In the matter of Mulberry Capital Management Pty Ltd v Shen

The Umbrella Agreement

1. The defendant discussed his potential role with China Kingho with Mr Huo in meetings in Beijing in 2013. They agreed on a salary of USD $1.5m per annum for his role with China Kingho and AUD $600,000 per annum in respect of the Australian entities. The defendant said he wanted to be paid in US Dollars.
2. The defendant says, and I believe him, not least of all because he was not challenged, that during these meetings, Mr Huo said to him that he wanted him to help protect his family's wealth, that the Chinese government was chasing him and might force him to merge with State-Owned Enterprises and that he could lose all his business and fortune in China. The defendant says Mr Huo asked him to help protect his overseas investments and told him that he would like to change Mulberry's name to remove the reference to China Kingho because that would potentially attract the name of creditors and undermine the protection of his wealth. Mr Huo told him that he was to follow his instructions and only report to him directly and not to anyone else in the group. He said that the defendant would meet his wife and daughter and that his daughter was still "green in business" and he should help her if needed.
3. The defendant says he drafted employment contracts and obtained input on them from Ms Yang.
4. The defendant resigned from his previous employment in about May 2013.
5. In June 2013, the defendant went to Beijing where he and Mr Huo signed a written agreement in Mandarin on 1 June 2013 under which China Kingho employed the defendant as investment director (also referred to as chief investment officer) of China Kingho and also as managing director of its Australian subsidiary. The parties referred to this agreement as the Umbrella Agreement.
6. The Umbrella Agreement provides that the defendant's term of employment is three consecutive years from the day of signing, with an automatic extension unless one party provides the other with not less than a month's notice in advance to terminate. It provides for payment of a salary of USD $1.5m and for the parties to sign an English employment contract as per Australian law.
7. Amongst others, the Umbrella Agreement provides for China Kingho to pay for personal housing for the defendant in Australia.
8. The Umbrella Agreement provides that the defendant is to report directly to the chairman of China Kingho.

The Employment Agreement

1. As well as the Umbrella Agreement, Mr Huo, relevantly on behalf of Mulberry, and the defendant, signed, in English, an employment agreement under which the defendant was employed as managing director of Mulberry and of Wealth Resources and Wealth Mining (the Employment Agreement). It provides for annual remuneration of AUD $600,000. It too provides for Mulberry to pay the defendant's accommodation expenses.

Setting up the Business

1. The defendant returned to Australia, rented offices and recruited staff.
2. The defendant says that he was in contact with Mr Huo, often more regularly than weekly, and travelled to Beijing a number of times each year to talk to Mr Huo in person. A travel schedule in evidence reveals that he visited Beijing no less than 20 times from February 2013 to February 2017. He says that each time he visited China between June 2013 and February 2017 he met with Mr Huo and provided him updates and a briefing in respect of the Australian entities.
3. Unlike other entities in the group, Mulberry was not focussed on the coal mining sector. It was established to create a cash pool and to manage non-mining investments including in stocks and property.

The Juno Transaction

1. In 2013, China Kingho was involved in a potential coal gasification project in joint venture with a company called Juno Capital (Asia) Pty Ltd (Juno), the chairman of which was an acquaintance of the defendant. Mr Huo requested an introduction to the chairman, which the defendant arranged.
2. The defendant says that the chairman of Juno said to him that he was happy to help with the gasification project but that he wanted the defendant to be personally invested in the success of the venture because he knew him and did not know Mr Huo. Juno's chairman said the defendant should speak to Mr Huo to make sure that he (the defendant) could have a small shareholding in the venture.
3. The defendant says, and I believe him, that he cleared his investment in the venture with Mr Huo.
4. The defendant arranged to incorporate an entity, called Alpha SL Capital Limited (Alpha), in the British Virgin Islands to hold his joint venture interest.
5. He also says that Mr Huo told him that he wanted the investment in Juno to be via another company in Hong Kong. This led to the incorporation of Northshore.
6. On 8 August 2013, a written joint venture agreement, in English and Mandarin, was entered into between Juno, Northshore and the defendant "on behalf of Alpha SL Capital Limited, a company to be duly incorporated and validly existing under the laws of British Virgin Islands with its principal place of business at 13 Phoenix Street, Lane Cove, NSW 2066, Australia". The address was the defendant's residence.
7. Mr Huo executed the joint venture agreement on behalf of Northshore. The defendant signed on behalf of Alpha.
8. Article 2.01 records that Alpha has a 10% interest in the joint venture.
9. Article 4.01 identifies who will be directors of the highest decision-making body of the joint venture. They include Mr Huo and the defendant.
10. Alpha was incorporated on 16 August 2013.

