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Pacific Century Insurance Co. Ltd. v Cheng Hon Chung

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date27 December 2002
Year2002
Judgement NumberCACV293/2002
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV000293/2002 PACIFIC CENTURY INSURANCE CO. LTD. v. CHENG HON CHUNG

CACV000293/2002

CACV 293/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 293 OF 2002

(ON APPEAL FROM DCCJ 9657 OF 2001)

______________

BETWEEN PACIFIC CENTURY INSURANCE
COMPANY LIMITED
(formerly known as
TOP GLORY INSURANCE
COMPANY (BERMUDA) LIMITED)		 Plaintiff
AND
CHENG HON CHUNG Defendant

______________

Coram: Hon Woo and Ma JJA

Date of Hearing: 11 December 2002

Date of Judgment: 27 December 2002

_______________

J U D G M E N T

_______________

Hon Ma JA:

Background

1. The plaintiff was at all material times in this action an insurer authorised under the Insurance Companies Ordinance Cap. 41 ("the ICO") to carry on various classes of insurance business in Hong Kong. It was formerly known as Top Glory Insurance Company (Bermuda) Limited ("Top Glory").

2. In May 1998, the defendant was engaged as an insurance agent by Top Glory. The plaintiff's case is that the terms of the defendant's engagement were set out in four contracts signed by him and made with Top Glory:-

(1) An Agent's Contract for Selling Long Term Insurance Business dated 1 May 1998 ("the Agent's Contract").
(2) A Unit Manager's Contract also dated 1 May 1998 ("the Manager's Contract").
(3) A Manager's Financing Agreement dated 20 May 1998 ("the 1998 Financing Agreement").
(4) A Manager's Financing Agreement dated 1 May 1999 ("the 1999 Financing Agreement").

3. I shall in due course have to deal with these agreements in greater detail as well as the defendant's allegations as to the terms of his engagement.

4. By a letter dated 13 October 1999 from the plaintiff to the defendant, the latter's engagement was terminated with immediate effect. According to the defendant, however, he had in fact been told in June 1999 that his engagement would be terminated forthwith.

5. The plaintiff's case is that at the date of the termination of his engagement, the defendant was indebted to it in sums totalling $400,403.93, such liability arising under some or all of the four agreements to which I have referred. A letter before action dated 17 April 2001 was sent to the defendant by the plaintiff's solicitors.

6. On 15 June 2001, the plaintiff commenced proceedings in the District Court claiming the said sum of $400,403.93 and interest. An application for summary judgment was taken out on 7 December 2001.

7. On 26 April 2002, Deputy Judge R. Yu granted summary judgment in the said sum, together with interest and costs. The defendant appealed by a notice of appeal dated 12 July 2002 (leave to appeal having been granted by Mr Justice Rogers VP on 8 December 2002).

8. The issue before us on 11 December 2002 was whether the learned Deputy Judge was correct in granting summary judgment under RDC Order 14. At the hearing, Mr Lee Wing-kin appeared for the defendant, Miss Julia Lau for the plaintiff.

The parties' respective positions

9. It is first necessary to state briefly the effect of the four agreements alleged by the plaintiff to comprise the contractual relationship between it and the defendant.

10. The Agent's Contract:-

(1) By clause 1.3 thereof, it was expressly stated that the relationship between the plaintiff and the defendant was not that of employer and employee. The defendant was throughout referred to as an agent and indeed the terms of the Contract related to the defendant's engagement as an insurance agent selling long-term insurance business.

(2) Clause 6 set out the remuneration of the defendant as consisting of the commissions and bonuses set out in that clause and in the Schedule annexed to the Contract.

11. The Manager's Contract:

(1) Paragraph II of the Recitals reiterated that there was no employer-employee relationship between the parties. In this Contract, the defendant was referred to as a manager. It governed the terms of the defendant's position as a manager within the plaintiff company and his relationship with other agents under his direct supervision. It was envisaged under this Contract that the defendant would or might have a team of insurance agents working under him. These other agents would be recruited, trained and supervised by the defendant.

(2) A relevant example of the triangular relationship between the plaintiff, the defendant and these other agents is clause 6(a) of the Contract. It was stated in that clause that should the engagement of any of the supervised agents be terminated by the plaintiff, the defendant would immediately be liable to the plaintiff for half of what such agent owed under his financing agreement with the plaintiff.

(3) The defendant was entitled to the allowances, bonuses and overriding commission set out in the Schedules to the Contract as his remuneration thereunder.

12. The 1998 Financing Agreement:-

(1) This Agreement was stated to form part of the Manager's Contract (which in turn referred to the Agent's Contract).

(2) The purpose of the Agreement was to set out the terms of monthly payments which were to be made by the plaintiff to the defendant, these payments being in nature advances on the plaintiff's remuneration under the Manager's Contract. There were provisions in the Agreement as to the mutual accounting of such payments at the end of the relevant financial period.

(3) Under this Agreement, the monthly payments were fixed at $40,000.00 for a period of twelve months.

13. The 1999 Financing Agreement:-

(1) Again, this Agreement made express reference to the Manager's Contract.

(2) Its terms were the same as the 1998 Financing Agreement except that the relevant monthly advances were fixed at $20,000.00 and the relevant financial period was four months.

14. As I have mentioned, it is the plaintiff's case that upon the termination of the defendant's engagement, the amounts due to it from the defendant totalled $400,403.93. As pleaded and as revealed in the documents before us, this sum can be broken down as follows:

(1)
$370,968.25 was allegedly due under the two Financing Agreements of which $363,364.40 was attributable to the 1998 Financing Agreement (taking into account repayments made by the defendant) and $7,603.58 was attributable to the 1999 Financing Agreement (also taking into account repayments).
(2) $28,649.95 was alleged to be due under the Manager's Contract.
(3) $785.73 was alleged to be due under some commission deductions due to internal replacement.

15. I now turn to the defences. Essentially, they can be distilled into the following (even though it must be said that there was much confusion in the way the defences are pleaded):-

(1) The true agreement between the parties was that the defendant had been engaged by the plaintiff as a unit manager with a guaranteed monthly income of $40,000.00 for twelve months. This agreement is alleged to have been made orally in May 1998 between the defendant and Mr Lam Yu Ming, the agency manager of the plaintiff. In the Re-Amended Defence and Counterclaim, the defendant admits the Agent's Contract and admits to signing the other agreements. It was, however, not clear from this pleading nor from the defendant's affirmation evidence just how the alleged oral agreement was to fit in. Before us, Mr Lee submitted that the oral agreement negated the effect of the 1998 Financing Agreement. He seemed to accept that the oral agreement did not affect the Agent's Contract, the Manager's Contract or the 1999 Financing Agreement. It is, however, unnecessary to decide...

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