A

HCA 322/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

D

COURT OF FIRST INSTANCE

ACTION NO 322 OF 2008

(Transferred from LBTC 5551 of 2007)

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BETWEEN
TADJUDIN SUNNY

Plaintiff

and
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BANK OF AMERICA, NATIONAL ASSOCIATION Defendant

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____________

Before: Hon To J in Court

Dates of Hearing: 8-10, 13-17, 20-24, 27-30 January 2014 and

4, 10-11 February 2014

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Date of Judgment: 24 December 2014

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JUDGMENT
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INTRODUCTION
Introduction
1.

This is an action for breach of contract of employment.

The

Plaintiff, Tadjudin, commenced her employment with Bank of America

(the Bank), as an analyst at the level of vice president on 5 June 2000.

Her contract of employment provided that either party may terminate the
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employment by given a minimum of one months notice in writing or by

paying one months salary in lieu of notice.

The contract also provided

that the Plaintiff was eligible to be considered for a bonus under the
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Banks performance incentive programme, subject to her being in

employment with the Bank at the time the Bank came to decide upon and
pay bonuses under the programme.

The Plaintiff received generous

bonuses for the years from 2000 through to 2006.

On 28 August 2007,

the Bank terminated the Plaintiffs employment by giving her a months

salary in lieu of notice, without any bonus or pro-rata bonus for 2007.
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2.

The Plaintiff commenced proceedings in the Labour Tribunal

against the Bank for breach of contract and in the District Court in DCEO
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4 of 2009 for sex discrimination under the Sex Discrimination Ordinance,

Cap 480 (SDO).

Her claim in the Labour Tribunal was transferred to

the High Court under the present action.

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Her claim under the SDO was

stayed pending the outcome of these proceedings.

The parties claims and defence

3.

In this action, the Plaintiff claims:

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(1)

damages for wrongful termination of employment by

the Bank with the intention of depriving her of the

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performance bonus for 2007; and

(2)

damages for perverse, irrational and mala fide

evaluations of her performance bonuses for 2005, 2006

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and 2007.

4.
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Her claims are based on the following terms implied into her

contract of employment at common law:

(1)

The Bank shall not exercise its right to terminate her

employment by giving one months notice or by paying

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one months salary in lieu of notice in order to avoid

her being eligible for the performance incentive

programme (the implied term of anti-avoidance).

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(2)

The Bank should not implement its performance

evaluations in respect of the Plaintiff in an irrational,

perverse or arbitrary manner that was not bona fide.

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(3)

The Bank should not administer its performance

incentive programme in respect of the Plaintiff in an

irrational, perverse or arbitrary manner or in a manner

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that was not bona fide.

(4)

The Bank should not act in a manner contrary to the

implied term of mutual trust and confidence between an

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employer and employee (the implied term of mutual

trust and confidence).

The first three implied terms have been expressly pleaded, but not the
fourth.

The fourth implied term was raised in the Plaintiffs opening

submission, which was then extensively argued in her closing submission.

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5.

The Bank disputes the existence of the first implied term.

It

accepts the second and third implied terms but disputes it was in breach.
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It takes great exception to the fourth implied term being argued and
strongly objects to any issue being raised on this implied term, which

remains un-pleaded by the close of the Plaintiffs case.

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The un-pleaded implied term of mutual trust and confidence

6.

The implied term of mutual trust and confidence was not

pleaded and, despite objection, remains un-pleaded by the close of the

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Plaintiffs case.

The Plaintiffs position is that it is trite that while points

of law may be pleaded, it is not required to be pleaded under Order 18 rule

11 of the Rules of the High Court (RHC).

Mr Harris SC, leading

counsel for the Plaintiff, submits that the implied term of mutual trust and
confidence is hardly a controversial principle of law and is described in the

Encyclopedia of Employment Law as the cornerstone of all contracts of

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employment.

He therefore argues that in circumstances where the

Plaintiff has pleaded the full terms of her employment contract, which she

has, and absence any requirement to plead matters of law under the RHC,
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there is no need to specifically plead this implied term which is so widely

accepted as affecting all contracts of employment.

7.

The Banks objection is that by introducing the implied term

of mutual trust and confidence with the two sub-category un-pleaded

implied terms under it, the Plaintiff is introducing an entirely new and
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different case from that which was pleaded and thus should not be allowed.
As a matter of law, the duty of mutual trust and confidence between an

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Sweet & Maxwell at 21-1.1.
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employer and his employee is nowadays implied into every contract of

employment.

The existence of this implied term in a contract of

employment was affirmed by the House of Lords in Mahmud v Bank of

Credit and Commerce International SA (in compulsory liquidation) 2.
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See

also Johnson v Unisys Ltd ; and Eastwood v Magnox Electric plc .

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Pausing here, I would agree with Mr Harris SC that there is no need to

plead such a well established principle of law for the purpose of advancing

the Plaintiffs pleaded case, such as the existence of the implied terms
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which were pleaded.

8.
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However, that is not what the Plaintiff seeks to achieve.

Plaintiff pleaded three implied terms.

In the opening submission, the

Plaintiff contends that the fourth implied term is free standing and distinct
from the other three which were pleaded.

The
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In his closing submission,

Mr Harris SC is not seeking to argue that the court should allow the
Plaintiff to rely on the implied duty of trust and confidence for the purpose

of implying the terms which have been pleaded, but contends two separate
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sub-category implied terms implied under the duty of mutual trust and
confidence which have not been pleaded, namely:
(i)

an employer must not exercise a power to dismiss

unconscionably and without reasonable cause and
contrary to the legitimate expectations of the employee;

and
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(ii)

must not exercise a power to dismiss to deprive an

employee of a contractual benefit which results in the

unreasonable forfeit of such a benefit.

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2
3

[1998] AC 20.
[2003] 1 AC 518.
[2005] 1 AC 503

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9.

These two sub-category implied terms are indeed free

standing and separate from the three pleaded implied terms.

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They are

directed at the Plaintiffs claim for the 2007 bonus, which is covered by the
first implied term.

The Plaintiffs case under the first implied term is a

very narrow one, ie that the Bank dismissed her with the subjective
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intention of avoiding payment of the 2007 bonus.

That is the pleaded

case which the Bank is required to meet under the statement of claim.

However, the scope of these two sub-category implied terms sought to be

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introduced under the pretext of a well recognised duty of mutual trust and
confidence is much wider.

They expand the Plaintiffs case from

subjective intention of the Bank to avoid payment to objective

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unconscionable dismissal, lack of reasonable cause of dismissal, legitimate

expectation of the Plaintiff, and the mere fact of unreasonable forfeit of the
bonus.

Clearly, the Plaintiff is introducing a very different case.

10.

Mr Harris SC argues that as the implied term of mutual trust

and confidence is a trite legal principle of law which need not be pleaded
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the Bank can hardly complain about being surprised or ambushed.

Had

he not included the two sub-category implied terms, I would agree.

However, it is Mr Harris SCs submission that the two sub-category

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implied terms are included under the umbrella of the implied term of
mutual trust and confidence.

The obligations under these sub-category

implied terms are not, as yet, established legal principles.

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They are just

implied terms suggested by Cabrelli in his article, Discretion, Power and

the Rationalisation of Implied Terms in Industrial Law Journal 5 to give an

employee anti avoidance protection against express terms in a contract of

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employment which provide for certain conditional payments, the condition

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Vol 36 No 2, June 2007 at 200
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being that the employee is still in the employment of his employer at the
time of payment.

As submitted by Mr Huggins SC, leading counsel for

the Bank, the purpose of Cabrellis article is to submit that the existing law
should be conceptualized, rationalized and developed by reference to the
implied term of mutual trust and confidence.

from the approach in the United Kingdom authorities, such as Clark v

The article is one in which

an academic is proposing a development in the law which would depart

Nomura International Plc

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and Horkulak v Cantor Fitzgerald

International 7 and has followed another author, Brodie 8 in querying the

suitability of the tests of irrationality in Clark v Nomura and Horkulak

because the irrationality test poses an extremely heavy burden on an

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employee to satisfy.

Both Brodie and Cabrelli disagree with the approach

of Mummery LJ in Keen v Commerzbank AG 9.

These sub-category

implied terms are not established legal principles yet.

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Cabrellis suggestion that they should be pleaded and tested in court.

11.

Indeed, it is

As Chief Justice Ma said in Kwok Chin Wing v 21 Holdings

Limited & Another 10, issues must be properly pleaded unless for some
reason the pleadings have assumed a less significant role in the
proceedings.

The Chief Justice said:

It should by now really be quite unnecessary to issue yet another

reminder on the rationale behind pleadings. The basic objective
is fairly and precisely to inform the other party or parties in the
litigation of the stance of the pleading party (in other words, that
partys case) so that proper preparation is made possible, and to
ensure that time and effort are not expended unnecessarily on

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6

[2000] IRLR 766 (QBD)

7
[2005] ICR 402; [2004] 942
8
D Brodie, The Employment Contract: Legal Principles, Drafting, and Interpretation (Oxford: OUP,
2005) at p 200 at 11.27
9
[2007] ICR 623
10
FACV no 9 of 2012

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other issues It is the pleadings that will define the issues in a

trial and dictate the course of proceedings both before and at trial.
Where witnesses are involved, it will be the pleaded issues that
define the scope of the evidence, and not the other way round.
In other words, it will not be acceptable for unpleaded issues to
be raised out of the evidence which is to be or has been
adduced

It is simply not permissible for an issue to be raised in this

way: one does not sift through the evidence adduced in a trial
in the hope that something was said that can conceivably found a
cause of action. Issues, I would reiterate, must be properly
pleaded unless for some reason the pleadings have assumed a
less significant role in the proceedings

The purpose of pleadings, in clearly and unambiguously setting

out the true extent and nature of a dispute not just for the benefit
of the parties but also for the Court in managing and trying cases,
remains important under our system of civil justice. The
retention of the old rules as to pleading as well as the
introduction of new provisions over four years ago under the
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Civil Justice Reform, reinforce this.

12.
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The same principle applies to contractual terms to be implied

from legal duties as matter of law.

A party may not, on the pretext of

legal argument, be allowed to wander into un-pleaded arena, leaving his

opponent pondering what case he has to meet and catching him unprepared.
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While the existence of the duty or implied term of mutual trust and
confidence is trite law which need not be pleaded, the issue raised by such
legal principle must be pleaded.

The existence of the two sub-category

implied terms allegedly included under its umbrella is not established legal
principle.

They are facts which must be pleaded.

scope than that which was pleaded.

They are wider in

Had they been pleaded, the Bank

would have marshalled a separate set of legal arguments, adduced other

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evidence and cross-examined on a different basis and presented its case

differently.

It would be grossly unfair and prejudicial to the Bank to

allow the two sub-category implied terms to be raised at this stage.

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The
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FACV no 9 of 2012 at 21-23.

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Plaintiff deliberately chose not to amend her statement of claim to properly

raise and plead the two sub-category implied terms.

appropriate that she should not be allowed to rely on them.

It is only
That said, as

the duty of mutual trust and confidence is a trite principle, the above

conclusion in no way preclude the Plaintiff from arguing that the pleaded
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terms have been implied into her contract of employment with the Bank by
reason of this legal principle, though not pleaded.

Sex discrimination issue

13.

The Plaintiff made a myriad of allegations, including one of

sex discrimination.

She commenced separate proceedings in the District

Court against the Bank seeking redress for treating her less favourably than
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it would treat a man and for discriminating against her in relation to her
employment because she is a female.

She repeated her claims for sex

discrimination in her pleadings and in her witness statements in this action.

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Her plea is that she was given unreasonable treatment due to a

discriminatory state of affairs within the office against female employees.

14.

While the Bank is desirous to have the sex discrimination

claims dealt with together in this action once and for all, Mr Huggins SC

queries if this court has jurisdiction to hear the Plaintiffs complaints of sex
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discrimination, given that section 76 of the SDO requires any claims of sex
discrimination under that Ordinance be brought in the District Court and

that jurisdiction cannot, as matter of law, be conferred by consent.

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15.

The Plaintiffs position, as explained by Mr Harris SC, is that

the allegations of sex discrimination were background only and may go to

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the rationality or otherwise of the Banks regime at any given time.

He is

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not inviting the court to rule or make any finding on sex discrimination but

asks the court to factor it in insofar as it relates to the attitude of the Bank.
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With respect, I agree with Mr Huggins SC that this is a bizarre position for
the Plaintiff to adopt.

If this court is not to make any finding on sex

discrimination, I am unable to see how to factor it in when deciding the

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rationality or otherwise of what the Plaintiff calls the Banks regime or

assessment of bonuses for the various years complained of.

16.

As analyzed above, the contractual cause of action in this

action are whether the Bank was in breach of the implied term not to

terminate the Plaintiffs employment to avoid paying her a bonus in 2007;

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and whether the Banks administration of its performance incentive

programme and performance evaluation for the years 2005 and 2006 were

irrational, perverse and in bad faith and in breach of any implied term in
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relation to the decision after the Plaintiff was dismissed not to award a
performance bonus in relation to the year 2007.

I do not find it necessary

to make a determination on the jurisdictional issue as the issue of sex

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discrimination is irrelevant.

finding of rationality of the Banks scheme or assessment of the Plaintiffs

bonuses.

I therefore decline to factor that in my

In any event, the evidence does not begin to establish the

Plaintiffs allegations of sex discrimination and no suggestion of sex

discrimination of any kind was put to any of the Banks witnesses.

The issues
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17.

The issues raised in this action are:

(1)

what is the nature of the bonus under the performance

incentive programme;
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(2)

whether a term that the Bank shall not exercise its right

to terminate the Plaintiffs employment by giving one

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months notice or by paying one months salary in lieu

of notice in order to avoid her being eligible for the

performance incentive programme is implied into the

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Plaintiffs contract of employment with the Bank;

(3)

whether the assessment of the Plaintiffs bonuses in

2005 and 2006 were irrational, perverse, arbitrary or

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assessed in bad faith such that no reasonable employer

could have arrived at such amounts;

(4)
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the

Bank

terminated

the

Plaintiffs

employment in August 2007 in order to avoid her being

eligible for a performance bonus; and

(5)
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if the Bank was in breach of contract in any of the

above aspects, the quantum of damages payable to the
Plaintiff.

whether

Except the second issue, which is a mixed issue of law and fact, the other

issues are issues of fact.

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THE IMPLIED TERM OF ANTI-AVOIDANCE

The applicable principle

18.

The Bank accepts the second and third implied terms.

Thus,

having excluded the fourth implied term, or more precisely the two sub-

category implied terms under it, what is left in dispute is the first implied
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term.

The principles under which a term may be implied into a contract

have been set out in BP Refinery (Westernport) Pty Ltd v President,

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Councillors and Ratepayers of the Shire of Hastings 12.

A term may only

be implied into a contract, if:

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(1)

it is reasonable and equitable;

(2)

it is necessary to give business efficacy to the contract,

so that no term will be implied if the contract is

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effective without it;

(3)

it is so obvious that it goes without saying;

(4)

it is capable of clear expression; and

(5)

it does not contradict any express term of the contract.

As with construction of an express term, the content of a term to be

implied depends on the factual matrix at the time of making of the contract.

19.

The Banks objections to the first implied term are that it is

inconsistent with an express term of the letter of employment; inconsistent

with the employers statutory right to terminate under sections 6 and 7 of

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the Employment Ordinance (Cap 57); and that the duty under this implied
term should not be implied into the employment agreement at all because

the legislature had enacted a comprehensive system of employment

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protection in Part VIA of the Employment Ordinance, it is not open to the

common law to legislate into legislated area.

The Banks arguments are

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based on the House of Lords decision in Johnson v Unisys Ltd .

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The relevant terms in the letter of employment

20.

By a written letter of appointment dated 19 April 2000, the

Plaintiff was employed by the Bank as a vice president in its Distress Debt
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(1977) 180 CLR 266 at 283.

[2003] 1 AC 518.

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Trading Group (ISSG) at an initial monthly salary of HK$74,519 per

month with a year-end bonus equivalent to one months salary and a

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monthly housing allowance of HK$40,000.

21.
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Under clause 3 of the letter of employment, upon successful

completion of the probationary period, either party may terminate the

employment by giving a minimum of one months notice in writing or by

paying one months salary in lieu of notice.

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22.

Clause 1 of letter of employment states that the Plaintiff was

entitled to a performance bonus under the Banks performance incentive

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programme.

That clause provides:

You will be eligible for consideration under the Banks
performance incentive programme and it will subject to you
being employed by the Bank at the time of payment.

The performance bonus under this clause is the subject matter of the
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Plaintiffs bonus claims in this action.

The performance incentive programme

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23.
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By reason of clause 1 of the employment letter, eligibility to

be considered for the performance incentive programme is an express term

of the Plaintiffs employment.

Generally, the Banks employees are

informed of their individual bonus payments in January after approval of

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the Banks board of directors.

The Bank maintains a culture of secrecy

regarding the bonus awarded to its employees.

The employees have no

knowledge about the bonus awarded to their colleagues.

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The Plaintiff

received substantial bonuses throughout her employment with the Bank.

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24.

One of the expressed purposes of the programme is to

compete for business and talent.

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The programme was administered

through a continuous performance evaluation process as outlined in the

Banks Pay for Performance presentation. The presentation consists of

fourteen pages. It explains what is pay for performance and the philosophy
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behind it; what total compensation, ie remuneration package, comprises;

how an employees performance is evaluated; and how the bonus is
assessed.

The followings are some salient features of the programme:

(1) the Bank is committed to a pay for performance
environment in which an employees performance is a

key consideration in determining his remuneration

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package;
(2) remuneration consists of: base salary; cash incentives, ie

bonus; and equity;

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(3) an express philosophy of the programme is that the Bank

rewards the highest performers with the greatest rewards

through basic salary, incentives, equity and rewards and

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recognition;
(4) managers

should

aggressively

compensate

high

performing employees;
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(5) the guiding principles for compensation are: reward

the highest performers with the greatest reward; pay

relates directly to performance; and awards are highly

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differentiated based on performance;

(6) the focus is on the results the employee achieved against

his specific goals;

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(7) performance is assessed on two criteria: (a) results

measured against the plan - the What; and (b)

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leadership behaviour - the How; each criterion is rated

as Exceeds, Meets, and Does Not Meet; and

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(8) total compensation is market-informed and driven by

final results of the Bank and line of business as well as

the employees performance results.

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25.

According to this Pay for Performance presentation, the

Bank expressly commits itself to a pay for performance environment and

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promotes a performance-based culture.

This commitment is reflected in

an email issued in January 2006 by Sydney Brown of senior management

instructing the Banks department heads across the world, including Ken
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Schneier and Scott Gordon who were heads of the ISSG from late 2004 to
early 2007, to deliver the bonus numbers for 2005 performance year to

employees by providing references to the compensation to revenue

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levels and the ratio for the Banks competitors and stating that the Bank
are among the highest paying companies on the street.

The email

includes various attachments, fact sheets and talking points totalling 27

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pages.

In his email dated 3 June 2006 to the Plaintiff, Ken Schneier said:
We will bend over backwards to ensure that recognition and
comp are properly allocated.

Thus the Banks commitment to pay for performance could not have been
over-stated.

26.

The Banks commitment to pay for performance environment

is also felt by its employees.

When complaining about the size of his

bonus for the year 2004, John Liptak, the Plaintiffs manager who was
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instrumental to her dismissal, cited a general payout ratio philosophy for

people in [their] type of work.

Ken Schneier and Scott Gordon did not

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disagree.

Ken Schneier even confirmed that for analysts, profit and loss

generated by an analysts credits is a useful tool.

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what he called multiple touch factor.

He also mentioned

The Pay for Performance

presentation also referred to other factors such as compensation to revenue

level in the industry and the individuals What and How rating.

But,

there is an undisputed correlation between the size of the bonus and profit
contributed by the individual.

27.

From this incentive programme, it can be seen that the major

part of an employees remuneration package is composed of performance

bonus and equity which are rewards for performance, a principle to which
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the Bank expressly commits itself.

While there is no simple formula for

determining the amount of bonus, it is largely linked to profit contribution

of the individual employee, his line of business and the Bank as a whole
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and the compensation data in the market.

For a performing employee, the

performance bonus is very substantial.

The base salary constitutes a

lesser fraction of his remuneration package.

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28.

On the fact, the Plaintiff had all along been paid very

substantial bonuses.
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annual salary, and bonus to salary ratio.

The denomination is in US

of thirteen months basic monthly salary of HK$74,519 and HK$84,730

respectively plus a monthly housing allowance of HK$40,000, converted

years.

No information is available for her salary for the other

For illustration purpose, it is assumed that the Plaintiffs annual

salary for 2001 was same as that for 2000 and her salary for 2002 to 2005

Her annual salary for 2000 and 2006 are calculated on the basis

into US currency.
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Table 1 below shows her profits contribution, her

bonus, the bonus/profit contribution percentage (bonus percentage), her

currency.

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was the average between her salary for 2001 and 2006 as the data for those
years are not available.

The data for 2000 are not typical as the Plaintiff

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did not work for the full year.

Table 1 Profit, bonus and salary ratios

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2000

2001

2002

2003

2004

2005

2006

Profits
(US$)

Bonus
(US$)

90,000

425,000

287,000

450,000

640,000

615,000

550,000

Bonus/
profit
Annual
salary
(US$)*
Bonus/
annual
salary

7.8%

7.8%

12.21%

9.00%

16.41%

7.66%

7.61%

185,737

191,738

202,755

48.46%

221.66%

No less than 6m

2.35m

5.00m

3.90m

8.03m

7.23m
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Data not available, assessed to be 194,246

being the average for 2001 and 2006
147.75%

231.67%

329.48%

316.61%

271.26%

* On the basis of 13 months salary plus housing allowance of HK$480,000 per annum
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29.

It can be seen from Table 1 that the Plaintiffs bonus for 2001

was more than double her annual basic salary.

Though the data for her

basic salary for 2002 through to 2006 are not available, it would not be far
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wrong to say that her bonuses for those years were between two to three
and half times her annual salary, a very substantial part of her total
remuneration package.

In this remuneration package, the base salary is

the sauce, the performance bonus is the meat.

The nature of the bonus under the performance incentive programme

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30.
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It would be convenient to deal with a disputed issue as to the

nature of the performance bonus under the performance incentive

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programme.

Mr Harris SC argues that the performance bonus is based on

performance.

An employee banks in her credits every day of the year.

At the end of the year, his bonus is assessed.

in a way which invariably produced predictable results through the

application of known principles and practices.

It is based on performance

not to use the word contractual lest the performance bonus would be
caught under Part VIA of the Employment Ordinance, under the provisions

The Banks case is that bonus is wholly discretionary, not

gratuitous and not contractual.

An employee has no entitlement to the

bonus but only to be considered for the bonus if he is still in employment

at the time when the bonus comes to be paid.

discretionary as opposed to discretionary.

31.

He calls it non-

Mr Harris SC is careful

of which the Plaintiffs claim was time barred.

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Mr Huggins SC submits

that there is a world of difference between a legal entitlement on the one

hand and an expectation or eligibility for consideration on the other.

Though it is more likely that employees would be more motivated by a

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contractual bonus than a mere hope of a discretionary payment which the

employer could choose in its discretion not to pay, it is not an inherent and

necessary condition of the employer/employee relationship that the

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performance bonus would be a right and not merely a hope or expectation.

There are sound commercial reasons for an employer to provide

discretionary benefits, including bonuses, rather than guaranteed ones,

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particularly in the financial sector.

32.
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Having regard to the letter of employment, the Employees

Handbook and the Pay for Performance presentation, I think the bonus to
be paid under the programme is not contractual like salary, which is

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expressly provided by the employment agreement.

There is no expressed

amount to be paid or formula on which it is to be assessed.

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programme is administered by the Bank.

The

The principles governing the

administration of the programme and evaluation of an employees

performance are determined by the Bank.
Performance presentation.

They are set out in the Pay for

There is no dispute that whether to award a

bonus and the amount to award is discretionary.

Given the Banks

expressed commitment to pay for performance, the very comprehensive

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programme of performance evaluation and assessment of bonus, and the

significant ratio the performance bonus has to bear on the total
remuneration package, the discretion is not an unfettered one.

wholly discretionary as Mr Huggins SC submits.

exercised in a serious and bona fide manner.

It is not

The discretion has to be

Like the courts discretion

which has to be exercised in accordance with established legal principles,

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the Banks discretion in awarding or not awarding as well as determining

the amount of the bonus has to be exercised in accordance with the
principles set out in the programme.

Thus,

the nature of the bonus is discretionary, not contractual or gratuitous.

However, the eligibility to be considered under the

programme is contractual, being expressly provided by clause 1 of the

letter of employment.

The discretion is not to be exercised

in an irrational, perverse or arbitrary manner that is not bona fide.

33.

If there was any breach of an implied term which

resulted in the Plaintiff being rendered ineligible to be considered under

the programme, she is entitled to such damages as will put her in the same

position as if she had been considered under the performance incentive

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programme and awarded the bonus which would have been paid to her in
accordance with the principles of the programme.

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Content of the implied anti avoidance term

34.

While clause 1 of the letter of employment expressly provides

that the Plaintiff is eligible for consideration for an award of the bonus
under the Banks performance incentive programme subject to her being

employed by the Bank at the time of payment, clause 3 gives the Bank the
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right to terminate her employment without the need for justification by

giving a months notice in writing or by payment in lieu.

Thus, unless the

first implied term pleaded was implied into the employment agreement, the
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Plaintiffs eligibility to be considered under the performance incentive

programme is illusory and could be easily taken away by the Bank

exercising its right to termination under clause 3, even if she was utterly
I

without fault.
J

35.

The ISSG, operated in a highly competitive environment in

which performance bonus was a major part of the employees total

L

remuneration package.

It is the meat of his remuneration package,

being between two to three and half times his annual base salary plus
M

allowance.
N

The bonus is not gratuitous.

performance.