The Consulting Agreement

1. The defendant says that around August 2013, when the Juno joint venture transaction was being executed, he had a meeting with Mr Huo in Beijing. He says that, by this time, he had not received any compensation pursuant to the Umbrella Agreement and that he had become aware that under foreign exchange regulations in China, it was not possible for China Kingho to pay him in US Dollars. As a domestic entity, it was not able to hold US currency to pay his salary in China. He recounts (and I believe him) the following conversation with Mr Huo: Defendant: I haven't been paid in these last two months [under the Umbrella Contract]. We signed the contracts in June. We agreed that I would be paid this number, so what are you going to do? Mr Huo: Well don't worry, we'll do that. You know there is no way to pay US dollars to a Chinese individual as a salary here. Given that Northshore is already set up in Hong Kong, why don't you be patient for another one or two months, and then we can transfer the money from China to Northshore and I can pay you from Hong Kong. Defendant: Ok. I already have Alpha set up - Northshore can pay the money to Alpha. Mr Huo: Ok - we can pay the money to Alpha - that would be good. You prepare the documents and I will sign them. Defendant: Ok, I'll prepare the documents - they will cover what I'm doing for the [China Kingho] Group and what you're going to pay.
2. The defendant says he met Mr Huo in Beijing on about 1 September 2013. The defendant had a draft of a consulting agreement and he says he explained it to Mr Huo. He says (and I believe him) that a conversation to the following effect took place: Defendant: So this is what I'm going to do. That's why I need to get paid. You won't be able to pay me in China - correct? Mr Huo: We won't pay you in China, no. Kingho will not pay you. So this is fair - we will pay you through Northshore. Defendant: Can you please sign on behalf of Northshore? Mr Huo: Who has signed the document on behalf of Alpha? Defendant: My mother, Xiujian. She is the CEO of Alpha SL. Mr Huo: Yes, ok. I am happy to sign.
3. Following upon that conversation, on 26 September 2013, Northshore and Alpha entered into a written Consulting Agreement (the Consulting Agreement). Mr Huo signed it on behalf of Northshore and the defendant signed it on behalf of Alpha. It provided for Alpha to render consulting services to Northshore for a period of three years unless extended by agreement of the parties. Clauses 2(a) and (b) provide, relevantly: (a) In consideration of the Services to be provided by the Consulting Company to the Company hereunder, the Company shall pay to the Consulting Company a Retainer Fee of US$97,500.00 per month for the first 12 months period ended in September 2014; and the Company shall pay to the Consulting Company a monthly fee of US$110,000 for the second and third 12 months period ended in September 2016. (b) In consideration of advising Australia M&A strategy on target company for Northshore and its affiliate, the Company shall pay to the Consulting Company a fixed consulting fee of US$1,133,750 'With two tranches, of which the first tranche of US$627,500 is due for payment by the end of December 2013 and the last tranche of US$506,250 is due for payment when the M&A transaction is completed.
4. It is not in issue that the Consulting Agreement was the means whereby the defendant was paid the salary which China Kingho had agreed to pay him under the Umbrella Agreement. It is also not in issue that the defendant did not receive any salary or other emoluments from China Kingho directly. The defendant (via Alpha) was paid exclusively by Northshore for services rendered pursuant to the Umbrella Agreement and the Consulting Agreement.
5. The defendant says that during each year that he was a director of Northshore, he travelled to Beijing or Hong Kong to meet with Mr Huo, Mrs Zhou and Mrs Fok to present Northshore's annual report.
6. Northshore's annual reports (which were audited although they did not have to be) for the financial years ending 31 December 2014 and 31 December 2015 are in evidence. The 2014 accounts are signed by the defendant and Mrs Fok. The version of the 2015 accounts in evidence is unsigned. It was not suggested that a version was not signed.
7. The accounts for 31 December 2014 disclose "Consultancy fees paid" for 2013 of HKD $7,120,800 and for 2014 of HKD $25,648,425. The accounts for 31 December 2015 show the 2014 figure and "Consultancy fees paid" for 2015 of HKD $20,212,740. It is not in issue that these amounts are the consulting fees paid to Alpha under the Consultancy Agreement.
8. In July 2015, the defendant sent Mr Ding (who sometimes assisted companies in the group) draft accounts for Northshore. They disclosed the payment of "consultancy fees" to Alpha for the 5 months to 31 December 2013 and for the year ending December 2014.
9. On 4 August 2015, Northshore wrote to the auditor providing information for the 2013 and 2014 accounts. The letter was signed by the defendant and Mrs Zhou. Paragraph 15 states: The Company has paid US$920,000 and US$713,750 as retainer and advisory fees to Alpha SL Capital Limited for the year of 2013 and 2014 respectively.
10. In around November 2016, the defendant travelled to Beijing to present the financial results and performance of the Australian entities, Northshore and certain Singaporean entities to Mr Huo, Mrs Zhou, Mrs Fok and Mr Ding. He prepared a written report entitled "Review of Position" (the November Report) in Mandarin. He says he met with the other individuals and handed copies of the November Report to them. During the hearing, the plaintiffs put in issue that Mrs Fok was there. The defendant maintained that the meeting was with the whole family and that she was there. I think that it is more probable than not that she was.
11. Under the heading "Hong Kong Northshore Investments Limited", the November Report includes the following (emphasis added): North Shore Investments was established to create a cash pool for overseas capital investments. In the past 3 years, following Chairman Huo and Director Yang's directions, the company's funds have been distributed as below: Coal gasification projects and corporate loans related consulting fees totalling approximately $3.7 million USD to JinNuo Capital. Remittance to Kingho Group totalling $3 million USD Consulting fees for companies relating to myself as per contracted totalling approximately $3.4 million USD

