of the 2nd defendant in its annual reports.  I therefore see no reason why the 3rd defendant cannot come to Hong Kong to attend the trial and to take part in the meetings by teleconferencing or videoconferencing facilities.

53.  Regarding the AGM of the 2nd defendant to be held on 28 October 2010, which is after the last day of the trial on 27 October, his evidence should conclude before the 27th and he need not be present when counsel make their submissions.  He can therefore fly back to Delhi in the evening of 25 or 26 October. 

54.  I have also observed above that nothing has been said on what efforts have been made to arrange the dates of the meetings to avoid their conflict with the trial.  There is also no reason advanced to suggest why the AGM of the 2nd defendant could not be changed to another date.

55.  The plaintiff also criticised the delay in making of this application.

56.  Counsel for the defendants submitted that the threshold to overcome for evidence to be given via video link is not a high one (see Sun Legend Investments Ltd v Ho Yuk Wah [2008] 4 HKLRD 239 at p.243 (para.6).  Counsel for the plaintiff, however, referred to Re Chow Kam Fai ex parte Rambas Marketing Co. LLC [2004] 1 HKLRD 161 at 174 (para. 28) per Deputy High Court Judge To (as he then was):

“The starting point is the fundamental basis that justice is dispensed by the Court of Justice and as a rule the parties have to come to the court to obtain justice. Secondly, justice is dispensed in open court accessible to the public so that any member of the public can watch the administration of justice in action. Justice has to be openly seen to be done. Within the court building and its precincts, the parties, their witnesses and their legal representatives are protected by law. They are free to prosecute their claim or their defence without fear. On the other hand, witnesses are obliged by law, the solemnity of the court atmosphere and the threat of immediate sanction to give evidence on oath or under affirmation and to tell the truth. They are subject to the sanction of the court if they should refuse to answer questions on oath or disobey an order of the court or otherwise behaves disrespectfully. Likewise, the judge can watch the witnesses giving evidence under the solemnity of the court atmosphere. Without exaggerating the notion of the dignity of the court and its authority, proper administration of justice must be conducted and seen to be conducted by proceedings within the courtroom. Hence, giving evidence outside the courtroom via video link is an exception rather than the rule. It is a privilege and not a right. This is my starting point.”

The views of Deputy Judge To on the whole were approved by Rogers VP when the case went on appeal.  Rogers VP said in Re Chow Kam Fai David [2004] 2 HKC 645 at 652, paras.16-19:

“16. The next question addressed by the judge was as to whether the cross-examination could be conducted whilst the respondent was in Macau using VCF. The judge approached this question on the basis that the giving of evidence by VCF was an exception rather than the rule and that it would be a matter of privilege accorded to the respondent and not a matter of right for him to be allowed to do so.

17.       In my view the judge was quite correct in this approach.  The starting point must be that proceedings are conducted in court.  Mr Kat, who appeared on behalf of the respondent, took issue with the approach of the judge where it was said in paragraph 28 of the judgment that “On the other hand, witnesses are obliged by law, the solemnity of the court atmosphere and the threat of immediate sanction to give evidence on oath or under affirmation and to tell the truth.”

18. Whether or not the threat of immediate sanction is something that weighs heavily on witnesses is, perhaps, a matter of conjecture. Nevertheless, I have no doubt that the atmosphere of a court is highly important as regards the taking of evidence. The solemnity of court proceedings and its atmosphere is something which, I have no doubt, plays an important role in the way justice is administered.

19.    There is no doubt that VCF is a highly useful tool.  It must be a question of judgment in each case as to whether VCF should be used for the taking of evidence.  No doubt, on those occasions when the witness is giving evidence that is technical or purely factual, without important issues as to credibility, a court may be more disposed to allow evidence to be given by the use VCF.  Questions of cost and convenience are no doubt also important considerations that the court will have to weigh in deciding whether to allow evidence to be given using VCF. But, first and foremost, it seems to me that the judge was correct in his approach that a party wishing to give evidence using VCF should establish a sound reason why that privilege should be accorded.”

57.  It is thus clear that the giving of the evidence via video link is an exception rather than the rule.  It is for the party wishing to use video link to justify why he should be accorded with this exceptional treatment.

Decision on video link

58.  From the discussion above, I am not satisfied that there are no other appropriate dates for the meetings other than the dates as fixed which are in conflict with the trial days.  I am also not satisfied that the 3rd defendant cannot come here to attend the trial and to take part in the meetings via teleconferencing/videoconferencing facilities.

59.  Regarding the medical advice, I have already dealt with it above.  I am not satisfied that the 3rd defendant by reason of his medical conditions as stated in the two medical reports should stay at home to give evidence via video link rather than coming to this court to give evidence.