It has to be earned by

The employee earns by banking in credits for profit

earned for the Bank to be paid out to him on bonus day.

An employee

therefore has a reasonable expectation to receive his bonus at the end of the
P

year.

That must also be the common understanding or expectation of the

employee and the employer because one express purpose of the

Q

performance incentive programme is to compete for talent so as to better

R

enable the Bank to compete for business in the market.

It gives an

employee the incentive to perform so as to maximise profit for the Bank by

S

linking the performance of the individual employee to the amount of the

T

bonus payment.

No talent would stay if he is under the constant fear that

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21

his employer would deprive him of the fruits of his effort by terminating
him before the date of payment of the bonus.

suffer.
E

Without that the assurance

given by the implied term, the purpose of the programme would be

defeated.

The Bank would be unable to retain talent and profit would

That would be contrary to the interest of the Bank.

Not only is

the implied term not inconsistent with clause 3, it supplements the express
terms, without which the employment agreement would have no business

efficacy.
G

36.

Furthermore, an employer/employee relationship is built on

mutual trust and confidence.

I

An employer is under an implied duty to deal with his employees fairly

Thus, if at the time the Plaintiff was entering into the

K

employment agreement with the Bank she had asked,

What about my bonus if I am dismissed through no fault of my
own during the year, by notice or payment in lieu?

There is no dispute that the obligation of

mutual trust and confidence is implied into any contract of employment.

and in good faith.

An officious bystander knowing of the performance incentive programme

and clause 1 and clause 3 of the letter of employment would have readily

responded saying:
O

Surely your employer will act in good faith. It goes without

saying that he wont do that to deprive you of your bonus unless
he has good reasons to terminate your employment.

Such an answer certainly covers the implied anti-avoidance term.

implied term is obvious and it goes without saying.

clear expression.

The

It is also capable of

It may even be wide enough to cover the un-pleaded

sub-category implied terms.

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22

37.

Mr Huggins SC objects to the implied term on the ground that

it is inconsistent with the express term in clause 3 of the letter of

C

employment.

Clause 3 gives the Bank not merely a power to terminate

but a lawful right to terminate at any time by notice or payment in lieu

with or without identifying any reason or cause.

He argues that it would

be inconsistent to say in one breath that there was an express lawful right
to terminate in this manner, that such termination was lawfully valid and

effective; and in the next breath to say that to terminate in this manner
G

would be wrongful, if done with an unfair intention to prevent the Plaintiff

from fulfilling the express contractual condition for consideration for the
2007 bonus.

He refers me to the first instance judgment in Thomas

Vincent v South China Morning Post Publishers Ltd 14 in which Deputy

High Court Judge Muttrie held that the implied duty of mutual trust and

confidence could not prevent the employer from terminating the

K

employment of the employee in accordance with an express term in the

contract allowing either party to terminate by giving one months notice.

38.

With respect, this approach of mechanically comparing the

implied term with express term is inappropriate in construing a contract of

employment.

context.

Each contract has to be construed in its proper factual

The factual context of that case is different from that of the

present case (see paragraph 45 below).

Mr Huggins SCs argument loses

sight of the employers overarching obligation implied by law as an

Q

incident of the contract of employment.

An employer has a duty imposed

by law to deal with his employee in good faith.

Under that duty, he may

not exercise his express contractual rights so as to destroy or seriously

S

damage this relationship of trust and confidence.

14

To say the minimum,

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[2002] 2 HKC 353.
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23

he may not exercise his right to terminate employment by giving notice or

payment in lieu with the intention to avoid paying the employee the
C

performance bonus.

Similar arguments had been considered by Lord

Steyn in Johnson v Unisys15.

Although that was a dissenting judgment on

the issue of legislative intent, Lord Steyns finding that a similar term as
E

the one sought to be implied did not conflict with express term of
termination by notice remains valid.

In Johnson v Unisys, counsel for the

employer relying on the notice provision argued that the obligation of

G

mutual trust and confidence could not be implied into the contract as it
conflicted with express terms of the contract.

Lord Steyn disagreed and

held that the duty could co-exist with the express term.
I

His argument approached the matter as if one was dealing with

the question whether a term can be implied in fact in the light of
the express terms of the contract. This submission loses sight of
the particular nature of the implied obligation of mutual trust and
confidence. It is not a term implied in fact. It is an overarching
obligation implied by law as an incident of the contract of
employment. It can also be described as a legal duty imposed
by law: Treitel, The Law of Contract, p 190. It requires at least
express words or a necessary implication to displace it or to cut
down its scope. Prima facie it must be read consistently with
the express terms of the contract. This emerges from the seminal
judgment of Sir Nicolas Browne-Wilkinson V-C in Imperial
Group Pension Trust Ltd v Imperial Tobacco Ltd [1991]1 WLR
589. It related to an employers express contractual right to
refuse amendments under a pension scheme.
The ViceChancellor held that the employers express rights were subject
to the implied obligation that they should not be exercised so as
to destroy or seriously damage the relationship of trust and
confidence between the company and its employees and former
employees. The employers blanket refusal was unlawful. The
decision did not involve trust law and the employer was not
treated as a fiduciary. It was decided on principles of contract
law. Sir Nicolas Browne-Wilkinson V-C described the implied
obligation of trust and confidence as the implied obligation of
good faith. It could also be described as an employers

15

He said at

paragraph 24:

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[2003] 1 AC 518
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24

obligation of fair dealing. In the same way an employers

express right to transfer an employee may be qualified by the
obligation of mutual trust and confidence : see United Bank Ltd v
Akhtar [1989] IRLR 507, Sweet & Maxwells Encyclopaedia of
Employment Law, vol 1, paras 1.5101 and 1.5107. The
interaction of the implied obligation of trust and confidence and
express terms of the contract can be compared with the
relationship between duties of good faith or fair dealing with the
express terms of notice in a contract. They can live together.
In any event, the argument of counsel for the employers misses
the real point. The notice provision in the contract is valid and
effective. Nobody suggests the contrary. On the other hand, the
employer may become liable in damages if he acts in breach of
the independent implied obligation by dismissing the employee
in a harsh and humiliating manner. There is no conflict between
the express and implied terms. I would therefore dismiss this
argument.

39.

Lord Hoffmann did not disagree with the above proposition.

He said at paragraphs 42 and 43:

J

42. My Lords, in the face of this express provision that

Unisys was entitled to terminate Mr Johnsons employment on
four weeks notice without any reason, I think it is very difficult
to imply a term that the company should not do so except for
some good cause and after giving him a reasonable opportunity
to demonstrate that no such cause existed.

43. On the other hand, I do not say that there is nothing which,
consistently with such an express term, judicial creativity could
do to provide a remedy in a case like this. In Wallace v United
Grain Growers Ltd 152 DLR (4th) 1, 44-48, McLachlin J (in a
minority judgment) said that the courts could imply an obligation
to exercise the power of dismissal in good faith. That did not
mean that the employer could not dismiss without cause. The
contract entitled him to do so. But in so doing, he should be
honest with the employee and refrain from untruthful, unfair or
insensitive conduct. He should recognise that an employee
losing his or her job was exceptionally vulnerable and behave
accordingly. For breach of this implied obligation, McLachlin J
would have awarded the employee, who had been dismissed in
brutal circumstances, damages for mental distress and loss of
reputation and prestige.

While saying it would be very difficult to imply such a term in the light of
the express termination provision, Lord Hoffmann did not rule out such a

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25

possibility in an appropriate case.

In Canada, it was held that the courts

could imply an obligation to exercise the power of dismissal only in good

C

faith.

40.
E

In the circumstances of the Plaintiffs employment agreement,

in particular, the structure of the remuneration package, the Banks

commitment to pay for performance, and the lack of efficacy without the

implied term, I think the implied term pleaded may reasonably be implied
G

into the employment agreement and there is no inconsistency between it

and clause 3 of the letter of employment.

41.

of by the Court of Appeal in Tadjudin v Bank of America National

Association

16

Stone J said at paragraph 58:

58. Second, although it was submitted by the defendant that an

implied term must not contradict other express terms in a
contract, and in the present case, it is said that the implied term
contended for by the plaintiff is inconsistent with the express
right of termination set out in clause 3 of the Employment
Agreement, this argument of the defendant is met by the response
of the plaintiff that the plaintiff does not dispute the defendants
right to terminate her employment by notice under clause 3, or
the validity of that dismissal. The anti-avoidance term only
protects against tactics calculated to avoid the payment of the
performance bonus. In that sense therefore it is not inconsistent
with or contradicts the express term in clause 3. In this respect,
therefore, the present case can be distinguished from Johnson v
Unisys where the implied term contended for was said to be
protective of the employees interest in remaining employed.

59. Furthermore, as was said in the judgment in Takacs case, in

which there was in the contract an express provision allowing the
employers to terminate the contract at any time on four weeks
notice, at page 419 :

16

when allowing the Plaintiffs appeal against an order to

strike out this implied term.

Furthermore, Mr Huggins SCs argument had been disposed

T
[2010] 3 HKLRD 417 at 58 and 59.
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26

I accept the claimants submission that the alleged implied term

could co-exist with the express termination provision in the
contract and that the present circumstances are distinguishable
from Johnson v Unisys. It is further, in my view, distinguishable
from Reda v Flag because in that case there was a clear and
unambiguous express right to terminate the contract at any time
without cause. There is, I conclude, a real prospect of
successfully arguing that such an implied term would supplement,
rather than be inconsistent with, the express terms of the
contract

42.

Mr Huggins SC argues that in that appeal the Court of Appeal

was considering an appeal against striking out the implied term and

decided that it was inappropriate to strike out the plea in what is a

H

developing area of law without first establishing the full factual matrix at
trial.

Hence, he submits that the above dicta are not binding on me.

43.

I respectfully disagree.

In the above dicta, the Court of

Appeal was precisely determining this narrow issue, whether the term,
assuming it is to be implied, is inconsistent with the express terms.

inconsistent, the pleading should be struck out.

If it is

Only if it is not

inconsistent that the issue should proceed to trial to have the disputed

matters resolved and a finding to be made whether the term is to be

N

implied.
O

Stone J also referred to Takacs v Barclays Services Jersey Ltd 17,

although that was only a case of striking out pleading by a master.

In that

case, Master Fontaine reached the same conclusion that a similar implied
P

term could co-exist with express termination provision in the contract.

Q

have made adequate finding of fact to enable me to find that the pleaded
term may be implied into the Plaintiffs employment agreement.

respectfully agree with and adopt the dicta of Stone J, which in any event
S

is also binding on me.

17

For similar reasons as stated by the Court of

T
[2006] IRLR 877
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27

Appeal, I consider the implied anti-avoidance term not inconsistent with

the express term in the employment agreement.

C

44.

As for Thomas Vincent v SCMP, the argument was whether

the implied obligation of mutual trust and confidence required consultation

E

and warning before dismissal.

that obligation could not prevent the termination in accordance with an

express term.

It was on that basis that the court held that

The obligation implied in that case is different from that in

the present case.

Whether the implied obligation could co-exist with the

express term had not been argued.

In any event, that decision is not

binding on me and cannot stand well in the light of the dicta of Stone J
I

quoted above.

I prefer to follow the decision of the Court of Appeal.

45.
K

Mr Huggins SC submits that it could not be sensibly argued

that the express term in clause 1 as to the bonus and clause 3 as to

termination should be construed together so as to prevent an employer,

who decides that the conduct of an employee is such that he is not working
M

well with his team mates or whose conduct and attitude is not conducive to
the smooth operation of the business, from exercising a right to terminate
by notice or payment in lieu.

pleaded goes that far.

The implied term as pleaded is very narrow.

It

only prevents the Bank from terminating the employment with the

It does not prevent the Bank from

terminating for reasons other than to avoid paying the bonus, such as those
suggested by Mr Huggins SC.

I do not think the effect of the implied term

intention to avoid paying bonus.

Q

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28

Inconsistency with statutory right under sections 6 and 7

46.

Mr Huggins SC argues that sections 6 and 7 of the

Employment Ordinance give an employer an unqualified and free standing

right to terminate the employment of his employee by notice or payment in
lieu.

But, the effect of the term sought to be implied would render it

wrongful for the Bank to terminate prior to the time for consideration and
payment of any bonus, if done with an intention to deprive the Plaintiff of

the bonus. It must follow that the implied term would effectively disentitle
G

the Bank as employer from doing lawfully and rightfully that which the
express terms of the employment agreement and sections 6 and 7 say it is
entitled to do.

He therefore submits that such a term could not be implied

into the employment agreement as it is inconsistent with sections 6 and 7.

J

47.
K

Mr Huggins SC refers me to the case of Sun Zhongguo v BOC

Group Ltd 18 in support of his proposition that sections 6 and 7 confer upon
the employer an unrestricted statutory right to dismiss upon the following

of the requisite procedure, and that there should be no implied term which
M

undermines that clear statutory right.

N

He says that Sun Zhongguo was

followed by other judges in the court of first instance, such as Yung Mei

Chun Jessi v Merrill Lynch (Asia Pacific) 19 and Kwan Hung Sang Francis
O

v HK Exchanges and Clearing Ltd 20.

48.

With the greatest respect, I am unable to read Sun Zhongguo

in the way counsel does.

R

In that case, the contract of employment

provided four methods of termination, including giving six months notice

S
18
19

20

[2003] 2 HKC 239.

[2012] HKCU 99.
[2012] 1 HKLRD 546.

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29

and payment in lieu.

The plaintiffs employment was terminated partially

by notice and payment in lieu in respect of the balance of the notice period.
C

The plaintiff argued that under an implied term he was entitled to work out
the entire notice period and be paid all allowances and benefits he would

be entitled had he worked out the entire notice period so that he could earn
E

the allowances and benefits.

In rejecting that argument, the learned

Recorder said 21:

12. The Plaintiff's contention in effect was that there

should be terms implied in the agreement which abrogated the
defendants rights under section 7 of the Employment Ordinance.
It is trite law that terms could not be implied into a contract
simply because they are reasonable and no terms could be
implied if it is against an express term of the contract. In the
present case, although the power to terminate under sections 6 &
7 of the Employment Ordinance is not an express term of the
employment contract, yet the rights given are nevertheless rights
which the defendant would be entitled to enjoy unless they are
taken away by the terms of the agreement. It is difficult to see
why as a matter of business efficacy, there must be a term to
exclude the Defendants statutory rights under sections 6 & 7, nor
could I see any reason for saying that as a matter of unexpressed
common intention, there must be a term that the defendant is not
to exercise the rights given to it as employer under the two
sections.

(My emphasis underlined)

N

49.
O

Two points ought to be noted.

employers statutory right to terminate under sections 6 and 7, the learned

Recorder unequivocally acknowledged that that right could be taken away
by the terms of the agreement.

undermine.

Second, the learned Recorder then went on to explore the

He held that such a term could not be implied

because of lack of business efficacy or because it was not the parties

21

That is far from saying that it is a

sacrosanct right which no terms of a contract of employment could

pleaded implied term.

S

First, while recognising the

T
At 12
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30

unexpressed common intention, ie that such a term is not so obvious that

it goes without saying.

Elsewhere, the learned Recorder said that an

implied term could not exclude the statutory power to terminate under
sections 6 and 7 of the Employment Ordinance.

But that was said in the

above context that a term which had no business efficacy and was not the
E

unexpressed common intention of the parties could not be implied to

abrogate a statutory right.

Nowhere did the learned Recorder express the

view that an implied term may not exclude a statutory right or have the
G

effect of suspending it.

I agree with the learned Recorder in the way I

read his judgment, but not the way Mr Huggins SC reads it.

50.

Nor do I think the other two cases quoted by Mr Huggins SC

support the alleged principle in Sun Zhongguo.

In Yung Mei Chun Jessi v

Merrill Lynch (Asia Pacific), the applicants contract of employment

K

provided for a notice period of seven days and an undertaking that she
would not, for a period of three months from the date the notice (the

restricted period), solicit the account of any of the employers clients

M

whom she had serviced.

The applicants employment was terminated

with seven days wages in lieu of notice.

She claimed wages for the

restricted period and underpayment due to currency exchange difference.

O

Her claim was dismissed by the Labour Tribunal and she sought leave to
appeal from the Court of First Instance.
the reason for her dismissal.

One of her arguments was about

She said at paragraphs15-16:

15. It was to cover up its wrongdoings that the defendant
terminated the employment and made up excuses for the
termination.

It was in that context that Deputy High

Court Judge Au-Yeung, as she then was, sought to rely on Sun Zhongguo.

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31

16. The applicant was dismissed by payment of wages in lieu

of notice, which an employer had a right to do under sections 6
and 7 of the Employment Ordinance and could do so even if he
did it for an ulterior motive. When exercising the statutory right
to terminate, neither party was required to give reasons for
termination. See Sun Zhongguo v. BOC Group [2003] 2 HKC
239, Recorder Edward Chan SC. There was therefore no need
to investigate the reasons for termination. There was also
nothing to correlate the contents of the report to the alleged oral
agreements.

(My emphasis underlined)

It was not a case of conflict between an implied term and statutory right of
G

dismissal. Sun Zhongguo was relied on as authority for the proposition that
there was no need to give reasons for termination under sections 6 and 7.

51.

In Kwan Hung Sang Francis v HK Exchanges and Clearing

Ltd 22, the plaintiffs contract of employment provided for termination by

four months notice or payment in lieu.

On 3 March 2004, he accepted

the terms of a forced resignation and reserved his rights.

Then, he turned

around and alleged that he was constructively dismissed.

One of his

grounds of claim was that but for the dismissal his employer would have
M

followed the procedure for disciplinary action under the terms of his
employment which would result in no finding of any cause of complaint

against him and such process would have taken over twelve months to
O

completion by which time he would have been entitled to some option

benefits.

At the hearing, the plaintiffs counsel confirmed not to take the

point that the employer failed to follow the procedure for disciplinary
Q

action.

It was in that context that Deputy High Court Judge Au-Yeung,

as she then was, said that the statutory right to termination could not be cut
down by an implied term in the contract.

To the extent that is a statement

of law, it was not argued but conceded; and in any event obiter.

T
22

[2012] 1 HKLRD 546.

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32

52.

The learned deputy judge then went on to hold, relying on

Sun Zhongguo, that that was so even if the employer had acted for an
C

ulterior motive. On my analysis, the issue of law decided in Sun Zhongguo

is that the statutory right could be taken away by the terms of the contract,

though on the facts of that case, a term to that effect was incapable of
E

being implied into the contract.

Insofar as the learned deputy judge was

relying on Sun Zhongguo as the authority for the proposition that the

statutory right to termination could not be cut down by the terms of the
G

contract, she was, with respect, misled.

53.
I

In my view, the right given by sections 6 or 7 is not

mandatory but permissive.

It does not require every contract of

employment to be terminated by notice or payment in lieu.

Nor does it

keep alive any contract which has not been terminated in accordance with
K

sections 6 or 7.

The statutory right to terminate by notice may

unilaterally or by agreement be waived by the party to whom it is

conferred against whom the obligation is owed.

Notice may be waived

and the parties may also be mutually discharged from the contract by
mutual agreement.

A convenient example is the form of notice.

Section

6(1) provides that a party may terminate the contract of employment by

O

giving notice to the other party, orally or in writing, of his intention to do

so.

The parties may by agreement cut down the statutory right by

waiving the right to give oral notice by agreeing that notice shall be in
Q

writing and that oral notice shall be ineffective.

An employer may also

unilaterally waive his right to terminate by giving oral notice by providing

in the contract that termination by the employer shall be by written notice

S

only whereas an employee may terminate by giving oral or written notice.

Given the principle of freedom of contract, I agree with Recorder Chan SC

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33

that the statutory right to termination by notice could be taken away by the

terms of the contract of employment, express or implied.

C

54.

Accordingly, it was open to the parties to agree that the Bank

shall not exercise its right to terminate the Plaintiffs employment by

E

giving notice or payment in lieu, whether in accordance with the letter of

employment or pursuant to the statutory right under sections 6 and 7.

If

such a term was not made an express term of the employment agreement, it
G

may be implied.

Whether such an implied duty is excluded by the protection under Part VIA
I

55.
J

It is Mr Huggins SCs submission that having regard to

sections 6 and 7, which give parties to an employment contract an

unqualified right to terminate by notice or payment in lieu, and Part VIA of

the Employment Ordinance, which provides certain statutory protection to

L

employees who are thus dismissed, it is to be inferred that the legislature

did not intend to provide remedies flowing from the manner in which an

employee is dismissed, and/or for dismissal with an underlying intention to

N

avoid an employee being considered for a bonus.

The legislatures

intention is that an employee would only be protected if the underlying

intention was to extinguish or reduce a right, benefit or protection

P

conferred upon the employee by the Employment Ordinance itself.

protection under Part VIA is exhaustive.

The

If the Plaintiffs case is that her

right to the 2007 bonus was such a right or benefit, she could and should
R

have availed herself of the protection of Part VIA within the statutory
limitation period.

She did not do so and, in any event, such a claim is

now time-barred.

If her right to the 2007 bonus was not such a right, she

has no remedy.

The remedy available to her is limited by Part VIA.

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56.

The basis for the inference drawn by Mr Huggins SC is

derived from the House of Lords decision in Johnson v Unisys.

C

In that

case, the House of Lords, by a four to one majority (Lords Bingham,

Nicholls, Hoffmann and Millett with Lord Steyn dissenting on this point),

held that an implied term that the employer would not, without reasonable
E

and proper cause, conduct itself in a manner calculated and likely to

destroy or seriously damage the relationship of trust and confidence

between the employer and employee did not exist because the evident
G

intention of the Parliament manifested in Part X of the Employment Rights

Act 1996 was that such claims had to go through specialist tribunals and
that the remedies were limited by legislature.

The rationale for this

principle is that in legislating for employment protection, the legislature

has struck a balance between the conflicting interests of employers and

employees and it is not for the court to legislate or upset this balance
K

through development of the common.

At paragraph 37 of Johnson v

Unisys, Lord Hoffmann said:

37. judges, in developing the law, must have regard to the
policies expressed by Parliament in legislation. Employment
law requires a balancing of the interests of employers and
employees, with proper regard not only to the individual dignity
and worth of the employees but also to the general economic
interest. Subject to observance of fundamental human rights,
the point at which this balance should be struck is a matter for
democratic decision. The development of the common law by
the judges plays a subsidiary role. Their traditional function is
to adapt and modernise the common law.
But such
developments must be consistent with legislative policy as
expressed in statutes. The courts may proceed in harmony with
Parliament but there should be no discord.

57.
S

Thus, Mr Huggins SC argues, likewise in the light of the

express statutory regime in Part VIA of the Employment Ordinance, which

provides for limited protection and relief to employees whose employers

U
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35

terminate their employment with an intention to extinguish or reduce any

right, benefit or protection conferred by the Employment Ordinance or

C

payment under the employees contract, there is no room for any

contractual common law implied term as contended for by the Plaintiff.
He quotes sections 32A, 32K, 32M, 32N and 32O in Part VIA.

The

legislature has carried out that exercise of balancing the interests of

employers and employees with proper regard not only to the individual

dignity and worth of the employees but also to the general economic
G

interest in Hong Kong.

prohibition against any other forms of unfair, unjust or unreasonable

dismissal.

It is inappropriate for the court to imply any

gone far enough or has provided inadequate protection in relation to unfair

or unreasonable dismissals and to substitute its own view as to what would

paragraph 13 in support of the above proposition:

It is not for the courts to extend further a common law implied
term when this would depart significantly from the balance set by
the legislature. To treat the statutory code as prescribing a floor
and not a ceiling would do just that.

He quotes the

following dicta of Lord Nicholls in Eastwood v Magnox Electric plc 23 in

It is not for the judiciary to say that the legislature has not

be socially just and fair balance of the relevant interest.

K

Lord Nicholls said further in paragraph 14:

O

I recognise that, by establishing a statutory code for unfair

dismissal, Parliament did not evince an intention to circumscribe
an employees rights in respect of wrongful dismissal. But
Parliament has occupied the field relating to unfair dismissal. It
is not for the courts now to expand a common law principle into
the same field and produce an inconsistent outcome.

58.
S

Mr Huggins SC also refers to Lord Hoffmanns dicta in

paragraph 58 of Johnson v Unisys which is to the same effect:

23

T
[2005] 1 AC 503 at 13
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36

59.

For the judiciary to construct a general common law remedy for

unfair circumstances attending dismissal would be to go contrary
to the evident intention of Parliament that there should be such a
remedy but that it should be limited in application and extent.

These are very powerful dicta from the highest court in the

United Kingdom, which certainly commands my respect. Mr Huggins SC

E

submits that it is no answer to these dicta to say that the statutory regime
F

under Part VIA of the Employment Ordinance is not as extensive or

comprehensive as that in the United Kingdom.

The difference is only a

matter of degree.
H

The principle is the same, namely that the legislature in

each jurisdiction has decided upon what relief should be given in the

employment field in relation to unfair dismissals and in particular in cases

I

where an employer dismisses with an underlying intention to reduce or

J

extinguish an employees right or benefits.

In Hong Kong, the deliberate

choice was made to limit protection to cases where the underlying

K

intention is to reduce or extinguish an employees rights, benefits or

L

protection conferred by the Employment Ordinance, and not otherwise.

60.

I would agree with that submission, if I am comparing like

with like.

But, I cannot lose sight of the fact that in the United Kingdom,

the Employment Rights Act 1996 provides a very comprehensive statutory

O

regime of employment protection against unfair dismissal which is far

P

more extensive than Part VIA of our Employment Ordinance.

The

interest which is protected by the United Kingdom regime is one against

unfair dismissal, whereas the interest protected by our regime under

R

Part VIA is at best an interest against dismissal to save costs, for want of
a better description.

The marked difference between the two regimes can

be demonstrated by comparing section 98 of the Employment Rights Act

T

1996 with section 32A of the Employment Ordinance.

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61.

