News
News //
Submitted by // K Bowers, Partner / Solicitor Advocate; P Yeung, Senior Associate
22 September 2017

 

Could moonlighting employees be breaching more than just their employment contracts?

Introduction

In Hong Kong, there is an increasing emphasis on the importance of reciprocal duties of trust and confidence between employers and employees. A 'moonlighting' employee (even one who takes up ancillary employment with a non-direct competitor) often sits in a legally precarious position since questions are bound to arise in relation to his/her fiduciary duties, restrictive covenants and/or the implied term of trust and confidence. In fact, a moonlighting employee is also at risk of committing an offence under section 9 of the Prevention of Bribery Ordinance (Cap. 201) ("POBO") which is concerned with transactions between third-parties and agents in relation to the affairs or business of their principals.

This Employment Alert discusses the judgment of the Hong Kong Court of Final Appeal ("HKCFA") in Secretary for Justice v Chan Chi Wan Stephen [2017] HKEC 505 and examines the circumstances which would render an employee guilty of bribery in the private sector.

Background

This case considers whether Chan, the General Manager of a television station ("TVB"), who also voluntarily hosted a television segment for TVB's pay channel, committed the offence of bribery pursuant to the POBO by contracting with a third-party to host an external television segment. In accordance with the POBO, Chan is an agent of TVB by virtue of being an employee of TVB.

The incident arose when TVB contracted with Olympian City, a Hong Kong shopping centre, to produce a New Year's Eve event. Olympian City subsequently entered into a separate agreement with Chan's agent (Tseng) for Chan to host a live rendition of his television segment at the New Year's Eve event broadcast. Chan received HK$112,000 from Tseng as remuneration for this engagement, but did not seek or obtain prior permission from TVB. Nevertheless, the evidence showed that Chan's engagement to host the external television segment was generally known to TVB.

As a result, Chan was charged in the alternative for: (1) "accept[ing] an advantage… as an inducement or reward for or otherwise on account of [him] doing or having done an act in relation to his principal's affairs or business" contrary to s.9(1) of the POBO; or (2) conspiring with Tseng to commit the s.9(1) offence. Tseng was also charged with the offence of bribery pursuant to s.9 of the POBO. Whilst both Chan and Tseng were acquitted at First Instance, the lower court's decisions were overturned by the Court of Appeal. Upon further appeal, the HKCFA unanimously quashed the convictions.

Issues

The primary issues before the HKCFA were as follows:

(i) What is the mental element required to render an agent guilty under section 9 of the POBO?

(ii) Should "in relation to the principal's affairs or business" be interpreted as requiring an element of prejudice to the principal?

(iii) How should the HK Courts approach the defence of "reasonable excuse" under section 9 of the POBO?

(i) Mental element

To secure a conviction under section 9 POBO, the prosecution must prove that the agent "knew or believed" that the advantage was provided as an inducement or reward or otherwise. In other words, if the agent receiving an advantage was unaware that the advantage was offered for a corrupt purpose, he will not be liable. Since the prosecution failed to establish that Chan knew or believed that the remuneration he received for hosting the external television segment was for a corrupt purpose, Chan couldn't be held culpable for the section 9 offence.

(ii) "In relation to the principal's affairs or business"

The HKCFA determined that section 9 POBO required an individual's mischief which is "aimed at the principal's business" to be conduct which "subvert[ed] the integrity of the agency relationship to the detriment of the principal's interests". Conduct which is beneficial to and aligned with the interests of the principal would fall outside the scope of section 9. In accepting remuneration to host the external television segment, Chan had not intended to influence or affect TVB's affairs or business in a manner that undermined the integrity of his agency relationship with TVB. Consequently, Chan couldn't be held culpable for the section 9 offence.

(iii) "Reasonable excuse"

"Reasonable excuse" may be a defence to an act that would otherwise contravene section 9 POBO. Since the HKCFA did not consider that Chan had breached section 9 (for the reasons stated above), the majority of the judges saw no basis for assessing the defence in this case. However, Tang PJ maintained a different view and thus elaborated on the "reasonable excuse" defence. Specifically, Tang PJ held that Chan had a reasonable excuse for hosting the external television segment as he "honestly believed that his principal would not object" to his participation.

Implications for moonlighting employees

Although this judgment may bring a sigh of relief to moonlighting employees, it certainly does not provide a carte blanche for multiple employment (especially where the employers are in the same industry). The decision on whether or not a breach of section 9 POBO has taken place is fact-sensitive and dependent on factors such as the agent's intentions and the nexus between the principal's business and the third-party's terms of engagement. Moonlighting employees should seek their employer's informed written consent before taking on additional employment, so as to ensure compliance with their employment obligations, and steer clear of any potential criminal prosecution.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

› read more
› minimize
Press //
Submitted by // C C Tan, Partner
22 September 2017


Howse Williams Bowers ("HWB"), a leading Hong Kong independent law firm, acted as the legal adviser to the sole sponsor and the underwriters in relation to the approximately HK$82.5 million share offer and listing of Cool Link (Holdings) Limited (Stock Code: 8491) ("Cool Link") on the Growth Enterprise Market of the Stock Exchange. Vinco Capital Limited acted as the sole sponsor while Pacific Foundation Securities Limited and Vinco Capital Limited acted as the joint lead managers. The shares commenced trading on the Growth Enterprise Market of the Hong Kong Stock Exchange on 22 September 2017.