60.  In the premises, I dismiss this application too.

61.  I further make a costs order nisi that the defendants do pay the plaintiff the costs of this action with certificate for counsel.  I also provide in the order nisi that the amount of costs be assessed by summary assessment and be paid forthwith as provided in the costs order nisi for the application for security for costs.

Leave to appeal by the 1st to 3rd defendants to Court of Appeal refused. Please refer to HCMP1895/2010 dated 7 October 2010

HCA954/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 954 OF 2005

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D E C I S I O N

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1. The plaintiff is suing for monies said to be due to him upon the termination of his employment in 2004.  The issue which is at the heart of this interlocutory proceeding is the identity of his employer.  The 1^st defendant (“D1”) is a Hong Kong wholly owned subsidiary of an international company incorporated in India, the 2^nd defendant (“D2”), of which the 3^rd defendant (“D3”) is the chairman and chief executive.  The amount claimed is substantial, in excess of US$1 million.

2. D1 was duly served in Hong Kong.  After much difficulty D2 and D3 were duly served in India.

3. The claim is in the form of a “Form 2” issued by the plaintiff in the Labour Tribunal.  That Form 2 claim has been transferred to this court.  By a decision of Master de Souza dated 13 June 2007 the claim against D2 was set aside on the grounds that (a) it did not fall within RHC Order 11 rule 1(1)(c) and/or (b) that there was no serious issue to be tried against D2.

4. The issue concerning Order 11 rule 1(1)(c) is simply whether or not D2 is a “necessary or proper” party to the proceedings.

5. Before me the plaintiff now appeals the Master’s decision.  The plaintiff submits that D2 is a proper or necessary party and there is a serious issue to be tried.

6. At the same time D3 has applied to this court for an order discharging four other Masters’ Orders (which, taken together, granted leave to serve D3 out of the jurisdiction) on the same grounds, namely, that D3 is not a “proper or necessary” party and that there is no serious issue to be tried.

7. Two other matters should be noted.  Firstly, the Form 2 claim is pleaded in the alternative.  In it the plaintiff claims that the contract of employment was made between himself and D3 acting on behalf of D1.  Alternatively, that the plaintiff was employed by D2 and/or D3.  In other words the claim is that D1 or D2 and/or D3 was the employer.  In the Labour Tribunal proceedings, D1 made an early formal admission that it was the plaintiff’s employer.  Secondly, on 10 October 2007 the plaintiff served an Amended Statement of Claim on the defendants’ solicitors (all three defendants are represented by the same firm).  One effect of the amendment was that the claim is now being made against all three defendants, not in the alternative.  The employer is thus claimed to be D1 and/or D2 and/or D3 in the amended claim.

8. At this hearing (both the plaintiff’s appeal and D3’s application) the plaintiff invites the court for a ruling in its favour based on the original pleading, as in Form 2.  Should the plaintiff be unsuccessful on the basis of the Form 2 it invites the court to re-grant leave to serve the Amended Statement of Claim on D2 and D3 by way of substituted service on their Hong Kong solicitors.

9. Mr Paul Carolan’s (counsel for D2 and D3) first submission is that D1’s admission that it was the employer deals a fatal blow to the plaintiff’s alternative pleas against D2 and D3 and therefore they cannot be proper or necessary parties to be included in this litigation by virtue of Order 11 rule 1(1)(c).  If, he submits, the plaintiff says, “A is my employer but if A is not my employer then B is my employer” and A says, “I admit that I am your employer”, the plaintiff cannot continue to claim that his employer may be B.

10. Mr John Scott, SC leading Mr William Wong for the plaintiff submits that D1’s admission of employment is an irrelevance in this appeal.

11. I agree.  The first issue is a narrow one, namely does the plaintiff’s case against D2 and/or D3 come within Order 11 rule 1(1)(c).  I am satisfied that even on the original Form 2 alternative plea, it does.  I do not think that the plaintiff is bound by D1’s admission to the extent that he is thereafter barred from continuing the action against D2 and/or D3.  The notes to Order 11 rule 1 state :

“	… a person may be a ‘proper’ party when the liability of several persons whether cumulative or alternative or both, depends on one investigation.”

12. I accept that the threshold that the plaintiff must meet to persuade the court that D2 and D3 are “proper or necessary” parties is not a low one.  It must demonstrate a good arguable case.  In my judgment this threshold has been reached.  As a result of considerable legal research an abundance of authority has been included in the plaintiff’s written arguments.  Mr Carolan has ably endeavoured to distinguish and counter-argue.  I do not propose, on this interlocutory application, to rehearse the submissions and analyses of each and every authority.