Section 98 of the Employment Rights Act 1996 provides :

(1) In determining for the purposes of this Part whether the
dismissal of an employee is fair or unfair, it is for the employer to
show

(a)
the reason (or, if more than one, the principal reason) for
the dismissal, and

(b)
that it is either a reason falling within subsection (2) or
some other substantial reason of a kind such as to justify the
dismissal of an employee holding the position which the
employee held.

(2)

A reason falls within this subsection if it

(a)
relates to the capability or qualifications of the employee
for performing work of the kind which he was employed by the
employer to do,

(b)

relates to the conduct of the employee,

(c)

is that the employee was redundant, or

(d)
is that the employee could not continue to work in the
position which he held without contravention (either on his part
or on that of his employer) of a duty or restriction imposed by or
under an enactment.

(3)

In subsection (2)(a)

(a)
capability, in relation to an employee, means his
capability assessed by reference to skill, aptitude, health or any
other physical or mental quality, and

(b)
qualifications, in relation to an employee, means any
degree, diploma or other academic, technical or professional
qualification relevant to the position which he held.

(4)
Where the employer has fulfilled the requirements of
subsection (1), the determination of the question whether the
dismissal is fair or unfair (having regard to the reason shown by
the employer)

(a)
depends on whether in the circumstances (including the
size and administrative resources of the employers undertaking)
the employer acted reasonably or unreasonably in treating it as a
sufficient reason for dismissing the employee, and

(b)
shall be determined in accordance with equity and the
substantial merits of the case.

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62.

The United Kingdom regime offers a two-stage protection.

First, under section 98(1), the employer bears the burden of showing that
C

the dismissal was for one of the four reasons falling within section 98(2) or
a substantial reason.

Second, if the employer fulfilled the requirements of

section 98(1), the court shall determine whether the dismissal was fair or
E

unfair having regard to the reason shown by the employer and the
circumstances set out in section 98(4).

63.

It only protects against dismissal for reason of saving costs.

The relevant provisions are section 32A, 32K, 32L, 32M and 32O.
I

By way of contrast, the protection given under Part VIA is

very narrow.

These
I

sections provide:

32A(1) An employee may be granted remedies against his

employer under this Part

(a)
where he has been employed under a continuous contract
for a period of not less than 24 months ending with the relevant
date and he is dismissed by the employer because the employer
intends to extinguish or reduce any right, benefit or protection
conferred or to be conferred upon the employee by this
Ordinance;

(2)
For the purposes of subsection (1)(a), an employee who
has been dismissed by the employer shall, unless a valid reason is
shown for that dismissal within the meaning of section 32K, be
taken to have been so dismissed because the employer intends to
extinguish or reduce any right, benefit or protection conferred or
to be conferred upon the employee by this Ordinance.

(3)
Q

32K For the purposes of this Part, it shall be a valid reason for
the employer to show that the dismissal of the employee or the
variation of the terms of the contract of employment with the
employee was by the reason of

(a)
T

the conduct of the employee;

T

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39

(b)
the capability or qualifications of the employee for
performing work of the kind which he was employed by the
employer to do;

(c)
the redundancy of the employee or other genuine
operational requirements of the business of the employer;

(d)
the fact that the employee or the employer or both of them
would, in relation to the employment, be in contravention of the
law, if the employee were to continue in the employment of the
employer or, were to so continue without that variation of the
terms of his contract of employment; or

(e)
any other reason of substance, which, in the opinion of the
court or the Labour Tribunal, was sufficient cause to warrant the
dismissal of the employee or the variation of the terms of that
contract of employment.

32L(1)
On a claim for remedies under this Part, in
determining whether or not an employer has shown that he has a
valid reason for the dismissal of an employee or for the variation
of the terms of the contract of employment with an employee
within the meaning of section 32K, the court or the Labour
Tribunal shall take into consideration the circumstances of the
claim.

(2)
Without affecting the generality of subsection (1), the
circumstances of a claim include the length of time that the
employee has been employed under that contract of employment
with the employer as compared to the length of qualifying
service required for the right, benefit or protection conferred or to
be conferred upon the employee by this Ordinance which is
capable of being extinguished or reduced by means of the
dismissal or the variation of the terms of the contract of
employment.

32M(1) On a claim for remedies under this Part if the court or

Labour Tribunal finds that the employer has not shown a valid
reason as specified under section 32K, the employer is deemed to
intend to extinguish or reduce any right, benefit or protection
conferred or to be conferred upon the employee by this
Ordinance and the dismissal or the variation is deemed to be
unreasonable and the court or Labour Tribunal may make an
order under section 32N or an award of terminal payments under
section 32O.

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32O(1) Subject to section 32M, if no order for reinstatement or

re-engagement is made under section 32N, the court or Labour
Tribunal may make an award of terminal payments to be payable
by the employer to the employee as it considers just and
appropriate in the circumstances.

(2)
Terminal payments under this section refer to the statutory
entitlements under this Ordinance that the employee has not been
paid and that the employee is entitled to upon the termination of
the contract of employment, or that he might reasonably be
expected to be entitled to upon the termination of the contract of
employment had he been allowed to continue with his original
employment or original terms of the contract of employment to
attain the minimum qualifying length of service required for the
entitlements under this Ordinance.

(3)
H

Subject to subsection (4), terminal payments include

H

(c)

any end of year payment payable under Part IIA;

(e)
any severance payment payable under Part VA or any long
service payment payable under Part VB;

(i)
any other payments due to the employee under this
Ordinance and under his contract of employment.

(4)
Notwithstanding that the employee has not attained the
qualifying length of service required for the entitlements under
this Ordinance, the court or Labour Tribunal may make an award
for terminal payments under subsection (1) or (5) which shall be
reckoned according to the actual length of time that the employee
has been employed under that contract of employment with the
employer.

(5)
P

64.
Q

Even by a cursory reading, one can readily appreciate that the

local regime is very limited and very different from the United Kingdoms.
First, it offers a much narrower protection, namely one against dismissal

with intent to extinguish or reduce any right, benefit or protection

S

conferred or to be conferred upon the employee by this Ordinance.

It is

not protection against the wider concept of unfairness in the dismissal.

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That apart, the scope of protection is also very limited.

It only protects

the right, benefit or protection conferred or to be conferred upon the

C

employee by the Ordinance and not other rights conferred by the contract
but not by the Ordinance.

The right or benefit to be considered for the

award of performance bonus under the performance incentive scheme is

E

not a right conferred by the Ordinance but by the employment agreement.

Thus there is no question about the Plaintiffs right being time-barred
under the Employment Ordinance.

stage protection.

Second, it offers a shallower one-

While section 32A(2) presumes that a qualified

employee is dismissed with the intent to extinguish or reduce right, benefit

or protection, the burden of proving otherwise is discharged upon the

I

employer successfully showing that the dismissal was for one of the five
reasons set out in section 32K.

Those five reasons are similar to those

under the United Kingdom regime.

K

there.

But the employers burden just stops

Once the reasons are established, he does not have to go on to

prove that the dismissal was reasonable, let alone fair: see Thomas Vincent

24

and South China Morning Post Publishers Ltd .

M

65.

The two regimes are not comparable.

In Hong Kong, the

field in respect of unfair dismissal is far from being occupied.

O

The

legislature had not really balance all or most of the interests of the
employer and the employee when enacting Part VIA.

In view of the very

narrow protection under the local regime, it could not have been the
Q

legislatures intention that the statutory remedy under Part VIA is

exhaustive and the courts are prohibited from allowing the common law to

develop in the area of employment protection.

S

24

T
[2004] 2 HKLRD 373, CA
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66.

Mr Huggins SC argues that although the Hong Kong

legislature chose to provide limited relief by creating a statutory

C

presumption that any dismissal will be presumed to be for the improper

intention or illegitimate purpose of depriving the employee of statutory

benefits, it is no answer to say the Hong Kong legislation is not designed

E

to target unfair dismissals because the word unfair is not used in the
Employment Ordinance.

That, he says, is a point of form only and the

courts in Hong Kong, such as Reyes J in John Simpson Warham & Ors v
G

Cathay Pacific Airways 25 and Deputy Judge Lam, as he then was, in

Karchoud, Leila Bent Mohamed v The ITIC Fund of HK 26 held that Part
VIA protects against unfair dismissal.

As I have said, the protection

under Part VIA is just against one aspect of unfair dismissal, namely, to
save the employers costs.

From a comparison of the two regimes above,

I do not think the absence of the word unfair in Part VIA is merely a
K

point of form.

It is a form of substance.

cases quoted by Mr Huggins SC as referring to the kind of unfair dismissal

under the United Kingdom regime.

I am unable to read the two

Even if the protection under Part VIA

is a form of protection against unfair dismissal, it is a very minimal

protection.

67.

The United Kingdom legislation provides a very extensive and

comprehensive regime in protection against unfair dismissal.

That

balance under the United Kingdom regime is one which was struck by the
Q

legislature after considering the socio-economic environment in the United

Kingdom, which has no bearing to Hong Kong.

It can fairly be said that

the United Kingdom legislature has occupied the field relating to unfair
S

S
25

26

[2009] 3 HKC 58 at 6(1), 52-54

(unrep) HCLA 61/200123

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dismissal.

In Hong Kong, the protection given by Part VIA is so minimal

that it could not be said that the legislature has occupied the field relating
C

to unfair dismissal, such that the common law should not be allowed to
develop in that arena.
being occupied.

The field in respect of unfair dismissal is far from

The absence of legislation in this area is precisely the

reason why the court should not hesitate to exercise judicial creativity to
develop the law by implying a suitable term into the contract of

employment to maintain a fair balance of the interests of the employer and

G

those of the employee.

In maintaining that fair balance, the court should

keep pace with the changes in employment terms in the employment

market, particularly as in this case in how the remuneration package is

I

structured.

There is no reason why in the near absence of statutory

employment protection, the development of the common law should not be

allowed to take its course.

K

Conclusion

68.

In conclusion, the term sought to be implied, ie not to

terminate the Plaintiffs employment by notice or payment in lieu in order

N

to avoid her being eligible for consideration under the performance

incentive programme, is reasonable, equitable, necessary to give business

efficacy to the employment agreement, and capable of clear expression.

P

It is not inconsistent with the express terms.

sections 6 and 7 and is not prevented by Part VIA of the Employment

Ordinance.

It is not inconsistent with

It is therefore implied into the Plaintiffs employment

agreement with the Bank.

69.
T

For similar reasons, the two sub-category implied terms, not

to exercise the power of dismissal unconscionably, without reasonable

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cause and contrary to legitimate expectations and not to dismiss to deprive

an employee of a contractual benefit which results in the unreasonable

C

forfeit of such a benefit, could probably be implied.

But those implied

terms will not be considered due to lack of pleading.

THE 2005 BONUS

Introduction
G

70.
H

The Plaintiff received a Meets rating for her What and her

How for 2005.

She was awarded a bonus of US$615,000.

As a result

of the commencement of these and other proceedings and subsequent

discovery, the Plaintiff came to realize that her bonuses for 2005 and 2006
J

were far lower than those awarded to her then colleague and manager, John
Liptak, considering the profit she and John Liptak respectively brought to
the Bank.

evaluations in relation to her performance bonuses for the years.

71.

She claims damages for perverse, irrational and mala fide

Her claim is brought on the basis that in transferring the

distress debt assets of Asia Pulp and Paper Group in Indonesia (APP
Indonesia) from John Liptaks Portfolio to hers, John Liptak and Ken

Schneier intended to dump the loss in those assets on her; and when she
P

found out about the hidden loss in those assets and pointed that out to Ken
Schneier, Ken Schneier downgraded her performance evaluation rating
from Exceeds to Meets in relation to her What in retaliation.

The

Plaintiff also seems to rely on the fact that John Liptak was paid more as
evidence in support of her allegation of irrationality and perversity in

relation to her bonuses for 2005 and 2006.

T

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72.

The legal basis of her claim is that the Bank as employer is

under a duty not to administer its performance incentive programme and

C

implement its performance evaluations in respect of the Plaintiff in an

irrational, perverse or arbitrary manner that was not bona fide.

The Bank

does not dispute that these duties were owed to the Plaintiff by reason of
E

the second and third pleaded implied terms which were implied into the
Plaintiffs employment agreement. The Bank argues that the burden of

showing irrationality is a very high one, and disputes the factual basis of
G

perversity, irrationality, and mala fide alleged by the Plaintiff.

The applicable principles in impugning a discretion: irrationality

I

73.
J

The subject matter of the claim is the performance bonus

awarded under the performance incentive programme.

discretionary.

The award is

The discretion is not absolute but qualified in that it has to

be exercised in accordance with the principles stated in the programme.

L

74.

The principles governing the challenge of the exercise of such

discretion have been conveniently summarized by Mummery LJ in Keen v

N

Commerzbank AG 27 as follow:
First and foremost, the bank has a very wide contractual
discretion. Mr Keen has to show that the discretion has been
exercised irrationally. It cannot be said that the decisions of the
bank on bonuses for 2003 and 2004 are irrational on their face.
The burden of establishing that no rational bank in the City
would have paid him a bonus of less than his line manager
recommended is a very high one. It would require an
overwhelming case to persuade the court to find that the level of
a discretionary bonus payment was irrational or perverse in an
area where so much must depend on the discretionary judgment
of the bank in fluctuating market and labour conditions.

27

T
[2007] ICR 623 59
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46

75.

In Clark v Nomura International Plc 28, Burton J said:

I do not consider it is right that there be simply a contractual
obligation on an employer to act reasonably in the exercise of his
discretion, which would suggest that the court can simply
substitute its own view for that of the employer. My conclusion
is that the right test is one of irrationality or perversity (of which
caprice or capriciousness would be a good example) i.e. that no
reasonable employer would have exercised his discretion in this
way.

76.
G

29

In CCSU v Minister for the Civil Service , Lord Diplock

called irrationality as Wednesbury unreasonableness and defined it as

follows:

77.

By irrationality I mean what can by now be succinctly

referred to as Wednesbury unreasonableness (Associated
Provincial Picture Houses Ltd v Wednesbury Corporation [1948]
1 KB 223). It applies to a decision which is so outrageous in its
defiance of logic or of accepted moral standards that no sensible
person who had applied his mind to the question to be decided
could have arrived at it.

The discretion is the employers.

It is for the employer to

decide whether to pay a bonus and, if so, the amount.

The court must not

embark on a microscopic re-examination of all evidence base on which the

N

employer exercised his decision to decide if it was reasonable to exercise

the discretion in the way the employer did.

It is not the function of the

court to usurp the employers exercise of his discretion.

P

entitled to substitute itself for the employer.

The court is not

It would be insufficient for

the employee to establish that the employer has acted unreasonably.

He

has to show that no reasonable employer in the same field would have
R

exercised his discretion in that way or that the employer has acted
irrationally.

The burden of showing irrationality is a very high one. The

S
28

29

[2000] IRLR 766 (QBD) at 40

[1985] 1 AC 374 at 410

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employee has to show that the decision is Wednesbury unreasonable, so

outrageous in its defiance of logic that no sensible person who had applied
C

his mind to the question to be decided could have arrived at it.

78.
E

If the contract of employment provides specifically that the

discretion is to be exercised depending on some identified single factor,

then the employer has an obligation to assess the bonus dependent upon
that factor only and is not entitled to consider other factors.

In such a

case, it would be less difficult to impugn the employers decision.

In this

case, assessment of performance under the programmne is dependent on a

number of factors.

It includes not merely the individuals contribution to

profit (the What) but also other distinct factors relating to conduct,
attitude, leadership qualities and teamwork (the How).

Even in respect

of an individuals contribution to profit, that contribution is the result of

K

multiple touches.

What weight to be given to each factor is solely a

matter for the employer.

The court is entitled to assume that an employer

must judge by reference to his own best interests what factors to consider
M

and what weight to be attached to such factors in considering whether to

pay a bonus and, if so, the amount.

It is not for the court to determine

what should or should not have been important to a commercial entity.

O

The court can only take a global view of all the factors and apply the test
of irrationality.

79.

If a decision is tainted or motivated by bad faith, the court

may view the exercise of a discretion with some circumspection.

Malice,

or bad faith, which is less than malice, has an impact on the decision
S

making process.

While the test of irrationality remains subjective and the

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burden of proof is very high, if a decision is impugned on the ground of

malice or bad faith, it would be easier to show irrationality.

C

The background
80.

Bank of America is a banking institution incorporated in the

United States.
F

One of its functional units was the Distress Debt Trading

Group which traded in distress debts.

The group was subsequently

renamed as International Special Situations Group (ISSG).

ISSG

business was divided into three regions: Asia which was based in Hong
H

Kong, Europe which was based in London and Latin America which was
based in New York.

81.
ISSG.

Between 2000 and 2004, Peter Young was the head of the
He was based in London.

He recruited the Plaintiff and was the

Plaintiffs manager.
L

82.

From 2004 to 2007, Ken Schneier and Scott Gordon together

succeeded Peter Young as co-heads responsible for management of ISSG.

N

They were both based in New York. Ken Schneier was mainly responsible
for the Hong Kong Desk of ISSG.

83.

In February 2007, ISSG was combined with the United States

Special Situations Group of the Bank to be run as a single business unit

under the name of Global Special Situations Group (GSSG).

Santry became the head of the GSSG.

Peter

He took over the management of

the Hong Kong Desk of ISSG from Ken Schneier.

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84.

Distressed debts are essentially debts, non-performing loans or

securities of companies or government entities that are already in default,

C

under bankruptcy protection, in distress and heading towards such a

condition.

The ISSG or GSSG purchased them at a great discount

reflecting their risk-adjusted value, held them while the company was
E

restructuring, and then sell them after the securities have appreciated.
The Bank provided capital for ISSG or GSSG operations.

The capital

available to invest in a particular country was determined by the Risks

G

Department of the Bank and was referred to as the country limit.

85.
I

The Plaintiff is an Indonesian.

She was living in her home

country in Indonesia, when she joined the Bank as an analyst at the level of
vice-president in the Distressed Debt Trading Group on 5 June 2000.

She

started working in the Banks Jakarta office until 3 July 2000 when she
K

was transferred to work in Hong Kong.

Young and initially worked under him until 2004 when Ken Schneier took
over the Hong Kong Desk of ISSG.

She was recruited by Peter

Hong Kong Desk.

In May 2001, John Liptak joined the

Since 2005, the Plaintiffs relations with John Liptak

became very rough.

In February 2007, ISSG merged to become GSSG

with Peter Santry as head of the GSSG and with John Liptak replacing Ken
O

Schneier as the Plaintiffs immediate manager.

In that capacity, he

brought about the Plaintiffs dismissal in August 2007.

86.

The

Plaintiffs

duties

included

identifying

investment

opportunities, performing analysis and valuation of distressed debt assets

and investing in the same on behalf of the Bank, as well as managing the
S

assets on an ongoing basis and performing certain administrative work

related to the assets in the portfolio which she was responsible for.

The

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Plaintiffs geographical area of responsibility was principally Indonesia,

which was assigned a low country limit.

Naturally, a lower country limit

affected the profit generated by the analyst.

However, the Plaintiff

generated good profit throughout her employment as shown in Table 1.

87.

John Liptak joined the ISSG team of the Bank in May 2001.

Unknown to the Plaintiff, probably at least until discovery in these

proceedings, John Liptak was Peter Youngs first choice.

It was because

John Liptak was not available that the Plaintiff was offered the job.

John

Liptak was formerly an analyst from ING Barings Securities Hong Kong.

He was offered expatriate terms and joined at the level of principal, which
I

was one level higher than vice-president.

During the material times, there

were between four to seven members in the team including Harumi

Hiyamuta, Elizabeth Loh and David Sbarro.

K

88.

In late 2004, sometime after Ken Schneier and Scott Gordon

took over the Hong Kong Desk of ISSG from Peter Young, they were
M

instructed by senior management of the Bank to appoint a Head of Desk in

Hong Kong responsible for supervision and control of the day-to-day
activities of the Hong Kong Desk.

to delegate some of the management responsibilities to the region.

In January 2005 John Liptak was appointed the Head of the

Hong Kong Desk of ISSG.

The appointment was not a promotion but a

change in title with added responsibility. There was some misapprehension

within the team about his position as Head of the Desk.

89.

The purpose of the appointment was

On 3 November

2005, Ken Schneier issued an email to the team announcing John Liptaks
responsibilities, which included supervision, control and administration of

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operations, and receipt and maintenance of information regarding all

projects being conducted by of ISSG Asia.

C

90.

It was during the above period, ie in September 2005, that

John Liptak transferred the distress assets of APP Indonesia under his
E

portfolio to the Plaintiff.

This transfer, the Plaintiff says, set the scene for

a retaliatory downgrade by Ken Schneier of her performance evaluation

resulting in a reduction in the size of her 2005 bonus.

G

91.

During that same period, the Plaintiff had a dispute with John

Liptak for not including her in a meeting with Tom White of senior
I

management from New York on the occasion of his visit to Hong Kong.

92.
K

On 18 November 2005, Ken Schneier gave the Plaintiff an

Exceeds rating for her What and a Meets rating for her How in her
2005 year-end performance evaluation.

But on 22 November 2005, he

reduced her What rating from Exceeds to Meets.

M

93.

On 1 February 2006, John Liptak and Harumi Hiyamuta were

promoted from principal to managing director.

O

94.

The relations between the Plaintiff and John Liptak had not

been good, particularly since John Liptaks appointment as Head of Desk.

Q

The discord arose out of the Plaintiffs belief that John Liptak took away
her deals and her contacts and she expressed reluctance to loop John

Liptak in for her projects, including Project Media. The Plaintiff also made
S

serious but false accusation against John Wacker and John OToole, both
from the Legal Department of the Bank, for assisting John Liptak in taking

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away her deal by sending a confidentiality agreement to John Liptak (the

Wacker Incident). She was forced by Ken Schneier to tender an apology.

C

95.

The Plaintiff was given an overall Meets rating for her

What and an overall Does Not Meet rating for her How in her 2006
E

year-end performance evaluation.

96.
G

GSSG.

Peter Santry took over the Hong Kong Desk from Ken Schneier.

John Liptak became the Plaintiffs immediate manager in place of Ken

Schneier.

Following a re-organisation, the ISSG became part of the

G

Peter Santry was informed of the discord between the Plaintiff

and John Liptak.

He had a meeting with the Plaintiff during his visit to

Hong Kong in April 2007 with a view to resolve the situation.

But as a

result of his discussion with John Liptak, Peter Santry decided to issue an
K

official warning.

97.
M

On 29 June 2007, John Liptak on behalf of the Bank issued an

official warning letter to the Plaintiff listing out her unacceptable

behaviour and enclosing a Performance Improvement Plan (the PIP)
setting out specific goals which the Plaintiff was required to meet.

The

warning letter stated that if the Plaintiff failed to make immediate

improvement as specified in the plan, the Bank would take further

disciplinary actions including summary dismissal.

Q

98.

John Liptak considered the Plaintiff did not meet the specific

goals required in the PIP.

S

On 14 August 2007, he reported the Plaintiffs

performance under the PIP to Peter Santry.

Peter Santry then decided to

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offer the Plaintiff the option to resign voluntarily or the Bank might elect

to terminate her employment.

C

99.

On 20 August 2007, John Liptak conducted an interview with

the Plaintiff about her performance of the PIP and told her that she failed
E

to comply fully with the improvement goals set out in the plan.

offered her the option to take the rest of the week off and decide if she
wanted to resign voluntarily.

He

The Plaintiff refused.

On 28 August 2007,

the Bank issued a written notice to terminate the Plaintiffs employment

with effect from 28 August 2007.

Credibility of witnesses
J

100.

The legal issues of the Plaintiffs claims having been disposed

of, what remains are mainly disputes of fact.

The evidence in this case

comprises mainly of the testimony of the Plaintiff and the defence

L

witnesses, contemporaneous emails and other contemporaneous documents.

Inherent probability and consistency of a witness testimony with

contemporaneous documents remains the most reliable test of a witness

N

credibility.

101.
P

The Plaintiff gave testimony but called no other witnesses.

She is protective and selective in her evidence, which was probably

prompted more by her paranoid interpretation of events than dishonesty.

102.

The Bank called John Liptak, Harumi Hiyamuta, David

Sbarro and other officers from its Human Resources Department.

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103.

John Liptak had left the employment of the Bank and may be

regarded as a non-interested.
C

Despite that, he impressed me as an

unreliable witness and selective in his evidence.

He was patently evasive

in his evidence about the APP Indonesia incident.

He impressed me

being decidedly dishonest with the Plaintiff at the time he transferred the
E

distress assets of APP Indonesia to the Plaintiff and with the court in his
testimony.

He also impressed me as acting maliciously in invoking the

PIP and in his conduct of the PIP.

G

These findings are dealt with in greater

detail in my analysis of his evidence.

Though other aspects of his

evidence are corroborated by contemporaneous documents, I do not

consider him a credible witness.

I

104.
level.

Harumi Hiyamuta was a salesperson at managing director

She had retired and should be regarded as a non-interested witness.

However, she impressed me as decidedly biased in favour of John Liptak

and against the Plaintiff.

105.
Japan.

I do not believe in her evidence.

David Sbarro is a current employee of the Bank attached to

He worked with the Plaintiff during the last year of her

employment.
O

not a reliable witness.

I give little weight to his evidence.

106.

For reason as given in my analysis of the evidence, he was

The main factual dispute is between the Plaintiffs and John

Liptaks testimony.

As between them, it would not be difficult to find out

where the truth lies by testing their evidence against contemporaneous

emails and documents and applying the test of inherent probability.

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107.

The evidence of the officers of the Human Resources

Department is mainly formal in nature.

C

dispute.

Their evidence is not in serious

C

I have no difficulties accepting their evidence.

Performance evaluation and rating

E

108.
F

One of the factors taken into account in awarding bonus is

performance evaluation.

Evaluations are done twice a year, once in mid-

year and again at year-end.

Evaluation begins with the employee

submitting a performance and development plan (PDP) to his manager.