Employment of Mrs Ma and the Bonus

1. On 1 October 2014, Mulberry (on the defendant's direction) employed Mrs Ma under the terms of a written employment agreement signed by the defendant on behalf of Mulberry. The agreement provides that she is employed in the position of Human Resources & Tax Consultant starting on 1 October 2014 at a salary (including superannuation) of $150,000 per annum.
2. The defendant says that from the time Mulberry employed Mrs Ma, he instructed that his own salary ($600,000) be reduced by the same amount as her salary. There is no issue that his salary was so reduced.
3. His avowed motivation for the reduction was that at the time, the Australian entities were relatively new and had not generated a stable revenue stream and he wanted to avoid the entities incurring further cost through her employment.
4. However, on 1 October 2014, he countersigned a letter from Wealth Resources to him in the following terms: Dear Dennis Re: Salary decrease As discussed in our recent meeting, your salary will be decreased effective 1 October 2014 in line with the increased duties you are performing for Wealth Resources Pty Ltd parent company in China. Your Fixed Annual Remuneration (FAR) will be reduced from $600,000 to $450,000, inclusive of superannuation. Your current position and duties as Managing Director of Wealth Resources Pty Ltd and its subsidiaries, will remain the same. The Company will continue to monitor the time spent conducting business in China and if needed, amend or restore your FAR accordingly. All other terms and conditions of your employment will remain the same. Please acknowledge your receipt and understanding of this letter below. Yours sincerely Janet Kavanagh (for) Human Resources
5. It is not altogether clear why the letter emanated from Wealth Resources as opposed to Mulberry itself.
6. He was perfunctorily cross-examined about this letter. It was put to him that the letter was inconsistent with the suggestion that he was trying to control the budget and that it was the fact that he was performing increased duties for "the parent in China". It was also put that Mulberry already employed an HR person and did not need Mrs Ma. In other words, Mulberry's position was that the reduction in salary was made for the reason given in the letter and was not connected with the employment of Mrs Ma. The defendant maintained the position that the purpose of the reduction was to save cost. His evidence was that "we have a new employee, but not spending more".
7. In my opinion, it cannot have been coincidental that at the same time as he took a salary reduction, the employment of Mrs Ma commenced at a salary precisely equivalent to his reduction. There was no evidence that he was performing increased duties for China Kingho. His Mulberry salary was reduced while his China Kingho salary was not increased. One might suspect that the letter was a contrivance to effect an income split for tax purposes, but this was not put to him, no doubt for forensic reasons.
8. It is the objective fact, however, that the combined effect of his reduction in salary and the payment to Mrs Ma of hers was revenue neutral for Mulberry (and the group). I believe him that the reduction was related to Mrs Ma's employment. It follows that the letter was a less than honest contrivance but that was not the complaint levelled at him.
9. The defendant says that during her employment with Mulberry, Mrs Ma undertook the following tasks, amongst others: advising on corporate tax policy and tax issues; advising on annual federal budget and relevant tax law updates; undertaking due diligence on designated projects; providing strategy advice in relation to the Australian operations and potential investments; performing annual reviews of the HR structure for the Australian operations; and advising on Mr Huo's wealth protection plan across multiple countries.
10. He says that he did not seek Mr Huo's approval to employ her because it was within the scope of his authority to make employment decisions.
11. During the period of his employment with Mulberry, Mrs Ma was paid a total of $386,433.98 gross including superannuation.
12. The defendant says (and I believe him) that in or about early 2015, he had a conversation with Mr Huo to the following effect: The defendant: 2014 has been a significant year for us. The team has worked very hard. Have you considered paying the staff a bonus for their hard work during the past year? Mr Huo: Yes, I agree. I think we should offer the staff a bonus for all of their hard work. The defendant: How much do you think we should offer for the bonuses? Mr Huo: I'm happy to let you decide a reasonable number for the bonuses in Australian market environment. You should also decide how it should be divided among the staff based on their performance.
13. In about March 2015, bonuses were paid to all staff, except the defendant. The defendant procured the payment of a bonus to Mrs Ma of $45,000 which was significantly higher than the bonus paid to any other employee.
14. He says that the amounts of the bonuses were determined by him and were based on the performance and contribution of each staff member throughout 2014. He did not disclose the payments of the bonuses to Mr Huo.
15. Mrs Ma's employment was terminated on 28 February 2017.