13. Having considered the arguments I am content that the position is as advanced by Mr Scott.  Where a plaintiff has alternative claims against different defendants he can sue both in the same proceedings and has a right to postpone election until judgment.  This may affect the ultimate costs order but that is a matter for the plaintiff.  By the same token, Order 15 rule 6(2)(b) permits the adding of a new defendant as an alternative employer to the original defendant provided it was “necessary for the complete and effectual determination of the matters in dispute”.  In the present case a dispute remains as to the true identity of the plaintiff’s employer regardless of D1’s admission.  Whilst that dispute remains nothing turns on whether the plea is in the alternative or joint.

14. A key flaw in the defendants’ argument is the premise that an alternative plea can only be considered after the failure of the primary plea.  Thus, it is submitted that if the primary plea cannot fail (because of D1’s admission) the “secondary” or “alternative” plea will never surface.  I do not agree.  Alternative pleas may be advanced in parallel.  The alternative is not necessarily “secondary”.  It need not always be a fall back position.  In my judgment this must be right because D1’s admission does not bind the plaintiff.  If it were otherwise strong defendants would encourage a weak defendant to be sacrificed at trial so as to enable the remaining defendants to escape liability.

15. In a sense all of the above may be academic.  Should I be in error and should the original Form 2 “alternative” plea, taken together with D1’s admission, mean that D2 and D3 fall outside Order 11 rule 1(1)(c) I can see no objection to exercising my discretion to accede to the plaintiff’s fall back request to re-grant leave to serve the Amended Statement of Claim by way of substituted service to the defendants’ solicitor.  Should it be necessary I would grant such leave.

A serious question to be tried?

16. Under this test the plaintiff must demonstrate that it has a reasonable prospect of success.  The court should avoid a “prolonged debate” about the merits of the plaintiff’s case when resolving this issue.

17. Not surprisingly, in respect of both D2 and D3 there are arguments to be made on both sides.  For example, against the plaintiff it will be strongly prayed in aid that D1 was the plaintiff’s paymaster at all times.  However, at this stage it is sufficient to note the indicia pointing for or against employment rather than to evaluate them.  Factors which may point to a contract of employment would include : the degree of control exercised over the plaintiff, the power of dismissal, the involvement in the appointment process and the plaintiff’s own belief. 

18. In relation to D2 the plaintiff points to no fewer than twelve factors in support.  None are frivolous.  I shall record merely three of them :

(i)	The plaintiff has written notes of the meeting in Amsterdam when he was appointed in 1999 plus evidence that the notes were circulated to the defendants. They support a significant involvement of D2 and D3 in the appointment process.
(ii)	There is evidence to show that the plaintiff was responsible for the whole North Asia and New Zealand region and was merely “posted” to Hong Kong for geographical convenience.  One of the several subsidiaries within that region was D1 and as a matter of convenience it was D1 who paid him.
(iii)	There is evidence that the plaintiff’s contract of employment was terminated by D2.

19. Taken together, the above and other factors relied on by the plaintiff point clearly to a serious question to be tried.

20. With regard to D3 there is a considerable overlap of the evidence.  D3 was the major party at the 1999 Amsterdam meeting.  He was also the person to whom the plaintiff’s performance reports were sent.  D3 exercised control over the plaintiff, particularly with regard to directing him, from time to time, where to go within the region for which he was responsible.

21. D3 also authorised a number of financial transactions directly involving the plaintiff, including personal loans and bonuses. 

22. Once the court is satisfied that sufficient indicia are present for there to be a serious question to be tried, further analysis is inappropriate.

23. The issues concerning (a) the plaintiff’s appeal and (b) D3’s application are substantially the same.  I have dealt with them together.

24. The authorities considered on the issue of whether D2 and/or 3^rd defendant are “proper or necessary” parties included Inchape JDH Ltd v. Baltrans Exhibition & Removal [1997] HKLRD at page 1283 et seq., Lief Christense v. Regent Ken International Limited, HCA6011/1996, Wong Kam Lee v. Shimizu [1997] 1 HKC at page 71, Peter v. Moloney (1957) 84 C.L.R. at page 102, Tang v. Capacious Investments [1996] 1 HKC at page 407, and Agip (Africa) Ltd v. Jackson [1990] Ch. 265 at page 284.

25. On the “serious question to be tried” issue, assistance was gleaned from      Seaconsar Far East Limited v. Bank Markazi Jomhouri Islami Iran [1994] AC 438 and      Cheung Yuen v. The Royal Hong Kong Golf Club, CACV146/1996.

26. I allow the plaintiff’s appeal with a costs order nisi here and below to the plaintiff.  D3’s summons is dismissed with costs.