H

After evaluation, the manager would discuss the evaluation with the
employee and then forward the performance evaluation to the Human

Resources Department for record.

J

109.

Performance

evaluation

would

ultimately

result

in

performance rating in relation to two dimensions, results against plan or

L

the What and the behaviour or the How.

Employees are rated on a

three-point scale: Exceeds, Meets and Does Not Meet.

110.

Exceeds in relation to the What means consistently

demonstrates outstanding accomplishment in all major areas of

responsibility; results are consistently above those of others who hold

P

positions of comparable scope and responsibility; and exceptional

performer who exceeds specific goals and achieves break through results.

In relation to the How, it means consistently demonstrates outstanding

R

skill level in leadership or other role-specific competencies; performs

above others who hold positions of comparable scope and responsibility

and is seen as a role model.

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111.

Meets in relation to the What means meets performance

expectations and achieves strong results based on stated specific goals.

C

role-specific competencies.

not fully meet expectations in key areas of responsibility and does not

adequately demonstrate leadership or other role-specific competencies

required to perform effectively in the job.

An evaluation at this rating

award of bonus to any employee given a Does Not Meet for the How.

113.

Management discourages

In relation to the How, it means does not

means a need for improvement is evident.

I

Does Not Meet in relation to the What means results do

achieve stated specific goals.

G

In

relation to the How, it means demonstrates strong leadership or other

112.

The Bank practises the 20/70/10 policy set out in the Pay

for Performance presentation.

Under this policy, 20% of the staff in a

team would be given an Exceeds rating, 70% would be given a Meets

rating, and no more than 10% would be given a Does Not Meet rating.
M

While management would strictly limit Exceeds rating to 20%, it would

not strictly force managers to rate 10% of his staff as Does Not Meet.

114.

result in nine different combinations of Exceeds, Meets and Does Not

Meet.

The ratings in the two dimensions of What and How

An employee awarded a Does Not Meet for his What and

How is unlikely to receive any salary increase, bonus or equity.

Not informed of evaluation in 2005

S

115.
T

The Plaintiff complains that she had not receive her mid-year

and year-end performance evaluations for 2005 which Ken Schneier

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completed on 10 August 2005 and 18 November 2005 respectively.

She

only received them in December 2007 during the Labour Tribunal

C

proceedings.

She was not aware of the downgrading until discovery of

the documents in those proceedings and in DCEO 4 of 2009.

She

seemingly suggests that the irregularities showed that Ken Schneier had
E

something to hide in respect of her evaluations.

Mr Huggins SC submits

that the contemporaneous documents show that Ken Schneier had

problems with the PDP forms at the time and asked the Human Resources
G

Department to incorporate the reviews in the form for him and hence
neglected sending a copy to the Plaintiff.

116.

Whatever might have been the reason for the Plaintiff not

receiving a copy of the evaluations, there is no dispute that Ken Schneier

did send the mid-year review and the year-end review to the Human
K

Resources Department on 10 August 2005 and 18 November 2005

respectively, and did downgrade the Plaintiffs evaluation on 22 November
2005.

material time and not concocted for the purpose of these proceedings.

117.

Furthermore, there are contemporaneous emails from Ken

Schneier to senior members of the Human Resources Department referring

to his discussion with the Plaintiff on 18 July 2005 and 18 November 2005
respectively about her mid-year and final performance evaluations.

The evaluation and downgrading were actually made at the

There

is also an email dated 18 November 2005 from Ken Schneier asking if the
Plaintiff would be available for discussion about her year-end evaluation

and the Plaintiff confirmed that she would be available that evening.
S

Under cross-examination, the Plaintiff admitted there was such discussion

though she could not remember some of the contents.

Thus, there can be

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no dispute that the Plaintiff had been informed of her two performance

evaluations, though not the downgrading (see paragraphs 135 to 142

C

below).

The material issue is whether the downgrading was irrational and

retaliatory.

The Plaintiffs complaint that she had not received a copy of

her performance evaluations is irrelevant.

E

Comparison with John Liptak

118.

It seems that the Plaintiff is relying on the fact that John

Liptak was paid more bonus than she as evidence in support of her
H

allegation of irrationality and perversity in relation to her bonus payments

in 2005 and 2006.

119.

It must be borne in mind that the bonus is a discretionary one

and the issue is whether the bonus awarded to the Plaintiff was irrationally

low and not whether the award to another member was irrationally high.
L

Thus, the fact that one, not all or most, members of the team was paid
irrationally more than the Plaintiff does not even begin to show

irrationality or perversity in respect of the decision relating to the bonus

N

awarded to the Plaintiff.

In this respect, irrationality can only be shown if

the Plaintiff did not receive what everyone else received in accordance

with the principles of the performance incentive programme consistently

P

applied.

There is no evidence that the Plaintiff singularly received an

irrationally low bonus compared with most or all members of ISSG.

this reason alone, this basis of her claim must fail.

For

Nevertheless, I shall
R

take a quick look at her comparison with John Liptak.

120.
T

There is no dispute that John Liptak was valued more highly

than the Plaintiff.

Peter Young was head-hunting for him.

It was when

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John Liptak was unable to take up the employment that the employment
was offered to the Plaintiff at vice-president level.

Eleven months later,

John Liptak was employed at principal level, which was one level higher
than the Plaintiff.

He was given more responsibility, wider geographical

area of responsibility, more country limits and higher targets. Presumably,

E

these were commensurate with his level of appointment, qualification and

relevant experience.

121.

Hereunder is a table showing the profit of ISSG, the Plaintiffs

and John Liptaks financial targets, contribution to the profit in US dollars

and expressed as a percentage of ISSG Asias profit, their bonuses in US

I

dollars and expressed as a percentage of their profit contributions.

Table 2 Plaintiffs bonus versus John Liptaks bonus

K

2002
L

2003

2004

2005

2006

6/2007
L

ISSG Asias
34.70 m
profit

35.15 m

40.86 m

27.39 m

-1.36 m

2.53 m

(US$)

M
Liptak

Financial
target

5m

10 m

10-15 m

20 m

Overall
30 m

Overall
18 m

Contribution
(US$)

8.11 m

Contribution/
ISSGs profit

23.37%

Bonus (US$)

500,000

16.16 m

29.27 m

19.67 m

-1.36 m

7.64 m
O

45.97%

71.63%

71.81%

301.98%
P

1,000,000

1,275,000

1,400,000

1,000,000

350,000

Q
Bonus/
Contribution

R
Plaintiff
S

Financial
target
Contribution
(US$)

6.17%

6.19%

4.36%

7.12%

4.58%
R

3m

5m

3-5 m

10 m

5-10 m

5-10 m
S

2.35 m

5m

3.9 m

8.03 m

7.23 m

6.06 m
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Contribution/
ISSGs profit

6.77%

14.22%

9.54%

29.32%

239.53%

Bonus (US$)

287,000

450,000

640,000

615,000

550,000

Bonus/
Contribution

12.21%

9.00%

16.41%

7.66%

7.61%

From 2006 onwards, John Liptak was given an overall target for the entire ISSG Asia Desk.

122.

Table 2 speaks for itself.

John Liptak consistently yielded

higher results than the Plaintiff except for 2006.

He incurred heavy loss

which wiped out the profit made by the Plaintiff with the result that ISSG
H

incurred a loss for 2006.

view that that was a bad year and ISSG could have suffered more loss but
for John Liptak.

However, the Bank excused him as it took the

I shall return to this when dealing with the Plaintiffs

complaint about the 2006 bonus.

Throughout the years, the differences in

the quantum of bonuses paid to John Liptak and the Plaintiff were
substantial but not patently or wholly disproportionate.

While John

Liptak was paid very roughly twice the amount of bonuses paid to the
Plaintiff, his profit figures, save for 2006, were consistently more than

twice the Plaintiffs profit figures. In terms of bonus percentage, John

N

Liptak was treated less favourably than the Plaintiff.

123.
P

were suppressed by John Liptak deliberately keeping down her country

limit for Indonesia, to which area she says most of her work was limited or
confined.

There is a suggestion by the Plaintiff that her profit figures

There was a complex and highly centralized process of setting

country limits which was beyond manipulation by John Liptak.

The limit

was set by the Risks Department of the Bank depending on its assessment
of the risk factor of the particular country.

Presumably, the Bank

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assigned the Plaintiff responsibility for Indonesia because of her

familiarity with the country.

Another possible reason for not assigning

the Plaintiff with more country limit could be the Banks assessment of her
qualification and experience as reflected by her appointment at vicepresident level.

These are management decisions for the Bank.

court will not question, examine or substitute its own view for the Banks.

Furthermore, there are other factors to be considered under the

performance incentive programme such as the How and What ratings,

leadership and other responsibility.

Since 2005, John Liptak was

appointed Head of Desk with more administrative responsibility.

I

124.

The

While

an employees performance in terms of his contribution to the profit of

ISSG has a bearing on the quantum of the bonus to be awarded, there is no

strict correlation and the Bank does not adopt a formulaic approach in
K

determining the quantum of the bonus.

All in all, the disparity between

the Plaintiffs and John Liptaks bonus figures cannot be said to provide

any basis for an allegation of irrationality or perversity.

M

Loss dumping

125.

John Liptak had been responsible for the distress assets of

APP Indonesia for some years.

P

There is no dispute that the assets had

been over-marked and the position had a potential loss of some

US$500,000 in 2005.

There can also be no dispute that both John Liptak

and Ken Schneier had been informed of the problem with those assets by
R

Sensu Serpen via her email dated 14 September 2005.

The problem was

that the assets were purchased under a trade confirmation which included

SACE guarantees which guarantee the repayment of 85% of the principal

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and interest due, but Sensu Serpen discovered that 85% of the traded

portion as specified in the confirmation was not so covered.

C

126.

Sensu Serpens email was sent to John Liptak and Ken

Schneier directly.
E

Under cross-examination, John Liptak said he did not

recall seeing this email or sharing the email chain with Ken Schneier.

His

answer must be viewed against the fact that just nine days ago, he received

the email from Sensu Serpen and knew that the APP Indonesia position
G

had a serious potential loss arising out of the problem of the guarantees.
He could not honestly say that he did not know the distress assets in APP

Indonesia he transferred to the Plaintiff was not carrying a potential risk of

I

heavy loss.

He knew this is an important issue in this trial which he had

to deal with in his evidence.

To say that he could not recall Sensu

Serpens email and other questions asked of him in relation to this issue is
K

just convenient non-sense.

He had much to hide from the Plaintiff then as

he had to hide before me now.

witness.

He never impressed me as a credible

I reject most of his evidence.

127.

When asked about the problem as identified in Sensu Serpens

email, John Liptaks simple answer was it was just a recurrent event
O

arising from the difference in opinion between analysts.

It does not take a

banking expert to say that distressed assets which are guaranteed have, at

least, a guaranteed value, whereas if the assets are not guaranteed their
Q

value may be subject to differences in opinion between analysts.

Without

going into details, the simple fact is that the assets in question were

purchased on the basis that they were 85% guaranteed when they were not.
S

That is a fundamental problem with the assets.

John Liptaks evidence

that this is a recurrent event is contradicted flatly by James Cook of the

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Banks Collateral Operation Team who said that such mis-marking seldom
occurred.

James Cook also marked down the assets by approximately

US$500,000 which tallied with the Plaintiffs assessment.

John Liptak

was trying to conceal a fundamental problem of the assets as difference in

valuation between analysts.

evidence.

time.

He was not being straight forward with his

He was not telling the truth.

He was trying to conceal the fact

that the assets he transferred to the Plaintiff carried a potential loss.

128.

Sensu Serpens email was not known to the Plaintiff at the

She only came to know about it through discovery.

The following

is a reconstruction of the events in the light of Sensu Serpens email.

I

129.

About nine days after John Liptak received Sensu Serpens

email, he asked the Plaintiff to agree to the transfer of the distress assets of
K

APP Indonesia from his portfolio to hers and the Plaintiff agreed.

A few

days later, Ken Schneier confirmed that with the Plaintiff face to face.

According to John Liptak, the idea of the transfer was Ken Schneiers and
M

not his.

As the transfer was confirmed by Ken Schneier, it really matters

not who suggested the transfer.

The issue is whether there was knowing

loss dumping on which retaliatory downgrading could be inferred.

O

I find

that both John Liptak and Ken Schneier knew that the distress assets of
APP Indonesia carried a potential loss before transferring them to the

Plaintiff.
Q

130.

When transferring those assets to the Plaintiff, John Liptak

only gave her two supporting documents, one was an outdated research
S

report he wrote while he was still working with ING Barings Securities
Hong Kong some years ago and the other was an appendix of the

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restructuring agreement.

Information was clearly wanting.

Despite

repeated requests, John Liptak declined providing information about the

C

assets sought by the Plaintiff.

Eventually, the Plaintiff sent him an email

on 10 October 2005 with a copy to Ken Schneier and Harumi Hiyamuta.

In the face of the questions asked by the Plaintiff, John Liptak dodged the
E

questions and replied that he would talk to Ken Schneier.

Then on

11 October 2005, John Liptak wrote to Ken Schneier, not the Plaintiff, that

he could not provide the information sought by the Plaintiff and suggested
G

to sell the position.

letting the Plaintiff pick up the assets as a new credit.

131.

Ken Schneier agreed but suggested an alternative of

132.

On 13 October 2005, Ken Schneier wrote to the Plaintiff:

I thought APP would be a good thing for you and now it just
becomes another headache for me. Please just take it and do it.
You will not be held responsible for any shortcomings in the file.
We may sell what we have to have a clean slate. Please get the
info you feel is necessary to do it right now. I cannot stand the
constant friction out there.

Eventually, the Plaintiff figured out what was odd about these

assets from the usage report.

On 22 November 2005, she wrote to Ken

Schneier with copies to Sensu Serpen, John Liptak and Eric Clause,
O

revealing the problem:

As you may be aware, I have been sorting out our APP PIOCs
exposure in the past few weeks. We finally figured out one of
the items which has been looking very odd. Please look at Row
268~272 in the usage report. These items are registered claims
through Royal Bank of Scotland but they still show the old
facility names. After some digging, Sensu finally realised that
we have overpaid for these items from Intesa by a few hundred
thousands and based on my rough estimate, the difference from
the cost as per the usage report is US$524K if I price Pindo blend
at 40 cents.

I have requested Royal Bank of Scotland to give us the final

numbers so that we can book this correctly in the usage report.

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Once they come back to us, our back office should be able to
correct them and we should mark it down.

133.

Ken Schneier responded promptly saying that he would like to

discuss further.

Then in less than four hours, he sent the Plaintiff an

email stating that he had instructed John Liptak and Sensu Serpen to
E

follow up with the booking and Unicredito issues and confirming that the
for going forward purposes, the trade history is with John Liptak and

Sensu Serpen.
G

134.

Both John Liptak and Ken Schneier knew about the problem

with the distress assets of APP Indonesia before they decided to transfer
I

them to the Plaintiff.

Most probably, John Liptak had wanted to loss

dump on the Plaintiff.

Trusting John Liptak as the Head of the Desk, Ken

Schneier might have granted his blessing without appreciating the

K

significance.

Liptak knew there could be no easy way out.

position.

As a result of the Plaintiffs press for information, John

downside to let the Plaintiff carry on anew.

Thus, by the time of Ken

Schneiers email dated 13 October 2005, John Liptak aborted his attempt.

Furthermore, James Cook confirmed that the profit and loss of the

distress assets of APP Indonesia was attributed to John Liptak.

Q

was plainly no loss dumping.

dumping.

Thus, the transfer of the distress assets of

There is no basis for any claim for loss of bonus due to loss
However, the incident exposed John Liptaks mala fide which

dented his incredibility.

There

APP Indonesia to the Plaintiffs portfolio had no effect on her profit

figures.

The Plaintiff took it up anew.

This was further confirmed by Ken Schneiers email dated 22 November

2005.

It was not sold because Ken Schneier thought there was no

He got rid of the position, bearing the loss.

O

He suggested to sell the

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Downgrading
135.

The above incident also sets the scene for the Plaintiffs

complaint of retaliatory downgrading.

The Plaintiff reported the mistake

about the valuation of the distress assets of APP Indonesia to Ken Schneier

by email at 7.01 pm on 22 November 2005, with a copy to Eric Clause (see

E

paragraph 132 above for the content of that email).

responded within an hour and half that he would like to discuss the matter
further.

Ken Schneier

At 10:56 pm, Ken Schneier confirmed that the trade history was

the responsibility of John Liptak and Sensu Serpen. That was a

reconfirmation of the position in his email dated 13 October 2005.

Then,

about an hour later, at 12:05 am the next day, Ken Schneier sent an email
I

to Sydney Brown downgrading the Plaintiffs performance rating in the

J

What from Exceeds which he awarded her four days earlier to Meets.

She was the only ISSG member downgraded that day.

K

136.

Based on the above chronology, the Plaintiff alleges that the

downgrading was made in retaliation of her exposing the hidden loss in the
M

distress assets of APP Indonesia.

N

The incident might have created some

hard feeling in Ken Schneier, a headache as he called it in his email

dated 13 October 2005.

Ken Schneier might have felt offended by the

Plaintiffs exposing John Liptaks and/or Sensu Serpens mistake which

P

adversely reflected on him as the person in overall charge.

137.
R

Ken Schneier was not called to explain the reason for the

downgrading.

He declined not to come to Hong Kong to testify because

of his health.

Mr Huggins SC explains that the downgrading was a

recalibration in accordance with the 20/70/10 policy (see paragraph 113

T

above).

He suggests that on 18 November 2005 Ken Schneier gave the

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Plaintiff an Exceeds rating for her What based on his estimation that
she would turn in more than US$7 million profit.

Then, on 21 November

2005, Ken Schneier received the profit and loss reports and spreadsheet of
2005 up to 31 October 2005 showing the Plaintiffs profit up to 31 October

2005 was just some US$3.2 million and seven out of nine members had
E

outperformed her.

The Plaintiffs target was US$10 million, but her

contribution was at the highest US$8 million.

As Exceeds rating

should be reserved to 20% of the members of the team, upon seeing those
G

figures, Mr Huggins SC suggests it was perfectly reasonable and rational

under the policy for Ken Schneier to reduce the Plaintiffs rating from

Exceeds to Meets.
I

138.

Mr Harris SC argues that the Plaintiff was the only person

downgraded on 23 November 2005 and that between 22 November 2005

K

and 14 January 2006 no one else in ISSG was downgraded, suggesting that
the Plaintiffs downgrading was the result of retaliation. This inference
based on timing is a very tenuous one.

nine more members from Exceeds to Meets in compliance with the

John Liptak was also downgraded as a result.

final figures show, the Plaintiff was surpassed by nine others.

Even if she

This shows that Ken Schneiers

choice on 22 November 2005 was obviously rational and the Plaintiffs

downgrading inevitable.

As the

had not been downgraded on 22 November 2005, she would have been
downgraded as result of this exercise.

As the evidence shows, on 14

January 2006, Ken Schneier was required by Robin Maxwell to downgrade

20/70/10 policy.

That the Plaintiff was the only person

downgraded on 22 November 2005 is neither here nor there.

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139.

Mr Harris SC argues that the evidence which surfaced at trial

shows that reports and spreadsheet were for the purpose of preparing for a
C

presentation and the Banks Human Resources Department staff who gave
evidence could not ascertain whether the reports reflect September 2005 or
October 2005 numbers.

I do not think all these make much difference.

140.

On an objective view, even assuming that Ken Schneier was

in favour with John Liptak, there was no reason why he should retaliate
G

against the Plaintiff.

The mistake was presumably made by Sensu Serpen.

According to the Plaintiff, it was Sensu Serpen who eventually discovered

the mistake, although that was as a result of the Plaintiffs persistent press
I

for information.

According to the Plaintiff, her report was put in a neutral

and subtle manner and not accusatory.

There was all the more reason to

commend the Plaintiff than to retaliate against her.

K

If there was any

reason to retaliate, the target should be Sensu Serpen, but there is no

evidence that she was retaliated.

I think the inference suggested by the

Plaintiff is too far-fetched.

M

141.

There is no plea that this 20/70/20 policy is irrational.

fact, the Plaintiffs own evidence is that the policy was rational.
O

In

There is

no need for me to make a finding one way or another, but I am inclined to

think it is not irrational.

Even if the policy is irrational, it is not for the

court to put itself in the shoes of the management to decide what policy to
Q

apply.

If the policy, albeit irrational, is consistently applied, then the

decision which is the product of the consistent application of the policy

cannot be impugned as irrational.

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142.

Even though Ken Schneier was not called to testify, the

evidence speaks for itself.

C

The Plaintiffs downgrade accords with her

target and profit contribution.

If she was not downgraded on

23 November 2005, she would have been downgraded along with others
later in accordance with the 20/70/10 policy.

any event, inevitable.

Her downgrading was, in

The loss dumping theory could not stand.

There

is no basis to suggest bad faith on the part of Ken Schneier or the Bank.

The policy was consistently applied under this discretionary performance

G

incentive programme.

Whatever was the reason for the downgrading, it

was well justified according to the Plaintiffs target and profit contribution

and the 20/70/10 policy.

I

Conclusion
143.

For the above reasons, there is no basis for the Plaintiffs

allegation of retaliatory downgrading of her performance evaluation.

L

The

2005 bonus award made as a result of the performance evaluation could

not be impugned as irrational.

This claim must be dismissed.

THE 2006 BONUS

O

Introduction
P

144.
Q

The Plaintiff received a Meets rating for her What and a

Does Not Meet rating for her How for 2006.

bonus of US$550,000 for 2006.

She was awarded a

The basis of her claims is that her bonus

was irrationally low when compared with the bonus awarded to John
S

Liptak in the light of their respective profit contribution; the ratings in her
performance evaluation for 2006 were irrational being recommended by

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70

John Liptak out of malice or bad faith and wrongly accepted by Ken
Schneier.

More specifically, she ought not to have been awarded a Does

Not Meet rating for her How.

In addition, she ought to have been

given an Exceeds rating for her What, as she made a profit of US$7.23
million while the Desk made an overall loss of US$1.36 million.

been given an Exceeds rating for her What and a Meets rating for

That would have an impact on the size of the bonus awarded.

Had the

performance evaluation been conducted in good faith, she would have

her How.

The background
145.

The Plaintiff joined the Bank in June 2000 at vice principal

level and John Liptak joined eleven months later at principal level, ie one
J

level above the Plaintiff.

Head of Desk.

In January 2005, John Liptak was appointed

That was not a promotion.

Initially, there was some

confusion or misunderstand within the Desk about his role.

L

responsibilities, which effectively put it beyond doubt that John Liptak was

ISSG had a bad year in 2006.

John Liptak set an overall

target of US$30 million for the Asia Desk, but the Desk ended the year
with a loss of US$1.36 million.

However, the Plaintiff had a shining

performance making a profit of US$7.23 million.

R

the level of principal to managing director.

146.

In February 2006, John Liptak was promoted from

In November

2005, Ken Schneier issued an email setting out John Liptaks duties and

in charge of the team.

John Liptak, who

incurred personal loss and loss for the entire Desk, was awarded a bonus of
US$1 million.

But the Plaintiff was only awarded US$550,000 for her

shining performance.
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The Plaintiffs conduct and behavior in 2005

147.

There were about seven members in the Asia Desk of ISSG.

The Plaintiff got on well with Elizabeth Loh, but was not sociable with the
other members of the Desk.

She was rude to Harumi Hiyamuta and had

frictions with John Liptak, particularly since his appointment as Head of

E

Desk in early 2005.

Ken Schneir regarded her work highly but criticized

her for lack of teamwork.

He considered her behaviour a problem which

affected the effectiveness of the Desk.

G

148.

The following are some notable incidents between the

Plaintiff and her colleagues in the Desk in 2005.

As there is no complaint

by the Plaintiff about her How rating in 2005, these incidents are not
J

dealt with in relation to her claim for 2005 bonus, but are mentioned here

as part of the background leading to her claim for 2006 bonus.

K

149.

Before John Liptak was appointed Head of Desk, the Plaintiff

used to work independently of him.

She sought approval for her deals

from Ken Schneier.

N

However, since his appointment as Head of Desk,

John Liptak adopted a different approach.

He insisted on teamwork and

required all members of the team to loop him in in respect of all their deals
O

and for him to allocate the deals according to ability and availability of the
P

members.

Presumably, because of the pay for performance culture

promoted by the Bank, the Plaintiff was protective of her deals and
Q

contacts and harboured an apprehension that John Liptak was snatching

R

her deals and contact from her.

Both John Liptak and Ken Schneier were

of the view that the Plaintiffs contacts belonged to the Bank and
S

considered the Plaintiff was taking a proprietary view of her credit, not
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72

willing to share her contacts and not a team player.

Her attitude caused

constant frictions between her and John Liptak.

C

150.

In May 2005, when Ken Schneier asked the Plaintiff to

consult John Liptak on the Bangkok Mass Transit System deal as he was
E

the principal analyst on Thai credits, the Plaintiff took a proprietary view
of the credit and resisted the instruction insisting to do it herself.

On 11

July 2005, she even stated that the transaction should be called off if she
G

was not the person doing it. Ken Schneier had to assure the Plaintiff that if
she helped develop a deal, her co-operation would be noticed and paid for.

151.

In the Plaintiffs mid-year performance evaluation, Ken

Schneier made the following comment:

Sunny [the Plaintiff] does have a flaw: although she has been a
very good soldier for Peter and for me, she has strenuously
resisted other leadership in Asia, particular that of John Liptak,
who now heads the desk. She takes a proprietary view of her
credits and countries and does not share information or
opportunities well with her Asian colleagues.

On 18 July 2005, Ken Schneier told the Plaintiff the above shortcoming
N

when discussing her mid-year performance evaluation.

He also reported

the same by email to the Human Resources Department.

The Plaintiff

denied having had such a discussion.

P

There was no conceivable reason

why Ken Schneier would have made up that conversation when writing to

the Human Resources Department (see paragraphs 115 to 117 above).