The defendant's departure

1. On or about 15 May 2017, the defendant was in his office when a Mr Wenjian Zhu, Mr Ding and a Chinese lawyer arrived. Mr Zhu said: "I am speaking on behalf of the Chairman - I am here as his representative. The Chairman doesn't trust you anymore. You should leave. We have prepared the documents for you to sign."
2. The defendant signed the documents as requested and left the office.
3. The Umbrella Agreement was formally terminated on 21 April 2017 by China Kingho.

The Witnesses

1. Mulberry and Northshore called Mr Huo, Mrs Zhao and Mrs Fok. They gave their evidence by video link with the assistance of a translator in Court: see In the matter of Mulberry Capital Management Pty Ltd v Shen - AVL Application [2022] NSWSC 1023.
2. They also called Mr Ding, who had made an affidavit in English without the intervention of a translator. During cross-examination, it soon became apparent that his proficiency in English was insufficient to have sworn an affidavit in it. I rejected the affidavit and indicated that they could have an opportunity to put on an affidavit prepared with the assistance of a translator or lead his evidence with one. The opportunity was not taken up.
3. Despite the fact that his evidence was given in Mandarin, it was readily apparent that Mr Huo is intelligent, articulate and a dominant personality. He ultimately owns and controls a large enterprise. In response to almost all of the conversations deposed to by the defendant, Mr Huo gave evidence that he had no recollection of them.
4. In his evidence, Mr Huo said he had no recollection of the defendant telling him about Alpha or of signing the Consulting Agreement. He had no recollection of anyone ever describing the contents of the Consulting Agreement or talking to him about it prior to about August 2017. He expressed a belief that he would have remembered if anyone had told him about it or that the defendant had a personal involvement with Alpha. He said he was not aware of any commercial reason for the Consulting Agreement, and it did not reflect any agreement he entered into with the defendant. He said that had he been aware of the effect and terms of the Consulting Agreement before it was entered into or while it was in operation, he would either not have entered into it or would have terminated it.
5. Mrs Zhou and Mrs Fok gave the impression of being intelligent, but from their evidence, and (leaving aside the defendant's direct evidence) from the objective contemporaneous circumstances, it is clear that whatever authority they may have, it yields to that of Mr Huo who is in control.
6. The defendant gave evidence in his own case.
7. The defendant was, save in one respect, a credible witness whose testimony I believe. He was almost untouched in cross-examination and his evidence sits comfortably with the objective contemporaneous circumstances and the inherent probabilities. Where his evidence conflicts with any of Mr Huo, Mrs Zhou and Mrs Fok on any material matter, I prefer his evidence.
8. Amongst others, the defendant gave evidence (which I accept) that: 1. despite the fact that Mr Huo was not a director of Northshore after February 2014 "he's the decision-maker, so he always need to control everything"; [1] 2. despite the fact that China Kingho was no longer the ultimate owner of the shares in Northshore, he still regarded as appropriate to deal with Mr Huo because "he ask me"; [2] 3. while the shareholding in Northshore had changed and been separated out of the Kingho Group to Goody Kingdom, this was from a legal perspective "but from administration or the practice" it was still under "the chairman's… management because, that's just part of the arrangement"; [3] and 4. Northshore was still under the chairman's will and his management. [4]
9. The aspect of his evidence which I do not accept is with regards to the justification for the payment to Mrs Ma of the bonus.