Cool Link is one of the leading Singapore-based importers of food products in the ship supply industry in Singapore. They supply food products to ship chandlers for consumption by ship crews and passengers.

The HWB team, led by partner Chia Ching Tan, had lead responsibility in the verification process, legal documentation, corporate and regulatory issues and general transaction management.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; intellectual property; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 
› read more
› minimize
Press //
Submitted by // B Ho, Partner
18 September 2017


Howse Williams Bowers ("HWB"), a leading Hong Kong independent law firm, on 11 September 2017, advised Truly International Holdings Limited ("Truly") on the completion of its HK$320 million placing of new shares. The placing agents were HSBC and Mizuho. At the same time, the controlling shareholder of Truly subscribed for shares in Truly in the sum of HK$107.7 million.

The principal business activities of Truly are the manufacture and sale of liquid crystal display products and electronic consumer products.

The HWB team was led by corporate partner, Brian Ho. The team had lead responsibility for legal documentation and general transaction management.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; intellectual property; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 
› read more
› minimize
News //
Submitted by // K Bowers, Partner / Solicitor Advocate
11 September 2017

 

The revision of the civil jurisdictional limit of the District Court is finally on the way. Last revised in 2003, the civil jurisdictional limit of the District Court is planned to triple from its current limit of HK$1 million to HK$3 million in 2018. The increase is aimed at reducing the workload of the High Court by transferring lower value cases to the District Court, increasing the efficiency of both Courts in the process.

Background

The last adjustment to the jurisdictional limit of the District Court was in 2003, when the limit was increased from HK$600,000 to HK$1 million. Since then, data published by the Judiciary shows that there has been a large increase in the number of civil cases being brought in the High Court, with little or no increase in the number of cases in the District Court. To illustrate, the number of civil cases filed in the Court of First Instance ("CFI") increased by 22% between 2011 and 2016. During the same period, there was a slight drop of about 2% in the total number of civil cases filed in the District Court. These figures show that there is a clear need to balance the workload of the two Courts, particularly in view of the general rise in the value of claims since 2003.

Proposal

Under the current proposal from the Judiciary, the jurisdictional limit will increase as follows:

(a) general financial limit of the civil jurisdiction of the District Court: from HK$1 million to HK$ 3 million;

(b) financial limit for District Court cases on recovery of and title to land: from HK$240,000 to HK$320,000;

(c) limit for the equitable jurisdiction in the District Court where land is not involved: from HK$1 million to HK$ 3 million, and

(d) limit for the equitable jurisdiction in the District Court involving land: from HK$3 million to HK$7 million.

Additionally, the limit for the Small Claims Tribunal will increase from HK$50,000 to HK$75,000.

Effect on litigation in Hong Kong

The planned increase of the jurisdictional limit of the District Court is likely to lead to more cases being heard in the District Court instead of the High Court. The Judiciary estimates that this should result in an 8% increase in the number of civil cases that will be heard in the District Court. Mortgage, personal injury and civil actions are expected to make up a significant part of the increase, as these cases made up 29% of the CFI's total caseload in 2016.

The proposal should also have an impact upon the waiting time in the Courts. Currently, the average waiting time between setting down and the start of trial is significantly longer in the CFI compared to the District Court. In 2016, the average waiting time in the Civil Fixture List of the CFI was 155 days, whilst the average waiting time in the Civil Fixture List of the District Court was 99 days. It is expected that the reallocation of cases from the High Court to the District Court will help to reduce the waiting time in the High Court.

Comments about the upcoming change

Thus far, the response to the proposed increase in the jurisdictional limit of the District Court has generally been positive. However, commentators have expressed some concerns about the upcoming change. For example, under Order 62, Rule 32 (1A) of the Rules of the District Court (CAP 366H), the rates allowed in a party and party taxation in the District Court are capped at two thirds of the rates allowed in the High Court. The Law Society has argued that as the value and complexity of cases in the District Court has increased since 2003, and is likely to further increase after the proposed jurisdictional increase, the limit should be revised to reflect the increased expense involved in litigating in the District Court. Alternatively, the Law Society suggests that the Solicitors' Hourly Rates should be reviewed so that the winning parties will not be left so much out of pocket, even when they succeed in the action.

The Bar Association has also expressed concerns about the increase in workload on the District Court, as the Court will become busier after the proposed jurisdictional increase. There will need to be a corresponding increase in the level of resources available to the Courts in order to avoid lengthening the time required for a case to be heard. The government will also need to train and recruit additional judges, judicial officers and support staff to cope with the increase in the number and complexity of cases in the District Court.

Next steps

The proposed amendment to the civil jurisdictional limit of the District Court is viewed as long overdue, especially in view of the growth of the economy and the gradual rise in the value of claims since 2003. The proposed amendment, when implemented, should help to alleviate pressures on the High Court and help to overall speed up the processing of claims through the Court system.

In a paper by the Judiciary Administration from April 2017, the Judiciary has expressed its desire to formally introduce the proposals to the Legislative Counsel in 2017, and to implement the revised jurisdictional limits in early 2018. Parties concerned should keep an eye on the legislative developments and anticipate the announcement of any transitional arrangements.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

› read more
› minimize