Q

152.

In August 2005, the Plaintiff was reluctant to involve John

Liptak in the Project Walker deal and expressed her animosity and
S

reluctance by writing:
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As I said I dont have good experience with John in the past

four years. I just wish he was a more solid player. I always
value and listen to good advice and thats how I learned to do
different types of projects. But he never added an ounce of
value to the team. Too bad that we have different opinions on
him.

Eventually, on 4 August 2005, though agreeing to involve John Liptak, she

E

I will try to work with him just to show you some respect and
nothing else. It is no minor adjustment trying to work with
someone who tried to set me up for failure many times in the past.
You owe me.

showed her grudge to Ken Schneier in an email saying:

153.

After the above incident was the transfer of the distress assets

of APP Indonesia which took place between September and November

2005 (see paragraphs 125 to 134)

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154.

In October 2005, Tom White of senior management from New

York visited Hong Kong.

L

He set up a meeting with John Liptak and

Harumi Hiyamuta, but excluded the Plaintiff.

about it, she became very upset.

When the Plaintiff learned

She had an outburst when confronting

Harumi Hiyamuta and blamed John Liptak for not including her in the
N

meeting.

John Liptak then asked Tom White to include the Plaintiff in

the meeting saying there was an issue with the Plaintiff.

In the end, the

Plaintiff was invited to attend part of the meeting briefly, and then Tom
P

White continued the meeting with John Liptak and Harumi Hiyamuta in
the Plaintiffs absence.

Her conduct attracted some adverse comments

from Tom White as being anti-social and paranoid.

R

Ken Schneier spent

an hour counseling the Plaintiff afterwards.

155.
T

In her year-end performance evaluation, Ken Schneier noted

the Plaintiffs friction with John Liptak and considered the friction

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impaired the effectiveness of the Desk, but hoped the situation had been
resolved.

He commented the Plaintiff as follows:

The downside mentioned at mid-year continued into the 3rd
quarter, friction with John Liptak, our Head of desk in Hong
Kong. This came to a head in October and has since settled
down and, I hope, has been resolved. While in effect, though,
this friction impaired the ability of our Hong Kong group to
operate effectively as a team.

(see paragraph 151 about the mid-year performance evaluation)

Despite the above incidents, the Plaintiff did not receive too adverse a
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comment in her performance evaluation.

The year ended with a Meet

rating for her What and for her How in her performance evaluation.

The Plaintiffs conduct and behavior in 2006

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156.

Despite the counselling by Ken Schneier, the Plaintiffs

friction with John Liptak continued into 2006.

She took a proprietary

view of her deals and contacts and was skeptical of John Liptak snatching
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away her deals.

157.
N

the conference call relating to the Project Media deal.

In her email of 23 February 2006 to Ken Schneier, she agreed to update

John Liptak on the deal but insisted not to involve him.

She wrote:

Johns modus operandi is to snatch deals away in the conference

call and please dont deny that you have not witnessed it

John is responsible for knowing what goes on there. He is not

snatching any deals away. His job is increasingly to be focused
on how well the region does, not himself, which means
encouraging ad helping you, not undercutting you. This is your
deal. Do not be paranoid.

Ken Schneier had

to plead with her saying:

In February 2006, the Plaintiff refused to loop John Liptak in

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yourself. I can update John on the deal but getting him

involved in this conf call is way too much.

Ken Schneier was exasperated and replied:

For you to do well, you will have to work as part of the team.
For John to do well, the team must work together and everyone
must be successful. I will not allow you to lose your deals.
Lets get over this once and for all. I was criticized at the end of
the year for not being able to manage our business, and I wont
have it happen again. Lets get together, please.

The Plaintiff further pressed on suggesting she was prepared to drop the
G

deal to protect the bank if she felt John Liptak would add negative value to
it.

Ken Schneier was obviously very exasperated and wrote:

Just keep John in the loop, thats all.
He may not even tune in.

The proprietary view taken by the Plaintiff of her contacts

was amply demonstrated in the Jain Irrigation System convertible bond

deal.

snatching a deal from her and that Ken Schneier made an about turn in
favour of John Liptak.

159.

I therefore go into some details about this deal.

In April 2006, the Plaintiff sourced a potential deal from

Morgan Stanley relating to Jain Irrigation System, a publicly listed

approval.

To that Ken Schneier responded:

I do not think this is non-standard, so please take a look.
Please keep John and Dhiraj in the loop.

She directly raised with Ken Schneier and Scott

Gordon recommending to buy the bond without seeking Risks Department

But, the Plaintiff says this is another instance of John Liptak

company in India.
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Youre doing a great job.

In the end, that deal fell through.

158.

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The Plaintiff took the reply as assignment of the deal to her, which was

obviously not.
C

160.

When John Liptak saw the email, he assigned the deal to

Dhiraj Dave and told the Plaintiff to send him and Dhiraj Dave the
E

information.

In

response, the Plaintiff wrote:

Excuse me.
deals.

Dhiraj Dave was a newly recruited Indian analyst.

161.

This is my deal.

Pls go and find your own

Ken Schneier had to intervene and wrote to the Plaintiff

telling her unequivocally that all deals that came to the bank were the

Banks deals and that it was for John Liptak to coordinate project
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allocations.

Ken Schneier wrote:

All deals that come to us are the banks deals. We have an
Indian analyst new to us whose experience we will use in Indian
projects, together with relationship that give rise to the projects.
It is Johns responsibility to coordinate project allocations.
Lets not have a repeat of last years bulls**t.

162.

The Plaintiff retorted:

I have made it very clear that I have been doing all these deals
out of my own initiatives and contacts and I am not doing it for
anyone who sits around in the office, waiting for other people to
drop the deals on their laps. You have also explicitly promised
in one of your emails that you wont let John snatch away my
deals. I am doing all these based on this promise. Otherwise,
I prefer to spend my time elsewhere.

If Dhiraj wants to help me, he is more than welcomed but this

will be my project.

163.

Ken Schneier wrote back:

I have made it very clear that this is a team. We will use

resources in the best way for the team and we will reward

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164.

everyones contributions.
I have no problem with your
involvement in this deal, as you have shown initiative and skill in
these new issues, but Dhiraj must have eyes on the transaction
for obvious reasons and John must be in the loop.

The Plaintiff probably misread Ken Schneiers email as

approval for her to head the project and wrote:

E

Okay.
F

Now it now makes more sense.

F

(1) I will keep John in the loop just because he needs to be aware
for the administrative reasons. John, next time pls do not
ask me to forward the information so that you can take over
the deal. Pls spend time to look for deals elsewhere. Our
profit in Asia is very bad and we need you to be more active.

(2) I will ask Dhiraj to help me out which is my intention

anyway.

Then Ken Schneier wrote back to the Plaintiff and told her that the
J

arrangement she proposed was not going to work and asked her to call him.
Presumably the Plaintiff did call and Ken Schneier corrected her of her

misapprehension.
L

165.

On the following day, Ken Schneier wrote to the team,

including the Plaintiff, saying that there were material issues about the
N

organization of the team, allocation of assignments and teamwork.

He

made it clear that projects will not be assigned on either a free-for-all or

first-come basis; members of the team are not competing among

P

themselves; that John Liptak as Head of Desk will remain initially

responsible for allocating projects that do not fit into someones clear

mandate; and that the key criteria for assignments were skill set, regional
R

knowledge, available time and relationships involved.

In respect of the

Jain Irrigation System convertible bond deal, he promised the Plaintiff a

non-exclusive credit if the deal got done.

By this time, the Plaintiff must

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have known that she must work as part of the team and that John Liptak as

Head of Desk was responsible for allocating projects.

C

166.

In June 2006, the Plaintiff had another outburst which spilt

over to the Banks Legal Department.

E

She was shown a potential

investment opportunity relating to a coal producer in Indonesia, the Indo

Coal Transaction and was about to enter into a confidentiality agreement in

order to be given access to confidential information relating to the deal.

G

While she was on sick leave after undergoing a surgery, she sent a draft
confidentiality agreement to John Wacker of the Legal Department for
review.

At the same time, John Liptak learned of the opportunity and

received a copy of the confidentiality agreement.

Not knowing that the

Plaintiff had been pursuing this deal, he sent an email to the Plaintiff to

pass on information to her and sent the confidentiality agreement to John

K

Wacker to review.
relating to this deal.
outburst.

Thus, John Wacker put John Liptak on the loop

Upon knowing this, the Plaintiff had an angry

In a number of subsequent emails to John Wacker and John

OToole, the general counsel for Asia, she accused John Wacker of taking
advantage of her situation to assist John Liptak to secure the deal.

167.

On 2 June 2006, Ken Schneier had to counsel the Plaintiff via

a lengthy telephone conversation about her unwillingness to conform to

group policies and keeping management including John Liptak in the loop.
Q

He also demanded the Plaintiff to apologize to John Wacker and John

OToole, which she duly did.

In his email to Scott Gordon and John

Liptak dated 3 June 2006, he reported his conversation with the Plaintiff
S

which contained strong terms disapproving her behaviour with a warning

that it will not be tolerated.

He wrote:

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her unwillingness to conform to group policies, keep

management including John in the loop on all projects and
cooperate with the group as a whole, as well as her occasionally
erratic and self-promoting behavior, have crossed the line too
many times. Her correspondence criticizing inside counsel John
Wacker for working with John Liptak
to complete a
confidentiality agreement for a Sunny-initiated deal, while Sunny
was out on a short medical leave, was the last straw. This
interchange necessitated an apology on our part to John Wacker
and his boss.

I explained to Sunny that behaviors reluctantly overlooked in the

past can no longer be overlooked She cannot show ideas to
me and end-run the rest of our group.

For some reason, real or imagined, she fears that projects or

relationships developed by her will be taken away and she will
lose credit or compensation. I assured her, as I have done with
everyone in our business, that there is absolutely no purpose or
plan to deprive anyone of credits or compensation for ideas
generated or work done. We will bend over backwards to
ensure that recognition and comp are properly allocated.
Sunnys attempts to withhold information and to avoid
established reporting lines are, in fact, hurting her and not
helping.

However, no written warning was given to the Plaintiff nor was that email
L

copied to her.

The Plaintiff denied that she was unwilling to conform to

group policies or was occasionally erratic and self-promoting.

She did

not remember if Ken Schneier had warned her that her behaviour would no
N

longer be overlooked.

Though Ken Schneier was not called to testify, I

have no reason to doubt his statement in the email.

168.

In her evidence in chief, the Plaintiff stood by her allegation

that John Wacker was assisting John Liptak to secure the deal from her and
said that her apology was procured under the threat of dismissal.

She

sought to justify her allegation by accusing John Wacker of manually

altering the date and time on his computer so as to give his emails the

appearance that John Liptak had approached him about the confidentiality
T

agreement before she did.

However, under cross-examination, it was

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shown that she was honestly mistaken.

At the request of Mr Huggins SC,

the Plaintiff unreservedly apologized to John Wacker.

C

This incident
C

suggests that she was indeed paranoid.

169.
E

In her mid-year performance evaluation, Ken Schneier gave

the Plaintiff an overall Meets rating for her How, and an overall
Meets rating for her What, though that included a Does Not Meet
rating for a specific goal.

the Plaintiff and John Liptak, but was optimistic that it would be rectified.
He identified the Plaintiffs problem as lack of teamwork, cooperation and

He commented as follows:

Within the team, however, there have been continuing conflicts

from time to time, which have occasionally spread beyond the
team to involve support partners, such as legal. At the heart of
this is a personality clash between Sunny and John Liptak, our
Head of Desk in Hong Kong, whose origin is unclear. I have
discussed this problem with Sunny and John on several occasions
and made clear to Sunny that teamwork, cooperation and sharing
is at least as important as production in ISSG and have
established clear guidelines for correcting these problems. I
believe some progress has been made to this end in recent
months and that the problem is on track to being fully rectified,
but we will re-evaluate at the end of this year.

He was aware of the personality clash between

sharing with members of her team.

But the Plaintiff was not given a copy of the performance evaluation.

She

only received a copy in the course of the proceedings in the Labour

Tribunal.

According to the Bank, performance evaluation reviews may

be conducted by telephone.
Q

170.

John Liptak complained that between 31 August and

2 September 2006, the Plaintiff went to visit Hengtong Guanghua, a space

S

drug company in Xi An in the Peoples Republic of China, without first

informing him.

He further complained that the Plaintiff assigned the deal

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to herself by providing an account of her visit and including it in her daily

report to everyone on 4 September 2006.

Schneier had asked her to look at the deal.

According to the Plaintiff, Ken

She had sent John Liptak an

email as early as 3 August 2006 about the project and another email dated
17 August 2006 reporting on the same company.

of the Plaintiff is demonstrably wrong.

171.

John Liptaks criticism

Shortly after that, in November 2006, John Liptak raised with

Ken Schneier the issue about the Plaintiffs performance (paragraphs 205
and 206 below).

172.

In December 2006, the Plaintiff sourced the UOB Thai deal.

Not realizing the reality of her situation, she sent an email to Ken Schneier

expressing her desire to work on the UOB Thai deal herself, otherwise she
K

would turn it down.

She wrote to Ken Schneier:

UOB mentioned a private Thai deal whose name is not

disclosed yet. They plan to make us exclusive and we can
dictate the terms. As it is an important relationship to me
personally plus I have the experience in structuring deals, I
would like to do it myself. Otherwise Id rather pass and wait
for the next one. I hope you agree with me.

It all went well with the first three sentences.

Her desire to handle that

deal was readily understandable.

P

Besides being another attempt to bypass

John Liptak and refusing to acknowledge his leadership, management

obviously found it unacceptable that she should be sacrificing the interest

Q

of the Bank if she would not be assigned the deal.

R

173.

To conclude, the Plaintiff still held a proprietary view of her

deals, refuse to show teamwork and her behaviour towards John Liptak
T

remained confrontational.

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Year-end performance evaluation How

174.

On 4 December 2006, Ken Schneier completed the Plaintiffs

year-end performance evaluation.

for How.

He gave her a Does Not Meet rating

In the evaluation, Ken Schneier commented as follows:

On the other hand, Sunny has demonstrated an extreme
protectiveness of her contacts/relationships and has operated as
an independent party, separate from the rest of the ISSGs
distressed team. She has been unwilling to share information,
except with management in NY, and has refused more than once
to recognize John Liptak in his role as Head of Desk in Asia,
with responsibility for overseeing and allocating credit
assignment.
Her protectiveness resulted in friction with
members of our in-house legal support team and a generally
polarized environment on the Hong Kong desk. This is
particularly damaging as both our team in Asia and other desks
with whom we are expected to work, grow and expand. While
Sunnys skills and results have been very good, her attitudes
towards teammates and others in Hong Kong nearly overwhelm
her good works. It will be critical for Sunny to overcome these
shortcomings in early 2007 to remain a part of the team.

175.

The Plaintiff complains that she was only given a copy of the

evaluation on 10 January 2007 and that Ken Schneier had forwarded the
M

evaluation to Human Resources Department before discussing with her.

According to Ken Schneiers own note and email to John Liptak dated
N

6 January 2007, he had a discussion with the Plaintiff on 5 January 2007

O

about her performance, which he hoped she would take to heart as it was in
her interest and the Banks that they made it work.

Before that discussion,

John Liptak had written to Ken Schneier via an email dated 13 December
Q

2006 setting out the key changes he wanted to see in the Plaintiff, which

obviously formed an important part of Ken Schneiers conversion with the

R

Plaintiff. The content of that conversation is summarised in Ken Schneiers

S

email to John Liptak, copied to Rajeev Syal and Judy Wai as follows:

I explained the upcoming reorg in ISSG and the

uncertainties involved, but that it was likely that your role would

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expand. I told her her attitudes toward the team and others
in the bank have been poor. I told her we would like to keep her
and that she has the potential to expand her productivity in the
Bank, but that she needs to promptly make the following changes
(1) post you and me on all projects when first initiated and allow
them to be allocated by you; (2) be more open with all on the
desk as to her relationships, for back up and other reasons;
(3) acknowledge that relationships with customers and customer
employees are [the Banks] relationships and not personal ones;
and (4) consult our desk and others (e.g. Will Clay) re trading
levels for any liquid credits to be traded, I encouraged her to
not be paranoid Most important, I told her she needs to take
down the wall between her and the others on the desk and to
affirmatively approach you and Harumi, in particular, to join the
team effort

she seemed to understand that she had no choice but to

conform to your requirements and mine

I will send her the PDP you have seen, which will now contain
no surprises.

The Plaintiff does not dispute she had a conversation with Ken Schneier on

5 January 2007, but said she did not remember having been informed
K

about the changes expected of her.

The Plaintiff was being protective.

There was no reason why Ken Schneier would have so written if he had
not indeed discussed her performance with her.

be less direct and more subtle.

His oral message might

He might even have avoided telling her

about the Does Not Meet rating, which was not mentioned in the email.

But upon receipt of the copy of the performance evaluation with a Does
O

Not Meet rating in the How, there could be no misunderstanding about

the threat and what she had to improve to remain in employment.

Though the discussion took place after Ken Schneier had forwarded the
Q

performance evaluation to Human Resources Department, such procedural

breach was immaterial.

The real issue is whether the evaluation was

bona fide made in that there were facts on which Ken Schneier based his
S

opinion.

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176.

The Plaintiff also complains that the performance evaluation

was drafted by John Liptak which was adopted by Ken Schneier.

C

However, from Ken Schneiers email quoted above, it appears that Ken
Schneier had drafted the performance evaluation and shown it to John
Liptak and was then sending him the final copy by his email.

opinion.

The comments are supported by incidents described in the

previous subsection.

They are consistent with the comments in the mid-

proprietary view of her deals and repeatedly refused to acknowledge John

In the light of those incidents and the comments,

it was open to Ken Schneier to give the Plaintiff a Does Not Meet rating
for her How.

In essence, the Bank considered the

Plaintiff lacked teamwork, refused to share her contacts, adopted a

Liptak as Head of Desk.

K

year performance evaluation.

I

The

question is also whether there were facts on which Ken Schneier based his

177.

That decision could not be attacked as irrational.

In any

event, it is a decision which the court is not entitled to substitute its own
M

opinion for the Banks.

Year-end performance evaluation What

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178.
P

The Plaintiff was given a Meets rating for her What in the

year-end performance evaluation.

She argues that as she made a profit of

US$7.23 million while the Desk as a whole incurred a loss of US$1.36

million, she should have been awarded an Exceeds rating for her What.
R

179.

The Plaintiffs argument is superficially attractive only.

Under the performance incentive programme, her performance should be

T

measured against her target and not against the performance of John Liptak,

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85

or any other colleague or the Desk as a whole.

She overlooked the fact

that her target was US$5 to US$10 million.

Her Meets rating for

What is nothing but justified.

Comparison with John Liptak

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180.
F

The major thrust of the Plaintiffs case about her 2006 bonus

is that despite she made profit of US$7.23 million and John Liptak
incurred loss of US$1.36 million for the entire Desk, she was only awarded

US$550,000 while John Liptak was awarded US$1 million.

H

181.

As I have said, the issue is whether the bonus awarded to the

Plaintiff was irrationally low and not whether the award to another
J

member was irrationally high.

The fact that one, not all or most,

members of the team was paid irrationally more than the Plaintiff does not

even begin to show irrationality or perversity in respect of the decision

L

relating to the bonus to the Plaintiff.

Plaintiff singularly received an irrationally low bonus compared with most

or all members of ISSG.

must fail.

For this reason alone, this basis of her claim

Besides, the Bank took the view that 2006 was a particularly

bad year and the Bank could have suffered more loss but for John Liptaks
effort.

There is no evidence that the

The Bank gave credit to John Liptaks managerial responsibilities

as Head of Desk.

Despite the loss, the Bank also valued John Liptak

highly and even had plans to expand his role, which was implemented a
few months later.

The Bank might consider a sizeable bonus required to

retain his service.

These were management decisions which this court is

not entitled to substitute its own for the Banks.

So far as the award of

the Plaintiffs bonus is concerned, it could not be impugned on the ground

T

of comparison with the bonus awarded to John Liptak.

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Conclusion
182.

The bonus awarded to the Plaintiff in 2006 could not be

impugned as irrational.

The Plaintiffs claim under this head is dismissed.

THE 2007 BONUS

Introduction

183.

The Plaintiffs claim in respect of the 2007 bonus is that she

was dismissed in breach of the Banks implied obligation not to exercise

H

its right to terminate her employment by giving one months notice or

payment in lieu in order to avoid her being eligible for consideration under
the performance incentive programme.

He had no cause to invoke the PIP process.

The specific

goals under the PIP were designed in such a way as to fail her.
L

deliberately picked on her daily work with intention to fail her.

He

Despite

that she achieved the specific goals, John Liptak terminated her on the
pretext that she failed the PIP.

Her case is that having become

her direct manager in February 2007, John Liptak orchestrated her

termination.

Had she not been so terminated, she

would have been entitled to be considered for the performance incentive

programme and awarded a bonus for 2007.

She claims damages

equivalent to the amount of the bonus which she would have been awarded.
P

184.

The Banks case is that such an obligation was not implied

into the employment agreement; and, if it was, the Bank was not in breach
R

as the Plaintiff was dismissed by reason of her conduct.

Having found

that the obligation was implied into the Plaintiffs employment agreement,

the remaining issue is whether the Bank was in breach of the implied antiT

avoidance term.

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The issues
185.

The burden of proving the Banks breach of the implied anti-

avoidance term rests on the Plaintiff.

anything.

The Bank does not have to prove

The Plaintiff has to prove that she was dismissed with the

intention of avoiding her being eligible for consideration under the

E

performance incentive programme.

narrow.

The Plaintiffs pleaded case is very

The intention pleaded is very specific.

such an express intention.

There is no evidence of

186.

The express reason given by the Bank for the termination was

the Plaintiffs conduct.

It is not the Banks case that the conduct was

such as to justify summary dismissal.

J

The Plaintiffs case rests entirely on inference.

Indeed, by giving notice or

payment in lieu to terminate her employment, the Bank is precluded from

relying on that conduct to justify summary dismissal.

The Bank is

relying on that conduct to justify invoking the PIP process under the terms
L

of the Plaintiffs employment agreement and the bona fides of its intention.

In accordance with the PIP process, if the Plaintiff failed to meet the
M

improvement goals, she would be dismissed by notice or payment in lieu.

N

But, if there was no cause to justify invoking the PIP process, or if there

was no justification in failing the Plaintiff in the PIP process, the inference
O

may be drawn that the reason for the termination was not genuine.
P

187.

As intention is subjective, the test for the Banks intention is

not reasonableness but genuineness, ie a genuine reason for her

R

termination or a genuine belief that it had a valid reason, even though the
reason was not substantiated.

The reason needs not be such as would be

sufficient to justify summary dismissal and may even be far from that.
T

It

needs not be one which commends to a reasonable man and may even be

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irrational, provided it is genuine and one which is sufficient to negative the

intention to avoid her being eligible for consideration under the

C

performance incentive programme.

although not substantiated, is sufficient to negative the intention pleaded

by the Plaintiff.

A genuine belief in such a reason,

Of course, the further the reason moves away from the

realm of reasonableness to irrationality, the easier it is for the inference to

be drawn that the reason given by the Bank was not genuinely held.

From that inference the further inference may be drawn that the Plaintiff
G

was terminated with the intention to avoid her being eligible for
consideration under the performance incentive programme.

188.

According to Wang Wei Wei of Human Resources

Department, the PIP is implemented with the intention of helping

employees to improve; and the Bank expects the PIP to bring about
K

significant long term improvement.

If there is improvement or

compliance with the PIP, the employee would have an expectation that his
employment would continue.

Ideally, we would hope the employee turns around and

improves so that would be a positive outcome. But if the
employee does not improve significantly and demonstrate that he
or she can sustain the improvement, then it could be the end of
the process. But there is the intention of helping employees to
improve.

189.

John Liptak took a different approach.

He took the view that

as the Plaintiff had more than enough time to get on as a team, she had
used up the goodwill of the Bank.

Hence, he considered that the

improvement or compliance had to be absolute.

S

She said in cross-examination:

percent or nothing, ie termination.

It had to be either 100

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190.

Wang Wei Weis opinion must represent the will of the Bank

on human resource matters.

C

The purpose of the PIP is to help an

employee to improve and to remain in employment.

By invoking the PIP

process instead of immediately exercising its right to terminate by reason

of her behaviour, it must be the Banks intention that if the Plaintiff made
E

significant immediate improvement as specified in the specific goals under

the PIP which was likely to be permanent, not short term for the purpose of

meeting the specific goals, the Bank would not exercise the right to
G

dismiss her by notice or payment in lieu.

If the Bank dismissed the

Plaintiff despite significant improvement which was likely to be of long

term, it would not be the genuine exercise of the Banks will.

given for such dismissal was not genuine.

The reason

In assessing the performance

of an employee under the PIP, the test is whether he has shown such

significant improvement since the PIP process which is likely to be of long

K

term.

The focus is on significant improvement of the employee.

His

past conduct which invoked the PIP process falls into the background and

is only relevant for the purpose of measuring the employees improvement.

M

John Liptaks 100 percent or nothing approach was inappropriate and

badly coloured his review of the Plaintiffs performance under the PIP.

191.

Thus, the issues under this head of claim are: (1) whether,

having regard to the Plaintiffs performance under the PIP, the reason

given for the termination was genuine; and if it is not, (2) whether the
Q

inference that the dismissal was made with the intention to avoid her being
eligible for consideration under the performance incentive programme.

The first issue in turn depends on whether the Plaintiff has failed to show
S

significant improvement.
intention of avoidance.

If the reason was genuine, it negatives the

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The Plaintiffs conduct in 2007 before the PIP

192.

The Plaintiff did not start 2007 with a good note.

On

5 January 2007, Ken Schneier discussed the performance evaluation with

her and told her the areas where improvements were required.