The Legal Principles

1. It is possible that Northshore's claims against the defendant are governed by Hong Kong law. The parties agreed that there is no relevant difference for present purposes between the law of Hong Kong and the law of New South Wales.
2. A director of a company owes it fiduciary duties: 1. to act in good faith and in the best interests of the company; 2. to exercise the powers of the office for a proper purpose; 3. not to prefer his interests or the interests of others over the interests of the company; and 4. to avoid placing himself in a position where his personal interests conflict with those of the company.
3. See, for example, Breen v Williams (1996) 186 CLR 71; Pilmer v The Duke Group Ltd (2001) 207 CLR 165; Howard v Federal Commissioner of Taxation (2014) 253 CLR 83.
4. The scope of a fiduciary's duty must be accommodated to the particulars of the underlying relationship that gives rise to the duties in the first place: Howard v Commissioner of Taxation (2014) 253 CLR 83; Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd [2016] NSWCA 357 at [134]; (2016) 340 ALR 580, 605. In determining whether there is a conflict between the personal interests of a director and his duties to the company, it is necessary to identify the functions or responsibilities the director has undertaken in that capacity. The content of the fiduciary duty is moulded to the character of the particular relationship between the director and the company: Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd [2016] NSWCA 357 at [136]; (2016) 340 ALR 580, 606, citing United Dominion Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1, 11.
5. Unless the provision in the articles of association provide otherwise, a director may not obtain any profit by means of a transaction in which he is concerned on behalf of the company unless all the material facts are disclosed to the shareholders and by resolution a general meeting of the company approves of his doing so, or all the shareholders acquiesce: Furs Ltd v Tomkies (1936) 54 CLR 583 at 592.