On

10 January 2007, she received the year-end performance evaluation for

E

2006 showing a Does Not Meet rating for her How.

first time in her employment with the Bank that she received such a poor
rating.

That was the

She was seriously worried.

As both she and John Liptak said, if

one had to receive such a rating, one would rather suffer that in the What
than in the How.

The performance evaluation contained serious

criticisms of her lack of teamwork, refusal to recognize John Liptak as

I

Head of Desk with responsibility for overseeing and allocating credit

J

assignments, and her friction with members of the Legal Department.

It

contains a stern warning that she had to overcome those shortcomings in

K

early 2007 to remain a part of the team.

L

She had been warned in her

mid-year performance evaluation that her conduct in the past will no

longer be overlooked and that she had to change if she wanted to remain in
M

the team.
N

More importantly, she was told by Ken Schneier that he would

no longer be her manager and that John Liptaks role would expand.

She

knew she could no longer be confrontational towards John Liptak as her

O

immediate manager.

She realised she had to submit to reality.

193.

As foreshadowed by Ken Schneir, John Liptaks role

expanded and became the Plaintiffs immediate manager in February 2007.

R

According to the Plaintiff, since 2007 there was nothing that she did

without first seeking John Liptaks approval, she shared her contacts and
S

information with her team members and that she was not confrontational
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91

towards John Liptak or any members of the team.

I now test what she

said against the evidence of the Banks witnesses.

C

194.

There is no dispute that the Plaintiff produced more daily

reports than did John Liptak.

E

There was not even one minor incident

between her and John Liptak since January 2007.

John Liptak could

point to no more than three incidents of misbehavior on the part of the

Plaintiff before he instituted the PIP process, namely, the China Tire deal,
G

the Mongolia deal and the Bemax Resources deal.

195.
I

The Plaintiff admitted that she looked at the China Tire deal

and declined it without first asking John Liptak.

as of 9 January 2007, she had received approval from Ken Schneier for all
the deals that ISSG wanted to do.

She turned the Mongolia deal down as

it was not within ISSG mandate.

There is nothing in the evidence to

suggest that John Liptak had informed the Plaintiff that he wanted to
proceed with that deal.

Her explanation is that

ISSG mandate.

There is no dispute that the deal was not within

In the circumstances, there could be no justifiable

criticism for the Plaintiff turning down that deal without first informing

John Liptak, otherwise the Head of Desk would be bombarded with

O

numerous deals that she had no interest to proceed.

196.
Q

As for the Mongolia deal, all that John Liptak could point to

was the fact that he discovered from the daily reports that the Plaintiff was
talking with ING Barings Securities Hong Kong about that deal.

There is

no evidence to contradict the Plaintiffs assertion that prior to 9 January

S

2007 she had obtained Ken Schneiers approval to follow up that deal.

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197.

There was another trivial incident in May 2007 in which John

Liptak answered a telephone call from Johnson Chan of Morgan Stanley

C

on behalf of the Plaintiff while she was in the Peoples Republic of China
looking at the Harbin Electric deal.

Johnson Chan asked if he could send

John Liptak the information about a potential deal, the Bemax deal, which
E

had been shown to the Plaintiff.

John Liptak replied in the affirmative.

Thereafter, the Plaintiff heard no more from Johnson Chan.

She then

called up Johnson Chan to ask what had happened and told him that the
G

information about the deal should be sent to her and not to John Liptak.
Mr Huggins SC argues that the Plaintiff was undercutting John Liptaks
authority.

I respectfully think that is taking the incident too far.

What

happened was that an employee had been attending to a deal and while she
was away her boss picked up her call and covered for her.

Then when

she returned, she followed up what she had been doing and told the other
K

side to deal with her and not to trouble her boss.

Taking a detached view

of the incident, the Plaintiff was just dutifully following up what she did.

There was no substance in John Liptaks complaint and no basis for

M

counsel to submit that the Plaintiff was undercutting John Liptaks

authority.

198.

John Liptak suggested in his evidence that the Plaintiff had

been rude to Johnson Chan when she called back which led Johnson Chan
to apologize to him.

I reject that evidence in its entirety.

First, it is

totally contrary to Harumi Hiyamutas evidence that the Plaintiff was

extremely courteous to her clients.

There was no reason to be rude to

Johnson Chan as she had to maintain a good relation with him to obtain
S

more deals from Morgan Stanley in future.

Second, John Liptaks

allegation does not sit well with the Plaintiffs behavior since January 2007.

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She acknowledged the need for teamwork, that deals were property of the
Bank and that John Liptak had sole authority to assign deals.

She said

she was not concerned about John Liptak taking away her deals.
she was worried was John Liptak not assigning deals to her.

What

Given the

stern warning from Ken Schneier and the reality that John Liptak was her
E

immediate manager, I do not believe that the Plaintiff would behave in that
way to provoke him.

Third, John Liptak has proved himself to be an

incredible; witness and for reasons as I shall give in the later part of this
G

judgment, I find that he was acting maliciously towards the Plaintiff.

reject his evidence and find that there is no substance in this complaint.

199.

The Plaintiffs behaviour in respect of those three incidents

may not even be described as unprofessional, let alone confrontational.

John Liptaks complaints are frivolous and suggest he was short of

K

evidence of misconduct against the Plaintiff.

200.
M

Next, I turn to the evidence of Harumi Hiyamuta.

She had

retired from the Bank and should be regarded as an independent witness.

She corroborated John Liptaks evidence about the Plaintiffs general

reluctance in disclosing her contacts in other shops to John Liptak in 2005

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and 2006.

I have no difficulties accepting that part of her evidence.

was well documented.

It

Then, in a broad brush manner and without

particulars, she said the Plaintiffs attitude towards John Liptak remained
Q

largely the same in 2007 and she did not discern any improvement in her
work relationship with John Liptak.

The sole basis of her allegation is

Ken Schneiers email of 9 January 2007.

S

The basis of her allegation is

obviously flawed as that email was relating the Plaintiffs conduct in 2006.
Harumi Hiyamuta could offer no particulars to support her allegation that

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94

the Plaintiffs attitude remained unchanged.

Indeed, since 2005 she

started spending more time in China and her commitment in China was
C

further increased after Elizabeth Loh left in early 2006.

She was so

busily involved in trips to China that she did not seem to have read the

Plaintiffs daily reports carefully and made up a false accusation that the
E

Plaintiff went to a roadshow in relation to the Hengtong Guanghua deal

when what the Plaintiff did was to watch a virtual roadshow on her
computer in the office.

I do not think she had a full appreciation of the

Plaintiffs conduct since 2007.

Besides, her allegation about the

Plaintiffs conduct in 2007 is not documented and contrary to my finding

that there was no confrontation between the Plaintiff and John Liptak
I

in 2007.

201.
K

As her interpretation of the Plaintiffs email of 2 August 2007

shows, Harumi Hiyamuta impressed me as decidedly biased in support of

John Liptak in building a case against the Plaintiff (see paragraphs 229 to
232 below).

himself.

She even supplemented what John Liptak did not say

She was ready to make assumption against the Plaintiff

presumably because of the Plaintiffs conduct before 2007.

I give little

weight to her evidence about the Plaintiffs behavior in 2007.

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202.

Lastly, I turn to the evidence of David Sbarro.

He joined the

team in August 2006 and worked with the Plaintiff during her last twelve
Q

months with the Bank.

He considered the Plaintiff hard working,

dedicated and committed in her work.

He said that the Plaintiff got on

well with him and was more than happy to share her information and
S

contacts with him.

He sat between John Liptak and the Plaintiff.

He

noticed open exchanges and frictions between the Plaintiff and John Liptak.

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The exchanges were awkward and often led to an uncomfortable mood on

the desk.

The awkward mood stemmed from John Liptak asking the

Plaintiff for information about her credits.

Most of the time, John Liptak

was met with curt responses and yelling from the Plaintiff.

When the

conversation became heated, John Liptak stopped the conversation to

E

maintain a professional atmosphere on the desk.

Plaintiffs friction amplified towards mid 2007.

He said that the

He also noticed friction

between the Plaintiff and Harumi Hiyamuta and saw the Plaintiff yelling at
G

Harumi Hiyamuta.

203.
I

While what he said about the Plaintiffs behavior in 2006 is

undoubtedly true, what he said about the Plaintiffs behavior in 2007 is

inconsistent with incontrovertible evidence, for example, that John Liptak
could point to no confrontation between him and the Plaintiff.

evidence about the Plaintiff yelling at Harumi Hiyamuta is flatly

contradicted by Harumi Hiyamuta herself who said that the Plaintiff had

His

evidence about the Plaintiffs friction with John Liptak amplified towards
mid 2007 is absolutely beyond belief.

His

no major frictions with her and they worked smoothly together.

M

Even John Liptak could not point

to any confrontation or incident other than the three unjustified complaints.

O

The Plaintiff was submissive since early 2007.

lamb in June 2007 when she was subjected to the PIP process.

That piece

of evidence cast real doubt on the reliability of his evidence.

David

Sbarros statement is very short and lacking in particularities.

It was

written by him on 18 May 2011 when he probably had no clear

recollection of what happened four years ago.

She was as tame as a

If he was not dishonestly

concocting evidence to support the Banks case, he must have been

coloured by the Plaintiffs conduct before 2007 and failed to notice the

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96

change since 2007.

I reject his evidence about the Plaintiffs conduct in

2007 entirely.
C

204.

There was absolutely no major incident or friction between

the Plaintiff and John Liptak since January 2007.

E

The three incidents

complained of by John Liptak are frivolous and not substantiated.

Her

behaviour towards John Liptak and Harumi Hiyamuta was no longer

confrontational.
good and helpful.

Her behaviour towards David Sbarro had always been

On the totality of evidence, I am fully satisfied that the

Plaintiffs conduct was substantially improved since January 2007.

Presumably, that was the result of Ken Schneiers counseling, a Does Not
I

Meet rating, the warnings conveyed by the mid-year performance

evaluation and the year-end evaluation, her appreciation of the reality that

John Liptak was her immediate manager and that Ken Schneier would no
K

longer be there to protect her.

As Ken Schneier noted in his email of

6 January 2007, the Plaintiffs reaction to his counselling was calm and
logical and she understood she had no choice.

The Plaintiff was seriously

worried about her future in the Bank and understood she had no choice but
to comply.

It is incredible that given all these circumstances the Plaintiff

would still behave in a confrontational manner towards her direct manager.

O

The background leading to the Performance Improvement Plan process

205.

Going back a little earlier, on 27 October 2006, John Liptak

raised the issues of the Plaintiffs attitude with Ken Schneier.

R

As a result,

Ken Schneier wrote to Rajeev Syal and Judy Wai of the Banks Human
Resources Department to seek their assistance on how to remedy the
situation.

In his email dated 28 November 2006, Ken Schneier wrote:

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97

I am sending this note The object is to request Judy to

discuss with John Liptak and with Sunny Tadjudin some issues
that have arisen regarding Sunnys performance, outlined below.

Despite her good work, Sunny has had a chronic problem

integrating with the other members of our group, participating as
a member of the team and sharing ideas and expertise Sunny
never accepted Johns role and has consistently failed to report to
him, update him on her projects and discuss new ideas so they
could be properly allocated within ISSG according to skills and
availability. She has become increasingly protective of her
contacts and projects, refusing to acknowledge that these are
Bank asserts, not personal ones. Despite personal direction
from me to share her ideas and other team members and to meet
regularly with John regarding her projects, she has refused to do
so and has stated that she will not do so. As our business in
Asia has grown, Sunnys protectiveness, secretiveness and
isolation from other members of our team has, if anything grown
worse and has been noticed, to our detriment, by support partners
and other businesses in the region. On occasion she has been
verbally abusive of team members and support partners, accusing
them of interfering with or attempting to steal her business
opportunities and contacts.

While we would be delighted to retain Sunny within ISSG

for her analytical and related talents, her isolation, virtual
insubordination and unwillingness to participate as a member of
our team effort have become insupportable. Your help in
attempting to remedy this problem would be most
welcome.

The Plaintiff said that email was deliberately issued to document her.
Even if it was, the contents were incontrovertible.

and that her behaviours reluctantly overlooked in the past can no longer

Plaintiffs behaviour could no longer be overlooked.

But, from the tone

of his email, it is obvious that what Ken Schneier requested was assistance

keen to retain the Plaintiff.

Plaintiffs employment.

It seems by this time, Ken Schneier considered the

to remedy the problem and not to get rid of the Plaintiff.

S

Ken Schneier had

mentioned in June 2006 that the John Wacker incident was the last straw

be overlooked.

Indeed, he was

He was not seeking advice on terminating the

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206.

Following a re-organisation, the ISSG became part of the

GSSG.
C

Peter Santry took over the Hong Kong Desk from Ken Schneier.

He was informed of the discord between the Plaintiff and John Liptak.
He had a meeting with the Plaintiff during his visit to Hong Kong in April
2007 with a view to resolve the situation.

After the meeting, Peter Santry

invited Ken Schneiers and John Liptaks comment on his draft note to be
sent to the Plaintiff.

John Liptak thought the tone of the draft too soft and

disagreed with Ken Schneier that it would be desirable for the Plaintiff to
G

stay.

It is obvious that John Liptaks intention was to terminate the

Plaintiffs employment.

In his own words under cross-examination,

time has come for a parting of the ways.

I

He said that the Plaintiffs

behaviour had an undesirable effect on the team as a whole and exposed

the Bank to serious credit risks because of her proprietary view of her

contacts, her refusal to disclose her contacts and provide information, her
K

desire to control the process from start to finish without keeping anyone in
the loop.

As result of John Liptaks objection, Peter Santry decided to

make the warning official and take the matter to the Human Resources
M

Department to determine the next step.

It should be noted that even by

that stage, John Liptak could not point to any, not even minor, incident in

2007 other than the China Tire incident, the Mongolia deal and the Bemax
O

Resources deal to support his allegations of misconduct against the

Plaintiff, which on my finding are all not substantiated.

He was relying

on the Plaintiffs conduct in 2006 to urge Peter Santry into invoking the
Q

PIP process.

With the blessing of Peter Santry, John Liptak approached

the Human Resources Department and commenced the PIP process.

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The Performance Improvement Plan

207.

On 29 June 2007, John Liptak, on behalf of the Bank, and in

the presence of Emily Cheung of Human Resources Department issued an

official warning letter to the Plaintiff.

The warning letter set out the

Plaintiffs conduct which the Bank considered unacceptable and which had
E

been brought to her attention in the various discussions since eighteen

months ago, including:

(a) consistently failing to report to John Liptak as her

G

manager;
(b) being extremely protective of her contacts/relationships

and projects;
I

(c) being unwilling to share information and expertise with

the Asia team;

(d) refusing to update John Liptak on her projects and

K

discuss new ideas so that they could be properly

allocated within the ISSG group according to skills and

availability; and
M

(e) being verbally abusive of team members and support

partners, accusing them of interfering with or attempting

to steal her business opportunities or contacts.

O

There is no doubt that these behaviours of the Plaintiff were adequately

P

made out on the evidence, but they are all related to the Plaintiffs conduct
Q

before 2007.

208.
S

A PIP was attached to the warning letter setting out a list of

specific goals which the Plaintiff was required to perform.

These goals

included:
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100

(a) immediately turn over all accounts, contacts and details

by 3 July 2007 to John Liptak by email, with detailed

C

status write-ups of each of the accounts and projects by

email to John Liptak by 4 July 2007;

(b) immediately start sharing information with associates and

E

management in a more efficient and timely way,

including weekly summaries on her projects/credits

given to John Liptak via email, with copies to Harumi

G

Hiyamuta

as

head

of

sales

for

Asia

on

any

correspondence sent to members of the ISSG sales team;

(c) immediately start conducting herself in a professional

I

manner which includes not directing verbal or emotional

outbursts at associates or management; and

(d) arriving in at the office by 9 am.

K

In the letter, John Liptak also prohibited the Plaintiff from talking to any of
L

her contacts and stated that he would assign her to other non-client-contact
duties.

209.

It was expressly stated in the warning letter that if the Plaintiff

failed to make such immediate improvement as specified in the PIP, the

Bank would take further disciplinary actions which could include summary
P

dismissal in accordance with the relevant provisions of the Employment

Ordinance.

The dismissal of the Plaintiff

S

210.

The Plaintiff was given four weeks to perform the PIP.

period expired on 27 July 2007.

That

On 14 August 2007, John Liptak sent a

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101

draft PIP Review to Peter Santry suggesting that the Plaintiff did not meet
the goals set out for her in some areas.

He then had a telephone

discussion with Peter Santry and concluded that enough opportunities had
been given to the Plaintiff to change her behaviour but she did not meet the
goals set for her.

It was agreed that John Liptak would go over the PIP

Review with the Plaintiff and offer her the option to resign voluntarily or
to have her employment terminated by the Bank.

On 17 August 2007,

John Liptak completed the final PIP Review.

G

211.

On 20 August 2007, John Liptak together with Emily Cheung

interviewed the Plaintiff.

I

He went through the PIP Review with her and

told her that she failed to comply fully with the requirements set out in the
PIP.

He gave her the option to take the rest of the week off and decide if

she wanted to resign voluntarily or, if not, the Bank would start the
K

termination process.

The Plaintiff refused to accept either option.

On

28 August 2007, the Bank issued a letter to the Plaintiff to terminate her

employment with effect from 28 August 2008 by giving her one months
M

wages in lieu of notice.

The Plaintiffs performance of the PIP

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212.
P

It is Mr Huggins SCs submission that the court should not

attempt to form a view, let alone substitute its own view, as to whether
what the Plaintiff provided was what John Liptak required.

He argues

that was an issue within what might best be described as the margin of
R

appreciation of the Bank.

While I agree that the court cannot be

expected to enter into a microscopic examination of that issue in what is a

pretty specialized field, that does not mean John Liptaks or the Banks
T

decision as to whether the employee has met the specific goals under the

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PIP is conclusive and beyond review by the court.

Whether the employee

has met the goals is a question of fact and not a matter of the employers
C

discretion.

It is a matter capable of objective analysis.

technical issues, the court will respect the employers margin of

appreciation.

In respect of

finding powers are unfettered.

213.

But, in respect of non-technical issues, the courts fact

In respect of goal (a), turning over all account contacts and

write-ups, the Plaintiff provided John Liptak account contact information

and write-ups of her projects.
met this goal.

According to the PIP Review, the Plaintiff

In the PIP Review, John Liptak reported as follows:

Results: Sunny did provide account contact information and

write ups on her projects.
J

However, at trial John Liptak raised the complaint that the information was
K

only provided just before the deadline and the Plaintiff was doing the bare
minimum.

214.

A deadline is a deadline for both the party setting it and the

party required to comply.

Providing the information just before the

deadline is nevertheless good compliance.

O

No particulars were given

about what were the inadequacies by providing the bare minimum.

Compliance with this goal required substantial work.

The Plaintiff had

four days to turn over all account contacts and five days to finish all writeQ

ups.

The time schedule was really tight.

inadequacies in the PIP Review.

The PIP Review is a contemporaneous

document which deserves great weight.

S

There was no complaint of any

On the evidence, there is no

dispute that the Plaintiff handed over all her accounts to Harumi Hiyamuta.
If there were any inadequacies, there was no reason why John Liptak

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would not have so remarked in the PIP Review in just a few words.

I find

John Liptaks evidence about inadequacies is a recent concoction made in

C

a desperate attempt to justify his PIP Review.

in John Liptaks complaint says it all.

The absence of substance

He was being oppressive, fault

finding and looking for pretext to fail the Plaintiff in her performance of
E

the PIP.

It reflects a lack of bona fides in his conduct of the PIP Review.

I find him an unreliable witness.

215.

I find this specific goal complied with.

In respect of goal (b), sharing information, John Liptaks

complaint is that the Plaintiff still did not communicate fully with him in a

timely manner on certain items, such as writing up of comparables, with

I

information coming in late via email after she had left for the day and did
not provide the weekly update on her projects as requested.

In the PIP

Review, John Liptak remarked as follows:

K

Results:
Information flow has improved from Sunny but
she has still not communicated fully with myself in a timely
manner on certain items with information coming in late via
email, after she has left for the day. In addition, Sunny has not
provided the weekly update on her projects as requested.

In summary, the complaints are that information relating to certain items

N

was provided late and after the Plaintiff had left the office; and that she did
not provide weekly updates on her projects.

216.
Q

On the dead line, 4 July 2007, the Plaintiff tendered her work

to John Liptak.

As John Liptaks complaint was mainly directed at the

Plaintiffs compliance in respect of his requests relating to the Harbin

R

Electric deal, I shall focus on that deal in the email chain. The Plaintiff
S

wrote at 12:08 pm:

I refer to the performance goals

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My portfolio is divided into two categories: new issues and

distressed debt.

For new issues, I have prepared memos for approval and I am

resending them again to you. In addition, I have updated the
financials quarterly if they are available. I am pleased to inform
that all of them are performing as planned and I do not have any
significant updates since our purchase. Therefore, please do not
feel that I have not been updating you on new developments
because there is simply none. , Harbin Electric and are all
performing well or according to plan. This is a remarkable feat
so I hope you feel pleased as well.

For distressed,
The only credit that I have not updated is Garuda. I have not
been able to focus on it since returning from the creditor meeting
for obvious reasons.

In addition, as I already mentioned, I have filed all available

information in blue folders in reverse chronological order. They
are situated right to my desk. Please feel free to pick up the
files if you want to know more details such as hard copies of
financial statements,
loan rollover
notices,
general
correspondence, etc. I also file some analysts report in the
folders.

In any event, if you are not comfortable with any of the credits
and/or the information we have, I would understand it as most of
them were purchased last year. I would recommend to sell so
that we have a consistent approach on our portfolio and also
reduce the misunderstanding that there is no information
sharing.

At 6:24 pm John Liptak replied:

Also, you need to provide comp[arable]s for all the new issues
you done we need to know how this credits stand next to their
peer groups. I cant see if that is attached, if not you need to get
that done.

You also need to provide an equity model, one that you have
done yourself for [H]arbin so we have a better understanding of
where this story is going.

As far as the ones you say have [been] performing for years we
need more updates [than] that. We need projections on
performance and what levels we would buy and sell the debt.

The Plaintiff replied at 6:50 pm:

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105

217.

I will see what I can do with your further info request. To be

honest, I am not sophisticated in my modelling. For any credit I
looked at, I used a lot of non quantitative factors and so far it has
worked. But I will try to use your approach going forward.

On 19 July 2007, the Plaintiff reverted to John Liptak about

comparables for the Harbin Electric deal.

She wrote at 9:12 am:

I refer to your request to receive comp[arable]s for all new

issues. These are , please see my email correspondence with
Harumi which you have been copied. I have not asked Harumi
about Harbin Electric and Perfect Sky because I understand they
are very unique in the industry and I think the investment houses
will have trouble providing comp[arable]s. However, I will
send the email anyway. For Infrastructure Capital, you have
approved this yourself. Please let me know what angle you
are looking at Infrastructure Capital.

John Liptak replied at 9:25 am:

J

So we are clear we need the analyst to maintain the

comp[arable]s for the credits they follow, especially in H[igh]
Y[ield] names, this includes financial comp[arable]s. All that is
included is price information in this email which I had already
had seen. Please provide the financial comp[arable]s which are
requested.

The Plaintiff replied at 9:39 am:

Thank you for your email. Instead of sending emails back and
forth, could you provide me with the format of the financial
comp[arable]s, perhaps from other analysts which have done the
job satisfactorily? I will be happy to find the information.
Please also note that most of the comp[arable]s will be outside
my coverage so we need to get the info from the investment
houses which maintain such database. Please recall that when I
did Lakewood, a Thai steel company, I looked at Megasteel
which you cover and you questioned me why I would read
Megasteel reports. I would like to avoid such misunderstanding
in the future.

At 10:52 am, the Plaintiff provided comparables for Perfect Sky and wrote:

Attached is the comp[arable]s for Perfect Sky. It was provided

by DBS and I have updated with the latest numbers available
from Bloomberg.

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106

If you do not have the standard format ready, I will use this one
for other issuers as well.

218.

The tone of the Plaintiffs emails was submissive.

response was prompt.

please and to comply.

employment.

Her

These show that she was ready and willing to

Obviously, she was desperate to retain her

This was not the conduct of someone who was

confrontational or disrespectful.

Requisitions could be easily made, but

compliance was burdensome, particularly in view of the tight time

G

schedule.

She was late only in respect of information of certain items.

She did provide the information.

John Liptak complained that she

provided the information by email after she had left the office.
I

If she was late, she was only

marginally late, having missed the office hours.

K

very mean.
M

information had been provided.

This complaint

He was fault finding and

In substance, she performed.

The

Plaintiff should reasonably be excused for not meeting deadline which was

In any event, there was substantial

compliance and should be acceptable according to standard of Wang Wei

Wei.

219.

Having viewed some of the emails, I find that a lot of

too tight, if not unreasonable.

O

To complain that she

provided the information out of office is frivolous.

provides a peep hole into John Liptaks mind.

Another

way to look at that is that the Plaintiff was so desperate that completed her
work even after office hours at home.

As for the alleged failure in providing weekly updates on her

project, John Liptak did not provide particulars.

The Bank relied on

Harumi Hiyamutas evidence that she was shown certain documents by the
S

Banks solicitors, namely items D137, D138, D144, D145, and D147, and
she did not see any weekly summaries on the Plaintiffs projects from

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those items.

D137 is the email chain of 19 July 2007.

D138 is the

Plaintiffs email providing financial projections of Harbin Electric.

C

D145 and D147 are the

Plaintiffs emails providing comparables for some of her projects.

E

D144

is an email chain about John Liptaks request for information relating to

Harbin Electric deal which I shall deal with later.

According to the Plaintiff, since commencement of the PIP

process, she had sent out fifty five emails updating her projects over the
course of six weeks.
updates.

are some of the emails which did not contain weekly summaries.

220.

These

She attended weekly calls and provided her weekly

I have viewed many of those emails. They include daily reports,

comparables and correspondences.

They contain updates, but no weekly

summaries or weekly updates of the kind requested by John Liptak.

consider she failed to meet this specific goal.

K

221.

I now turn to John Liptaks specific complaints in respect of

the Harbin Electric deal.

M

On 18 July 2007, he requested for the name and

contact of the investment bank that did the deal.

To that request, the

Plaintiff responded within eight minutes as follows:

Merrill Lynch, Harumi now talks to them.

O

Both John Liptak and Harumi Hiyamuta considered that answer inadequate
P

and a defiance of John Liptaks position as her manager.

only provided the name of the investment bank but not the name of the
person whom she contacted in that bank.

information.

In easier times, that answer would have been acceptable,

The Plaintiffs explanation is that as the

account had been handed over to Harumi Hiyamuta and she was instructed

By that answer, she was telling

John Liptak to ask Harumi Hiyamuta who may have more update

though by no means a good one.

T

The Plaintiff

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not to contact the client, she did not have the up-to-date information of the
contact person.

Hence, she referred John Liptak to Harumi Hiyamuta.

At the time, John Liptak did not raise any complaint about that answer.
Presumably, he considered the answer acceptable.

If he had considered

otherwise, he would have followed up as he did in relation to the next

E

requisition below.
concoction.

This complaint carries the hallmark of recent

The Plaintiff admitted her answer was inadequate.

But I

would not go that far as to find it a defiance of authority.

G

222.

The next day, 19 July 2007, John Liptak asked for the resale

registration statements.

He wrote:

Please provide me a copy of the resale registration statements,

which you should have, for the warrants/shares. If you dont
have it, let me know and I will get it from Merrill.

To that request, the Plaintiff referred him to her earlier email.

Effectively, she sent the whole package to John Liptak and asked him to
look for it himself.

She could have done better.

documents, she should have simply said so.

If she did not have the

John Liptak wrote back:

This is not what we are asking for which should have been
part of the [due diligence] work. Harumi and I will go back to
Merrill.

She wrote:

Please refer to my email dated 1 June 2007. These files

comprise the whole package that I received. If you do not see
what you need, please feel free to contact any relevant parties.

According to the Plaintiff, she thought John Liptak was querying the

propriety of the transaction because of her lack of due diligence

S

investigation and was not pursuing the statements as John Liptak said he
would go back to Merrill Lynch.

The Plaintiff replied:

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Please feel free to contact Merrill Lynch for any documents

relating to Harbin.

We bought Harbin last year and I have received proper approval

from Ken for the purchase. If the procedure has changed,
please make the new procedure available to me. I now
understand that you need the model, comp[arables], checkings
with other market players for new credits. I have not done any
deal without those elements since. If there is anything more
you need, please let me know.

In the event that you are not comfortable with any of the position
purchased last year, I will repeat that I strongly recommend that
we sell them so that we maintain your standard on all of our
position. We have made profits on all of the names.

223.

Mr Huggins SC argues that even in the face of the PIP, the

Plaintiff was still confrontational and refused to assist John Liptak to look
I

for the requested statements.

With respect, that is an unfair comment.

The series of emails have to be read in their proper context.

show that the Plaintiff was submissive.

was required of her.

goal posts.

She misunderstood the purpose of John Liptaks

Perhaps, that was because John Liptak was moving the

She did not know if there were the registration statements.

In any event, the question about the registration statements was closed as
John Liptak said he would turn to Merrill Lynch.

She provided what she thought

request and thought he was querying the adequacy of her due diligence
investigation.

The emails

Hence, in the first

sentence of her last email quoted above, she told John Liptak to ask Merrill
Lynch for the documents.

That was the best she could do as she was

prohibited from contacting her clients.

Q

224.

Mr Huggins SC refers to the following answers of the Plaintiff

under cross-examination and criticises her as being the un-reformed old

S

Sunny:

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Q: When you looked at the package, did you then send this to
him? What do we see here? Is this what youre
referring to when you say, These files comprised the
whole package that I received?

A:
D

Yes, I believe so. I send it by PDF and of course I did

not send a hard copy.

You didnt look through even this bundle to see

A:

No, I did not.

Q:

- to see whether it had what he was looking for?

A:

No, I did not.

Q:

Why not? Just look yourself.

A:

You know, at that point of time I wasnt really interested

in looking at you know, you can say legal document; this
is all too much for me.

Q:
J

You were under a warning letter. You should have

known perfectly well that if your boss asks you to do
something, you would do it. If he asks you for
something, you would get it if you can. Did you not
appreciate that?

A:

I did not do anything unusual as per my normal activities.

Q:

Yes, the same old Sunny; the same you do it yourself.

A:

No, this if he has asked any other analyst he may have

gotten the same reply, because this is purely not an analyst
or a traders job.

Q:

You said its not for you to go looking for the documents
hes seeking?

A:

I frankly do not think that was Mr Liptaks job. The

appropriate things for him to do or for Ms Hiyamuta to do
is to forward the entire document to our in-house counsel
and see whether we have complete documentation. Its
not for anyone at the desk to review these documents.

225.

Q:

With respect, I think that is a distorted interpretation of the

Plaintiffs evidence.

What the Plaintiff said was that she did what she

was required to do as an analyst.

She said that the registration statements

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were legal documents which were the responsibility of the Legal

Department and not the analysts or traders; and, if asked, any other
C

analyst would have given the same answer.

that.

John Liptak did not dispute

The real gist of his complaint is that he thought the Plaintiff had

those statements but was uncooperative in not turning them over to him.
E

However, the fact is that she did not have those statements and right at the
start John Liptak was happy to ask Merrill Lynch if she did not have the
statements.

inability to turn over the statements.

In any event, that was one failure

only out of many requisitions John Liptak had raised and it was not at all a

exaggerating the incident as a fatal failure under the PIP.

226.

John Liptak was only picking on the Plaintiff and

Presumably, nothing important turned on the Plaintiffs

very serious failure.

I

Lastly, John Liptak complained that the Plaintiff failed to

provide comparables within the requested timeframe.

He said that as

high yield bonds would trade relative to other credits inside the market,

comparables are required for the purpose of comparing the valuation of the
M

assets held against other assets in the market.

that the comparables provided by the Plaintiff were brief and sketchy and
there was no analysis or analytical input.

Mr Huggins SC submits

Hiyamutas evidence.

That is based on Harumi

But, on the other hand, the email chain quoted in

paragraph 217 shows that the Plaintiff did provide comparables and asked

for the format John Liptak required so that she could conform tio his
Q

standard.

But John Liptak did not respond.

In the absence of any

standard format provided by John Liptak, she sent him comparables for
Perfect Sky and said she would adopt that format.

objection from John Liptak.

There was no

It would be unfair for Harumi Hiyamuta to

say that the Plaintiffs comparables were inadequate, if John Liptak did not

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give her the format.

For all the comparables that John Liptak asked, he

could only complain about the ones in respect of Harbin Electric project.
C

It must be assumed that the Plaintiff met his requirements in respect of

comparables for all her other projects, albeit late.

Given the size of the

task, such failure must be regarded as de minimis.

E

227.

In respect of the Harbin Electric deal, John Liptaks complaint

was that the Plaintiff just relied on Harumi Hiyamutas conversation with
G

the arranger and told him that there were no comparables.

why that was unacceptable.

On the fact, all comparables were provided

by investment houses, brokers and banks.

I

Harbin Electric was unique and investment houses would have trouble

When she reported what Harumi Hiyamuta

told her, John Liptak did not insist that she should somehow find a way to

assertion that an analyst was not supposed to be just dependent on the

brokers; and if the brokers have no comparables, an analyst would have to

vague as to what that means.

himself did not assert.
some comparables.

evidence.

Now, the Bank relies on Harumi Hiyamutas

somehow find a way to find those comparables.

O

The Plaintiff nevertheless said she would enquire

from the investment houses.

find those comparables.

In her email issued at 9:12 am

on 19 July 2007, the Plaintiff had already informed John Liptak that

providing comparables.
K

He did not say

Harumi Hiyamuta was

This duty is something which John Liptak

He did not tell the Plaintiff to somehow find

I have doubts in the reliability of Harumi Hiyamutas

She impressed me as regurgitating from prepared speech

which is not contained in her witness statement.

I cannot help feeling

uncomfortable why she would make that assertion which John Liptak did
S

not find it necessary to make it himself.

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228.

In his PIP Review, John Liptak only vaguely said that the

Plaintiff did not fully comply but without referring to this complaint or any
C

other particulars.

This is the only specific complaint John Liptak could

make in respect of the Plaintiffs failure to meet goal (b).

The totality of

evidence impressed me that John Liptak was trying hard to retrospectively

E

justify a vague assertion of lack of full compliance by picking on the

Plaintiffs failure to provide comparables for just one project out of the
comparables for all the projects that she provided.

that was one failure only out of many projects which she was able to

should fairly be considered as having substantially achieved this goal.

In respect of goal (c), stopping verbal abuses and emotional

outbursts, John Liptak confirmed that there were no verbal or emotional

outbursts from the Plaintiff.
confrontational at times.

229.

Despite the few inadequacies, the Plaintiff

Even if the Plaintiff

were at fault in failing to somehow find comparables for this unique deal,

produce on a tight schedule.

His complaint is that her attitude was still

The Bank only relied on the following email

from the Plaintiff dated 2 August 2007 as evidence that she was still
confrontational and unwilling to work under the leadership of John Liptak.

230.

Before looking at that email, it would be useful to outline the

context in which that email was written.

After turning over her accounts

and contacts with other shops to John Liptak, John Liptak transferred them
Q

to Harumi Hiyamuta.

introducing Harumi Hiyamuta to her accounts one by one as if she was

handing over her job.

The Plaintiff was required to make telephone calls

Then, the deals which were subsequently referred

to the Plaintiff from those accounts were all turned down, while the
Plaintiff was still doing research on them.

At the time, the performance

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of team was deteriorating.

melting down.

In particular, John Liptaks portfolio was

It was in that context that the Plaintiff wrote to Harumi

Hiyamuta on 2 August 2007 pleading her not to reject deals when she had
shown interest to work on it in view of the deteriorating performance of
the ISSG.

In that email, she wrote:

I would like to highlight an issue that I have since I was asked

to hand over my relationships with major investment banks to
you one month ago. The purpose of this message is not to put
blame on you and I completely understand if you did not make
such decisions.

On two occasions that I am aware of, you have declined the

deals which I have openly expressed interest to explore
further without informing me and only after I asked then you
told me a decision has been made between you and John Liptak
that we will not pursue the deals. On the first deal shown by
Merrill Lynch you have eventually obtained the information
which I took a look and quickly declined myself. On the second
deal shown by BNP-Paribas, you have said today that you told
BNP-Paribas that we are not interested before I had the chance to
look at the deal.

I have been covering the Indonesian market since I joined in

2000 and may I remind you that I initiated the high
yield/leverage loan product for the ISSG group in 2005. I have
a successive 7 years track record of profitability without major
losses. Given this background, I would appreciate that if you
could give me some credit that I have a good sense in making the
preliminary judgment on which deals will work and which wil
not. After all, I will be the one who spend a lot of time doing
the groundwork and if I did not manage to get the approval, it
will be mostly my time to waste.

I also would like to highlight that during the distressed era,

everybody made money and almost all other market players
made the most from Indonesia. For whatever reason, this was
not the case for us and it did not matter a lot at that time since we
were extremely profitable. However, the market has become
very sophisticated and we are unfortunately no longer profitable.
If we want to turn back to our past glorious days, we must be
nimble about the business opportunities in the market. It
requires the well touted teamwork that Bank of America is
looking for.

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If there is any misunderstanding, please let me know by email.

I apologize for my straightforward manner but there is no point
beating around the bush given the dire state we are in.

Harumi Hiyamuta considered that a rude complaint.

The impression she

formed was that, notwithstanding the various warnings, the Plaintiff was
still saying that she should be the one to have a look at the deal first.

In

other words, the Plaintiff was still taking a proprietary view of her deals.
She said that the Plaintiff still believed that she had better sense in

deciding which deal was worth pursuing and her good sense in making
G

the preliminary judgment on which deals will work and which deal will
not should prevail over the consensus of two managing directors, herself

and John Liptak, in turning down deals that came through her relationship.
I

231.

I have quoted the email in full.

I consider Harumi Hiyamuta

gave a very tainted interpretation of that email.

K

the two deals.

pursuing.

The Plaintiff referred to

She fairly admitted that the first one was not worth

She complained to use the words of Harumi Hiyamuta that

the second deal was turned down before she had a chance to look at it.
M

She then pledged her credit and expertise in Indonesian deals by reason of
N

her familiarity with the region which was where she came from.

It was

against that background that she pleaded for a chance for her to give her
O

views on the deal before a decision was made to turn it down.

P

offering to share information.

She was

In the penultimate paragraph, she was

offering her teamwork to make the ISSG as profitable as before.

She was

not saying that the two deals were her property or was assigning them to
R

herself.

She was by no means challenging John Liptaks leadership in the

team and his prerogative in assigning deals.

She was offering her views

and expertise to Harumi Hiyamuta so that she or John Liptak could make
T

use of before making a decision one way or the other.

She had

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reasonable grounds to do so because Indonesia was her geographical area

of responsibility and her expertise.

That was far from protesting that her

manager was making decisions without involving her or that her views
were superior to that of two managing directors.

She was offering

cooperation and teamwork. She was rectifying the inadequacy complained

E

of her in item (d) of the warning letter, namely, refusing to discuss new
ideas; and was exerting herself by sharing information in meeting goal (b).
In the final paragraph, she apologised for being straightforward.

sincerity in her email.

Plaintiff.

I can see

Harumi Hiyamuta is manifestly biased against the

This badly damaged her credibility and the reliability of her

evidence.
I

232.

As Harris SC rightly points out, this is the Banks weak

attempt to show that the Plaintiff was still confrontational in the face of a
K

completely submissive employee desperate to retain her employment.

This is a desperate attempt to justify an allegation of confrontational

behaviour when there was none.

M

233.

In respect of goal (d), John Liptak complains that the Plaintiff

took a days vacation leave on 20 July 2007 without prior notifying him or
O

Harumi Hiyamuta.

There is no dispute that prior to taking her leave, the

Plaintiff had instructed the team secretary, Cecilia Yeung, to mark her day
off on the teams electronic calendar.

It is all a matter of office practice.

I think it goes without saying that while taking leave is a matter of right
under the employment agreement, granting leave is a matter of discretion

of the employer and subject to exigency of the employers requirement.

S

In that connection, prior consultation or application is usually required.

According to Harumi Hiyamuta, while the practice is ISSG was very fluid,

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the basic is to, at least, tell John Liptak.

This is what she said in cross-

examination:
C

I think in normal circumstances, I may ask John or my

other colleagues that if its okay, Im going to be out of the office
on that particular day, or I just want to tell them first. Maybe
not every individual, but at least tell John. If I see nobody has
any problem with that, what I had done is then notify our desk
secretary and I ask her to input the system about the absence of
leave.

234.

According to the Plaintiff so long as her absence was

adequately covered, it was the usual practice to take leave by marking the
H

electronic calendar.

By having her absence covered, it must necessarily

mean having informed someone to take care of her work during her
I

absence.
J

This might well be the case under the set up of the ISSG with

analysts having their respective geographical areas of responsibility and

working round the clock to match New York time.

This was especially

so under the leadership of Ken Schneier when analysts worked rather

L

autonomously and management was remote in New York.

of Desk in Hong Kong, there was no reason not to, at least, tell John Liptak
of her leave beforehand.

With a Head

It was the Plaintiffs evidence that at the PIP

Review interview, John Liptak let her off on that count upon her
explanation that she had worked overtime.

Obviously, John Liptak did

not take a very serious view of that breach.

The breach was a very trivial

neglect and did not occasion any serious consequences for ISSG.

Against

a background of loose supervision and all the circumstances, it would not

have justified summary dismissal and would not have, by itself alone,
R

rendered an otherwise substantial performance of the PIP a failure.

235.
T

In conclusion, all that the Plaintiff failed were (1) failing to

provide weekly summaries of her projects and comparables in respect of

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only one unique project in respect of which no comparables were available

from the investment houses; and (2) one minor neglect in properly
C

applying for leave.

Against the very serious accusations in the PIP and

the very onerous specific goals, these shortfalls cannot be described as

anything but insubstantial which should fairly be excused.

improvement.
G

The test should be an objective one of significant

She complied with virtually all the requirements

What particularly required of her was the turning over of

all her accounts and contacts which she did.

I

make introductory calls to her contacts.

She was made to do that

under humiliating circumstances, being required by Harumi Hiyamuta to

passed that test by a comfortable margin.

K

The Plaintiff actually mended her ways substantially since

early January 2007.

under the PIP.

John Liptak

failed the Plaintiff by applying his 100 percent or nothing standard.

That was inappropriate.

I consider the Plaintiff has

A termination on the ground of

K

her failing the PIP could not have been a genuine reason.

Bona fides or otherwise of the initiation of the PIP process

M

236.
N

The Plaintiff harboured a theory that John Liptak brought

about her termination because he could not stand a female outperforming

him while he suffered heavy loss.

She made some assertions that female

employees were treated less favourably than male.

P

But I do not think the

evidence goes that far as to support a case of gender discrimination.

any event, that is not the focal point in these proceedings.

In

There are,

however, evidence that since 2006 John Liptaks portfolio suffered severe
R

losses.

His personal loss in 2006 wiped out all the profits made by the

Plaintiff, resulting in an overall loss for the team.

loss in 2007.

But for the Plaintiffs profit of US$6.06 million, the team

would have again ended up in red.

He also suffered heavy

That does not cast a favourable light

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on John Liptak as Head of Desk.

But I would not go that far as to say

that gender discrimination and the Plaintiffs performance were the reasons
C

for her dismissal.

237.
E

There is no dispute that the relations between the Plaintiff and

John Liptak had been rough since 2005 which carried on into 2006.

condition was most probably caused by the Plaintiff taking a proprietary

view of her deals and contacts.

Schneier.

That attitude could be easily understood in a performance

driven environment, though contacts obtained in the course of employment

He emphasised

more on teamwork and insisted that an analysts contacts belonged to the

His policy was that an analyst who sourced a deal would not

necessarily be assigned the deal, and assignment should be made on the

basis of ability and availability.
management point of view.

When John Liptak

became the Head of Desk, he took a different approach.

employer.

That attitude had been connived by Ken

must be regarded as the property of the employer.

I

That

All that made business sense from

It would also work in a performance driven

environment, if properly and fairly administered and credit given to the

analyst who sourced the deal.

John Liptak criticised the Plaintiff for lack

of teamwork and for being protective of her contacts, while the Plaintiff
O

was troubled that by sharing her contacts her contribution would not be
adequately acknowledged.

That was what caused the conflict between

the Plaintiff and John Liptak since 2005 through to 2006.

Q

238.

It seems that since Ken Schneiers counselling of the Plaintiff

on 5 January 2007, the wall between the Plaintiff and John Liptak had been
S

torn down.

She knew she could no longer be confrontational towards

John Liptak as her immediate manager.

She realised she had to submit

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herself to reality.

She tried to mend her ways.

longer confrontational since January 2007.

C

contacts.

As I find it, she was no

She was ready to share her

Harumi Hiyamuta confirmed that the Plaintiff generated more

daily reports, more than John Liptak did.

She also confirmed that she had

no major friction with the Plaintiff and they worked well together.
E

contacts and information.

Obviously, the Plaintiffs improvement was not good enough

for John Liptak.

David

Sbarro said that all along the Plaintiff was helpful and willing to share her

239.

When he became the Head of GSSG Asia in February

2007 after the reorganisation, he started steps to get rid of the Plaintiff.
I

He had a brief discussion with Peter Santry and then wrote to him on 14
February 2007 requesting further action against the Plaintiff, saying:
While there have been a number of discussion with Sunny to
bring back into the fold, to date we have seen little progress.

Pausing here, what was the situation between January and February 2007
which provoked the issue of this email?

Unlike the situation in 2005 and

2006 in which the Plaintiffs conduct was documented, there was

absolutely nothing that John Liptak could point a finger at the Plaintiff,

except the China Tire deal, the Mongolia deal and the Bemax Resources
O

deal.

For reasons as already explained, those complaints were frivolous.

The Plaintiff had mended her ways.

She was already in the fold.

However, John Liptak misled Peter Santry into thinking that the Plaintiffs
Q

situation was unacceptable and unsustainable.

240.
S

Then, in April 2007, Peter Santry visited Hong Kong and had

a meeting with the Plaintiff.

Presumably, that meeting ended in a good

note because Peter Santry drafted an email to the Plaintiff in rather

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encouraging and complimenting tone, saying that he wanted her behaviour

to change.

But that email was not sent after discussion with John Liptak

and Ken Schneier.

The reason for Peter Santrys change of course was

John Liptaks email of 27 April 2007.

In that email, John Liptak wrote:

I think the tone of the note and to an extent the scope is too soft.
As Ken points out we have been down this path with her on
numerous occasions with little to no effect. I disagree with Ken
that it would be desirable for her to stay in her current state, she
has an undesirable effect on the team as a whole and as pointed
out below we have some serious credit risk at stake.

Even after Ken had his last round of talks with Sunny at the start
of the year and she was put on notice with HR that she had to
fully come into line, we in Asia have seen little improvement in
her communication or attitude. She still has not provided any of
the contacts at the various shops she speaks with, tho asked on
several occasions to do so. In addition, when asked about HY
deals coming to market that the desk has interest in, she has
failed to provide information to the desk that has been given to
her by other shops.

Pausing here, what was the situation between January and April 2007?
L

John Liptak had no complaint but the China Tire deal, the Mongolia deal
and the Bemax Resources deal which were not substantiated.
misconduct had been documented.

No other

Though John Liptak said Ken

Schneier had pointed out the past counselling had no effect, on the
contrary it was Ken Schneiers opinion that his counselling on 5 January

2007 was effective, that the Plaintiffs reaction was very calm and logical
P

and she understood she had no choice but to comply.

is that the Plaintiff did comply.

The objective fact

I cannot emphasise more strongly than

that the confrontation in 2005 and 2006 was never repeated in 2007.
R

Liptak could point to no confrontations in 2007.

say Peter Santrys draft note was too soft.

Ken Schneier recommended the Plaintiff to stay.

T

John

He was the only one to

Ken Schneier did not.

Indeed,

He had been the

T

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Plaintiffs manager for four years up to February 2007.

His opinion must

carry more weight.

C

241.

Then, John Liptak went on and wrote:

With regards to the risk on the book that Sunny is responsible

for- neither myself or Harumi are aware (to any reasonable extent)
what our strategy is on these names with regards to what our
strategy is on these names with regards to what we want to do
i.e. when we would like to add, sell, what key events we should
be looking out for, etc. This comes from Sunnys general
resistance to letting anyone in Asia know what she is doing.
From a simple risk management standpoint, the two senior
people on the desk shouldnt be put in that position.

While the Plaintiff had been protective of her deals and contacts, this is the
I

first time when allegations of this sort relating to risk surfaced.

there is no documentation.

Again,

I am surprised that for serious allegation of

this nature, John Liptak as Head of Desk would not have made written
K

demands for information.

problem with her portfolio.
half years straight.

team.

On the objective fact, the Plaintiff never had

She consistently made profit and for six and

It was John Liptak who was the risk problem for his

For two consecutive years, his portfolio suffered serious loss

which wiped out the profit contribution of the Plaintiff.

He subsequently

received a Does Not Meet rating in his performance evaluation for 2007
O

and a record low bonus of US$350,000.

I think he was exaggerating or

even misrepresenting the situation to put pressure on Peter Santry to take

action against the Plaintiff.

Q

242.

John Liptak went on and wrote:

With regards to the development of the HY business I do feel
Sunny has done a good job developing the initial contacts via
salespeople at the various HY shops in the regions. However
her attitude of these are mine regarding these contacts has not
allowed us to leverage off this business to any extent. In

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addition, her desire to control the process from start to finish

without anyone else in Asia in the loop has put the desk at risk
with regards to market movements. As discussed with Ken and
mentioned to you, while Sunny was pushing for these HY
investments she never even checked with our HY trader (Will
Clay) to get any market color on the deals or the market in
general, instead depending (it appeared to me) on the salesperson
who showed us the deal for this vital information.

For similar reasons, I have reservation about the veracity of his allegations.

Even if they were true, they only related to the Plaintiffs conduct
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before 2007.

243.
I

In the end, as result of John Liptaks email and discussion, in

June 2007 Peter Santry authorised the issue of the warning letter and the
PIP.

On the objective facts, I find the Plaintiff had made significant

improvement on her conduct as result of Ken Schneiers counselling on

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5 January 2007.

Much of what John Liptak said about the Plaintiff is

untrue or at least does not reflect the situation in 2007.

Those allegations

were said to mislead Peter Santry into authorising the PIP process when
M

there was no basis to do so.

that John Liptak did so as a vendetta for the Plaintiffs conduct in 2005 and
2006.

I have no difficulty in drawing the inference

was clearly instituted with malice.

With

the blessing from Peter Santry, he started pushing the Human Resources

He sought

advice from Tommy Fung and Emily Cheung on how to make a case to get
rid of the Plaintiff.

That was how John Liptak manipulated Peter Santry.

Department to execute his plan to terminate the Plaintiff.

S

I would not go that far as to infer that he did so because of gender

discrimination or because the Plaintiff outperformed him. The PIP process

244.

On 27 June 2007, he wrote to Todd Shaw of Human

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Resources asking to initiate the process to terminate the Plaintiff.

On

28 June 2007, Emily Cheung followed up and gave a PIP template to John
C

Liptak.

Emily Cheung asked:

I think we would all be happier if she left, so if you have any

ideas to make this work to that end let us know.

It is obvious that it was John Liptaks express intention to have the

Plaintiff terminated regardless of her performance under the PIP.

John Liptak replied instantly,

One thing you have to consider is that if Sunny fulfill all three
objectives, i.e. deliver the client details to you and behave herself,
are you happy to help her in long run?

After receiving the draft performance goal from John Liptak,

This is

the clearest evidence from John Liptaks own mouth that the PIP was not
J

going to be conducted in good faith but was a pretext to terminate the

Plaintiffs employment.

I have to treat his evidence regarding the

Plaintiffs conduct in 2007 with extreme caution.

L

245.

I ask rhetorically, what has the Plaintiff done between January

and June 2007 to deserve the PIP other than her significant improvement?
N

This is what John Liptak said in cross-examination:

Q.
I suggest to you, right at the outset, that you think
the time has come for a parting of the ways?

A.
As I stated earlier, I thought a time had come for parting
of the ways, based on the exchange of emails I had with Ken and
Peter Santry, sometime in mid to end of first quarter 2007.

Q.
Was there any specific incident that triggered your
position in relation to the issuing of a warning letter and the
performance improvement plan that you were told you had to
follow through human resources?

A.
I dont think there was any specific thing. Its kind of,
you know, which one drop of water breaks the dam? We
continued to have issues with Sunny going into you know, by
this time in 2007. So regardless of the multiple warnings she

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had I cant remember if there was one instance that just, you
know, finally was like, This is it. But I thought by early 2007,
we had already approached that point, if not passed it.

Thus, John Liptak confirmed that the Plaintiff had done nothing in 2007 to
trigger the PIP process.

It was only he who decided in February 2007

that time had come for a parting of the ways.

E

analysed those emails.

I have

They were about the Plaintiffs conduct before

As her manager for 2006, Ken Schneier did not consider it

appropriate to terminate the Plaintiff because of her conduct in 2006 and

thought it appropriate to allow her to stay.

Peter Santry was initially in

favour of giving the Plaintiff a chance.

Only John Liptak was adamant

that the Plaintiff should be terminated.

On my analysis, he misled Peter

Santry about the Plaintiffs conduct in 2007 and pressurised him into
initiating the PIP process with threat about the Plaintiffs risk potential.

The basis for his decision

was the emails he had with Ken Schneier and Peter Santry.

2007.
G

It

is amply clear that John Liptak initiated the PIP process without valid
grounds and was determined to bring about the termination of the Plaintiff
regardless of her performance of the PIP.

He did so as a vendetta for the

Plaintiffs conduct in 2005 and 2006.

N

Bona fides or otherwise in the conduct of the PIP process

246.

The PIP process was manifestly not conducted in good faith.

First, the improvement goals were obviously and excessively wide.

Q

The

Plaintiff was prohibited from talking to any of her contacts and was
assigned to non-client-contact duties.

This had nothing to do with her

unacceptable conduct stated in the warning letter.

S

Compliance with this

goal would not bring about any improvement on her conduct either.

This

goal was not meant to test the Plaintiff or to remedy her conduct, but to
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punish.

It took her out of the field and prevented her from making deals

and performing.
C

247.

Second, not only was the Plaintiff made to turn over all her

accounts and contacts, she was required to prepare write-ups of all her
E

projects and to make introductory calls to her contacts to introduce Harumi

Hiyamuta to her clients and contacts.

Turning over her accounts and

contacts may be reasonably regarded as rectifying her protectiveness and

G

secretiveness.

prohibiting her from talking to her contacts were equivalent to handing

over her job.

But, turning over accounts, making introductory calls and

She was not asked to improve, but to hand over her job.

That specific goal speaks the mind of John Liptak, that he would fail her
regardless.

That was why he required her to handover her job.

248.

Third, John Liptak set an absolute standard of 100 percent or

nothing, when according to Wang Wei Wei significant improvement of a

long term nature is what is required of the employee.

He set the rule with

intention to fail the Plaintiff rather than to remedy her inadequacy.

As

indicated in his email to Emily Cheung, he wanted the Plaintiff to leave

and asked Emily Cheung to find ways to make this work to that end.
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249.

Fourth, John Liptak distanced himself from the drafting of the

PIP.

Under cross-examination, he said he did not recall who drafted the

PIP.

According to the email chain between Emily Cheung and John

Liptak on 28 June 2007 quoted in paragraph 244 above, Emily Cheung

gave a template to John Liptak for the purpose of drafting the PIP. John
S

Liptak replied instantly:

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I will work on this first thing in the morning and give you a
call.

On the following day, ie 29 June 2007, he interviewed the Plaintiff and

gave her the warning letter and the specific goals.

person actively pushing for the PIP process.

Peter Santry to authorise the process.

He sought assistance from Human

He must be impliedly

saying it was not him so as to give the impression that the PIP process was
carried out in an independent and fair manner by the Human Resources
Department.

Who else but he

Yet, he had the audacity to say

on oath that he could not recall who drafted it.

He received the PIP

template the night before and promised to work on it.

could have been the one to draft the PIP?

He was the only

He tried hard to pressurise

Resources to find a way to make this work.

F

The only reasonable inference to be drawn from his

distancing himself from the drafting of the PIP is that he was trying to
conceal his malicious intention of terminating the Plaintiff regardless of

how she performed under the PIP.

L

250.

As analysed above, the Plaintiff had substantially met the

specific goals.
N

She made significant improvement which is likely to be of

the long term.

Despite that, John Liptak failed her in the PIP.

Obviously, the PIP process was invoked by John Liptak not for its proper

purpose of remedying the conduct of the Plaintiff but to pave the way for
P

her exit and smooth transfer of the accounts she was responsible for.

PIP was not instituted and conducted in good faith, nor was the conclusion
of the PIP Review.

The

As submitted by Mr Harris SC, the PIP process was

nothing but a charade orchestrated by John Liptak to bring about the

Plaintiffs termination.

Malice is written absolutely on the face of the PIP

Review.
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The intention to avoid the Plaintiff from being eligible for consideration

under the performance incentive programme

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251.

On the objective fact, the Plaintiffs conduct substantially

improved in 2007.

Despite the harsh terms of the PIP, the Plaintiff

substantially performed and should be regarded as having passed.

E

Thus,

the Bank failed to show that she was terminated by reason of her conduct.
The reason given for her termination was not genuine.

Peter Santry was

manipulated by John Liptak into authorising the Plaintiffs termination, on

G

behalf of the Bank.

John Liptaks malice is therefore attributed to the

Bank.

252.
J

On the very narrow pleading of the statement of claim, the

Plaintiff bears the burden of proving that the Bank terminated her

employment with the intention to avoid her being eligible for the
K

performance incentive programme.

L

intention.

There is no evidence of such express

The Plaintiff relies on inference.

the reason offered by the Bank.

She successfully rebutted

It is common knowledge that the

Plaintiff would be deprived of the 2007 bonus if she was terminated prior
N

to the bonus payment date.

and the Bank.

That was known to John Liptak, Peter Santry

Mr Harris SC therefore argues that in doing whatever he

could to bring about the Plaintiffs termination, John Liptaks, and

P

therefore the Banks, intention was to avoid paying the Plaintiff the

performance bonus which she would have been paid had she continued her
Q

employment to payment date.

R

His argument seems to have equated

knowledge of consequence with intention.

253.
T

Mr Huggins SC argues that the Plaintiff must either establish

the pleaded motive to deprive her of a 2007 performance bonus or fail in

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her claim for wrongful termination based on the alleged implied term.

He

submits that it is not enough for her to say that her termination had the
C

inevitable and foreseeable incidental effect or consequence of depriving

her of eligibility for consideration for the performance bonus.

Any

termination prior to the year end of 2007 for any of the valid reasons under
E

section 32K of the Employment Ordinance or indeed any reason wholly

impregnable at common law would have had that same incidental effect of

removing her from any consideration of a performance bonus for 2007.

G

He stressed the significant and material distinction between (a) specific

intention and (b) incidental effect.

He submits that where the employer

can show that he had a valid reason under section 32K of the Employment
I

Ordinance or a reason which is on any view wholly unobjectionable at

common law, nevertheless if the employer knew that the inevitable

consequence would be that the employee would be deprived of a

K

performance bonus for that year, then he had an intention to avoid paying a
bonus was opportunistic and exploitative and therefore wrongful.

254.

These are very forceful arguments which I would have found

irresistible but for one reason.

These arguments are premised on the

Bank successfully showing it had a valid reason for termination, but on the
O

fact, it had not.

tendered by the Bank was not genuine but was made up by John Liptak out
of malice.

On the contrary, the Plaintiff has shown that the reason

If the Bank can establish a valid reason for termination, then it

cannot be taken to have intended the natural or foreseeable consequences

of the termination.

But, if the Bank cannot show a valid reason, what is

left is a concealment of the true reason for termination which is open to

S

inferences to be drawn from the circumstances.

If the Plaintiff could go a

step further to show that her termination was brought about by malice, it is

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all the easier for adverse inference to be drawn, including all the negative

foreseeable consequences that termination may bring.

C

255.

This proposition is not difficult to understand.

Take the case

of an employer who dismissed his employee knowing that if the employee

E

stayed in employment he would have to pay the employee certain

employment benefit in the foreseeable future.

If he dismissed the

employee, not for cause or the employees unacceptable conduct or

G

redundancy, but for absolutely no reason or no genuine reason at all, can it

not reasonably be said that he dismissed the employee to avoid paying him
the benefit?

make it easier for adverse inference to be drawn?

The fact that the

employee had been providing useful and profitable service would give

If the dismissal was actuated by malice, the inference to be

drawn is all the stronger.

256.

What inference to be drawn depends on the surrounding

The inference to be drawn is highly fact sensitive.

accept the Banks case that from 2005 through to 2006 the Plaintiff had not
been a good team player, was not willing to share contacts, and was
confrontational to John Liptak as Head of Desk.

circumstances.
O

It is all a matter of common sense.

The nearer it is to the date of payment of

the benefit, the stronger is the inference of the intention to avoid the
payment.

If he conceals the reason for the dismissal, would it not

further force to the inference.

K

But, I find as a fact and

for good reasons, which I am not going to repeat, that the Plaintiff
substantially improved her conduct since Ken Schneiers counselling on

5 January 2007 and that there was absolutely no basis for John Liptak to
S

complain about the Plaintiffs conduct in 2007 and to initiate the PIP
process.

I find as a fact that the PIP process was instituted not for its

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proper purpose but was conducted in bad faith with intention to fail the
Plaintiff regardless of her performance.

I find as a fact that the Plaintiff

should have, on an objective view, passed the PIP.

The reason given by

the Bank or John Liptak for the Plaintiffs dismissal could not be a genuine
reason.

The PIP was just a pretext to bring about her termination and the

smooth transfer of her accounts.

On the other hand, the Plaintiff was a

performing employee, consistently making good profits for six and half

years straight! By the time of the termination, two-thirds of the year

G

lapsed with the Plaintiff having made significant profit contribution.

John Liptak and the Bank must have foreseen that she would be awarded

substantial bonus for 2007.

I

257.

From John Liptaks malice and his concealing the true reason

of the Plaintiffs dismissal, the inference may reasonably be drawn that

K

John Liptak, and therefore the Bank, intended all the foreseeable
consequences that termination would bring, including depriving the

Plaintiff of her eligibility of being considered for the performance

M

incentive programme.

That intention, along with John Liptaks intention

to get rid of the Plaintiff, must be one of the dominant intentions or

purposes of the dismissal.

It may be argued that a prestigious bank as

Bank of America would not do anything so mean or so lacking in

commercial sense as to dismiss a performing employee to avoid paying her
bonus.

I have no doubt that was not the intention of Peter Santry or the

Banks senior management.

attributed to the Bank.

But John Liptaks intention must be

That was what the Bank did through the hands of

John Liptak and with his intention.

S

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258.

Mr Huggins SC argues the Plaintiffs theory that she was

targeted and ultimately dismissed on what she says were spurious grounds
C

because John Liptak was jealous and concerned about her outperforming
him and wanted to get rid of her for her contacts is inconsistent and

materially different from an intention to avoid paying her a performance

E

bonus.

The Plaintiffs theory is inconsistent with an intention to avoid

paying her a bonus, but that cannot prevent the inference of such intention

from being drawn from the surrounding circumstances including

G

concealing the true reason for termination of a performing employee with

malice.

In any event, it is not the Banks case that the reason for the

Plaintiffs dismissal was that John Liptak was jealous and concerned about
I

being outperformed.

259.
K

In conclusion, I draw as the only reasonable inference that one

of the dominant intentions of the Bank in terminating the Plaintiffs

employment was to avoid her being eligible for consideration under the
performance incentive programme for 2007.

for the Plaintiff to succeed, what is needed is to prove that intention was

Quantum

260.

Damages have to be both properly pleaded and proved.

30

Plaintiff bears the burden proving damages .

The

The Plaintiff only pleaded

that she was awarded 16.6% of her profit in the years 2002 to 2004 and

It needs not be the sole intention.

While Mr Harris SC opened

the Plaintiffs case on the basis that that was the sole intention, in my view,

one of the dominant intentions.

30

Furmston et al: The Law of Contract (4th edn, 2010) at 8.6

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hence she should get 16.6% of her profit figures by way of damages for the

years 2005 through to 2007.

C

261.

While it is understandable why the Plaintiff excluded the

figures for 2005 and 2006 which are the subject matter of her claim,
E

Mr Huggins SC criticises her unexplained reason for excluding the figures

of 7.8% for 2000 and 2001.

But his real and more substantive criticism is

that the Plaintiffs formulaic percentage basis of calculation of this

G

discretionary bonus is entirely contrary to the incontrovertible evidence

relating to the performance incentive programme.

262.

Mr Huggins SC submits that there is no evidence to support

the Plaintiffs plea that the Bank adopted a formulaic approach in assessing

bonus and that such a formulaic approach is against commercial common

K

sense.
fail.

Accordingly, the Plaintiffs quantum claim for 2007 bonus must

There is indeed nothing to support the Plaintiffs pleaded case of a

formulaic approach in assessing bonus.

M

A glance at Table 2 shows that

the bonuses she was awarded in 2000 to 2006 varied widely between
7.61% and 16.41% of her profit contribution.

As submitted by

Mr Huggins SC, she was plainly not given bonuses based on any formula
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remotely resembling the percentage formula she is now contending for.

Furthermore, it is Tommy Fungs unchallenged evidence that the Bank
does not adopt a formulaic approach in awarding the bonus.

He said:

the Bank does not adopt a formulaic approach in awarding

discretionary bonus and has no formula whatsoever for
determining the amount of the discretionary bonus to be awarded
to each employee. Such discretionary bonus is not a commission,
it is not determined by reference to a percentage of the revenue
or profit generated by an employee or by the line of business to
which the employee belongs.

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263.

Though the Plaintiffs pleaded basis for assessment of the

bonus collapsed, that does not necessarily mean the Plaintiffs claim must
C

fail or that she is only entitled to nominal damages.

the pleading does not prevent the court from doing what it can to assess
damages on the basis of the available evidence.

The inadequacy of

While a defendant is

under no duty to help the claimant to perfect his pleading and is entitled to
see the claimants pleaded case collapse, he only have himself to blame by

not pleading his positive case, if he has one, and not providing proper
G

discovery, in the event that the claimant succeeds in proving liability.

If

there are other factors which the court should have taken into account but

has not and made an assessment to his detriment, the defendant, just as the
I

claimant, would only have himself to blame for not pleading those factors.
Similarly, if the defendant fails to provide sufficient discovery, the court
may make assumptions.

The defendant will also have himself to blame if

the assumptions work out to his detriment.

I say this because there are

data, such as the bonuses received by other employees of ISSG or GSSG

which the Bank should have disclosed but did not and which the Bank
M

resisted on the ground of irrelevance to the question of liability but failed

to disclose in relation to quantum.

I shall proceed with my assessment

without those data.

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264.

The bonus in question is a discretionary bonus.

The English

Court of Appeal in Horkulak provided useful guidance on how such

Q

discretionary bonus is to be assessed.

Basically, the size of the bonus

depends on how the employer would within the terms of the bonus
programme have exercised his discretion.

If in breach of his duty the

employer failed to exercise the discretion or exercised it in a capricious or

arbitrary manner, the court will put itself in the employers shoes and

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consider what decision, acting rationally and not arbitrarily or perversely,

the employer would have reached as to the amount of the bonus to be

C

paid 31.

In assessing the amount, due weight must be given to the range of

criteria which may be properly taken into account 32.

These include the

following useful criteria suggested by Potter LJ:

E

(a)

the purpose of the bonus scheme;

(b)

the claimants expectation;

(c)

a comparison of the claimants position with the overall

remuneration package; and

(d)

the range of salary and bonus payments being paid to

employees who were of the same title and status as the

I

claimant, not only as an indication that bonuses were

being paid in the years concerned, but to see whether he

was in the right ball park when assessing what might

K

have been paid to the claimant.

265.
M

The features of the performance incentive programme are

described in paragraph 24 above.

performance philosophy.

Essentially, it adopts a pay for

The programme emphasises on rewarding the

highest performers with the greatest reward through base salary, equity and
O

incentives bonus.

Its express guiding principles are reward the highest

performers with the greatest reward; pay relates directly to performance;

and awards are highly differentiated based on performance.

It focuses on

the results the employee achieved against his performance goal.

Performance is assessed on two criteria: the What and the How.

S
31

Horkulak at 51, per Potter LJ

32
Horkulak at 70, per Potter LJ
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Total compensation is market-informed and driven by final results of the

Bank, the employees line of business as well as the performance results of

C

the employee.

Thus, at the heart of this programme is performance,

which is measured by the employees rating in his What and How.

The single and most important factor to consider is the employees result
E

or profit.

Two other subsidiary factors are the Banks own result and the

result of the employees line of business.

While the Bank does not adopt

a formulaic approach, as profit is the single and most important factor

G

under the programme, bonus percentage best reflects the end product of the
employers exercise of discretion and provides the best quantitative data
for assessing the likely bonus to be awarded to the Plaintiff for 2007.

are qualitative data.

The bonus awards of the previous years will assist the court in

finding out how the Bank exercised its discretion.

The bonuses awarded

in the more proximate years would provide a more reliable guide.

M

The

employees ratings in his How as well as ISSGs and the Banks results

266.

In

assessing the Plaintiffs bonus for 2007, I shall use the bonuses awarded in
2005 and 2006 as reference, now that I have dismissed the Plaintiffs

challenges to those awards.

O

267.

In 2005, the Plaintiff was awarded a Meets rating for her

What and for her How.

Q

She was awarded a bonus of US$615,000

against her profit contribution of US$8.03 million and ISSGs result of

US$27.39 million.

Her bonus was equal to 7.66% of her profit

contribution and 2.25% of ISSGs result.

S

I assume 2005 to be a typical

year, with two Meets for the Plaintiff and overall good profit for ISSG.

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268.

In 2006, the Plaintiff was awarded a Meets rating for her

What and a Does Not Meet rating for her How.

C

7.61% of her profit contribution.

E

Her bonus was equal to

Understandably, the Bank would have to cut down the size of the bonus

her Does Not Meet rating.

Her bonus bears no meaningful

comparison with ISSGs result as ISSG suffered an overall loss.

because of the result of ISSG.

G

She was awarded a

bonus of US$550,000 against her profit contribution of US$7.23 million

and ISSGs result of a loss of US$1.36 million.

Another negative factor for the Plaintiff is

A positive factor is her shining performance

which she achieved though at the middle of her financial target.

The

overall effect was a bonus of 7.61% which was 0.05% marginally lower
I

than the year before.

That shows the Plaintiffs performance carried

greater weight in determining the size of her bonus than her poor
performance under the How.

penalised for her Does Not Meet rating for her How.

269.

In 2007, no mid-year performance evaluation was made in

respect of the Plaintiff.

She made US$6.06 million profit for the first five

months of that year.

At that rate, she would have made a profit of

US$14.54 million by the end of the year.

O

that she projected the total profit of her portfolio at US$10.7 million plus a

Her postulated result would have far exceeded her target.

Against her

target and the overall loss suffered by ISSG, she would have been awarded

Though John Liptak invoked the

PIP process, on my finding the Plaintiffs conduct had much improved.

As she was awarded a Meets rating for her How despite her rather

Her financial target was US$5-10 million.

an Exceeds rating for her What.

S

That would be in line with what

she told John Liptak and Peter Santry in her email of 13 February 2007

realised profit of US$2 million.

Q

She was probably only marginally

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confrontational attitude in 2005, she would surely have been awarded a

Meets rating for her How in 2007 in the light of her improvement.
C

270.

For 2007, John Liptak made substantial loss and as

result ISSG only made an overall profit of US$2.53 million.

E

percentages for 2002 to 2004 were very high.

The bonus

This is probably because

the ISSG made huge profit of up to US$40 million and could afford to be
very generous.

The profit of GSSG was very low in 2007.

percentages for those years may not provide suitable reference.

The

bonus percentage for 2006 is also not an appropriate comparable because

I shall

therefore take 2005 as a typical year as reference for the purpose of

assessing the Plaintiffs bonus for 2007.

The bonus

of the significant difference in the What and How ratings.

I

The Plaintiff performed better

with a postulated Exceeds rating for her What, but the ISSG overall
K

performed poorly making only a small profit, which was wholly

contributed by the Plaintiff.

Given the Banks pay for performance

philosophy, the Plaintiff would have been awarded a higher bonus

M

percentage than what she was awarded in 2005 in view of her outstanding
performance.

On the other hand, the Bank must have been less generous

with its award in view of the small profit made by ISSG as a whole.
O

Allowing for such a reduction, I think on a proper exercise of its discretion,

the Bank would have awarded the Plaintiff a bonus of between 7.66% and

9.00% of her profit contribution, ie between US$464,196 and US$545,400.

Q

271.

The above assessment is principally based on the criteria of

the performance incentive programme.

S

I now turn to consider the other

criteria suggested by Potter LJ in Horkulak.

expectation that she would be paid a bonus.

The Plaintiff certainly has an

She claimed 16.6% of her

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profit contribution.

The highest bonus percentage she received was

16.41% in 2004 at a time when the ISSG made huge profit of US$40.86
C

million.

That probably explained the high bonus percentage.

the bonus percentage was reduced to about 7.6% with the reduction in
profit of ISSG.

Since then,

grossly excessive and not supported by the overall profit of GSSG in 2007.

272.

In my view, a claim of a bonus percentage at 16.6% is

The Plaintiffs total remuneration package at the time of her

dismissal was US$202,755 per annum, ie US$135,170 for eight months up

to the month of termination.

A bonus of US$464,196 and US$545,400

would be equivalent to 343.42% and 403.49% of the Plaintiffs

I

remuneration package for the same period.

Such a bonus falls slightly

outside the range of about 330% of what she had been receiving prior to

termination, but may be justified because of her postulated result.

K

273.

Mr Huggins SC submits that the Plaintiff has not adduced

evidence of the range of salary and bonus payments being paid to her
M

former colleagues who were of the same title and status as hers for the
purpose of checking what bonus would be in the right ball park when
assessing the bonus which might have been paid to her.

exclusively known to the Bank.

These data are

If the Bank does not plead that the bonus

percentage claimed is excessive and out of line with that given to the then

current employees and does not adduce relevant evidence, I shall assume
Q

that such evidence has insignificant impact in assessing the Plaintiffs

bonus.

274.

There is also nothing to suggest that a team members bonus

should be capped by the bonus awarded to the Head of Desk or that the

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total bonus pay-out should be subject to a certain amount or percentage of

the teams overall profit.

If there was such a policy, the Bank have not

pleaded or adduced evidence.

I shall assume there was no such policy

and make my assessment without considering that factor.

275.

Having so considered the criteria under the performance

incentive programme and the other factors as suggested by Potter LJ in

Horkulak, I consider a bonus within the range of US$464,196 and

G

US$545,400 would have been awarded to the Plaintiff for her performance
had she not been dismissed before payment date.

As the result of ISSG

had not been particularly good, I consider the Bank would have on a
I

proper exercise of its discretion awarded the Plaintiff a bonus of

US$500,000.

Such a bonus would have a bonus percentage of 8.25%,

which is higher than the Plaintiffs rate in 2005 and 2006.

K

It is well

justified by reason of her profit contribution and her postulated Exceeds

rating for her What.

It is equivalent to 369.90% of the Plaintiffs

remuneration package for the year of her dismissal, which is marginally

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outside the range of what she had been receiving prior to the dismissal, but
justifiably so.

Accordingly, I assess the Plaintiffs damages in the sum of

US$500,000 and award her damages in the sum of HK$3,900,000 at the

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official exchange rate of HK$7.8 per US dollar.

CONCLUSION
Q

276.

In conclusion, I dismiss the Plaintiffs claim for damages for

underpayment of her bonuses for the year 2005 and 2006, but allow her
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claim for damages for loss of bonus for the year 2007, which I assess at
HK$3,900,000.

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141

277.

The Plaintiff is successful in respect of one only of her three

claims.
C

She may not be entitled to all of her costs.

for 2005 and 2006 were quite unmeritorious.

However, the evidence

Having regard to all these factors, I consider her costs should be reduced

pay the Plaintiff 85% of her costs.

278.

Accordingly, I make a costs order nisi that the Defendant shall

Her claim for 2007 bonus involves

substantial arguments on the law, in respect of which she is successful.

by 15%.
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Her claims for bonus

relating to those claims provides the background facts which are necessary
for proving her claim for 2007 bonus.

Lastly, I thank Mr Harris SC and Mr Huggins SC and their

respective legal teams for their exhaustive research into this developing
area of the law and for their very enlightening arguments.

I also thank

their solicitors for their thorough preparation of evidence and trial bundles.
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I deeply apologise for the time taken in my deliberation and I thank the
parties for their patience.

(Anthony To)
Judge of the Court of First Instance
High Court

Mr Graham Harris SC and Ms Pema W Fung, instructed by Oldham, Li &

Nie, for the Plaintiff

Mr Adrian Huggins SC and Mr Bernard Man, instructed by Mayer Brown

JSM, for the Defendant

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