The Claims

1. I will deal first with Northshore's claim and then with Mulberry's.

Northshore

1. In final submissions, Northshore considerably narrowed its claim from that pleaded in its Amended Statement of Claim. It dropped claims based on alleged breaches by the defendant of provisions of the Corporations Act 2001 (Cth) and that the defendant had breached the Employment Agreement. It relied only on alleged breaches of fiduciary duty.
2. Most significantly, it abandoned a manifestly unsustainable claim that the entry by Alpha into the Consulting Agreement with Northshore constituted a breach of the defendant's fiduciary duty to Northshore. Northshore correctly accepted that in the circumstances in which it occurred there was nothing improper about the entry into of it.
3. After all, the Consulting Agreement was the mechanism by which the defendant was paid the amount due to him under the Umbrella Agreement, which could not be paid by China Kingho in US Dollars under Chinese government regulations. Additionally, the Consulting Agreement was entered into with the full knowledge and consent of China Kingho's ultimate holding company and its owner, Mr Huo. Added to this, Northshore's ultimate holding company was relieved of the burden of paying the defendant and the interests of the group, including the holding company and Northshore, were advanced. The entry into of the Consulting Agreement was no secret. The payments to the defendant under it were repeatedly disclosed in Northshore's accounts, the subject of the letter to the auditor dated 4 August 2015 signed by Mrs Zhou and referred to in the November Report.
4. In any event, article 88(d) of Northshore's Articles of Association (the Articles) provides: Any director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a director: provided that nothing herein contained shall authorize a director or his firm to act as auditor to the Company.
5. It is not in issue that Alpha was the defendant's firm for the purposes of the Article.
6. In the end, Northshore's only complaint is one that when the shareholding in and composition of the board of directors of Northshore changed on 21 February 2014, there arose a substantial possibility a conflict (which the defendant was obliged to avoid) between his personal interests and those of Northshore because Northshore's interests had changed in that China Kingho was no longer its holding company. It was now a company owned and controlled ultimately by Mrs Fok.
7. Northshore put that the appropriate remedy for this breach was that the defendant compensate it for $US 3,987,391.71 being the total paid to him under the Consulting Agreement after 21 February 2014. The amount includes US $73,641.71 recorded as rental paid on 6 January 2016. This was not part of Northshore's original claim and in any event, Northshore had an obligation to pay the defendant's accommodation expenses. This is, in effect, a submission that the defendant should disgorge the remuneration he was paid for the work he did under the Umbrella Agreement after that date.
8. This claim is not merely unsustainable. In my view, it lacks commercial morality.
9. Leaving aside the fact that as at 21 February 2014, Northshore was already legally committed under the Consulting Agreement to pay Alpha, the Consulting Agreement had been entered into in the context of Northshore's then holding company, China Kingho, not being able to fulfill its obligation to pay the defendant in US Dollars and its then subsidiary being chosen to discharge this obligation on its behalf.
10. It could hardly be said that in this context there was substantial, or indeed any, tension, let alone conflict, between the defendant's personal interests and his duties owed to Northshore. Far from being inconsistent with the proper discharge of his functions or responsibilities, I consider that it was entirely consistent with them.
11. What then of the change of structure on 21 February 2014?
12. In my opinion, neither the particulars of the underlying relationship between the defendant and Northshore, nor the character of the relationship he had with that company changed.
13. The change in structure on 21 February 2014 was no more than a device adopted on the instructions of Mr Huo, to put distance formally between him and China Kingho on the one hand and the foreign assets on the other and to protect those assets from possible interference by the Chinese government or creditors while leaving him in de facto control of the entire enterprise. The formal position may have changed but the realities had not. Mr Huo did not even recognise the names Mulberry and Goody Kingdom. When the defendant was let go on 15 May 2017, the message was delivered on behalf of Mr Huo, not the directors of Northshore or Mulberry. As the November Report recorded, over the last three years, moneys had been disbursed at the direction of the Chairman and director Yang.
14. Having observed the plaintiffs' witnesses, and in light of the objective circumstances prevailing before and after 21 February 2014, the suggestion that either Mrs Zhou or Mrs Fok had any form of authority over any aspect of the group enterprise which might prevail against Mr Huo is out of accord with reality.
15. Counsel for the plaintiffs accepted that if the Court found that Mr Huo remained in ultimate control of Northshore, Northshore's claim had to fail.
16. More than this, in my view, it would have been inimical to the implementation of Mr Huo's investment protection strategy for the defendant to have received payment from China Kingho directly after 21 February 2014 (even if this had been possible).
17. Moreover, the defendant had the protection of article 88(d) of the Articles.
18. I also consider that Northshore continued, with the acquiescence of all shareholders to pay the defendant. The arrangement was the subject of the November Report and, as earlier referred to, disclosed in Northshore's audited accounts.

Mulberry's Claim

1. Dealing first with the employment of Mrs Ma, the defendant accepted that he did not disclose this to the directors because he considered that he had the authority to employ her. He undoubtedly had that authority, but that does not mean that in employing her he did not breach his fiduciary duty.
2. There was plainly a potential conflict between his own interests (in procuring the employment of his wife) and those of Northshore, but the sting of the conflict was effectively neutralised by the fact, as I have found, that part of the arrangement was for him to take a pro tanto reduction of his own salary. The defendant gave uncontested evidence of the expertise of Mrs Ma. It was not contested that Mrs Ma actually performed services for Northshore. Whatever the services provided by her were, the true state of affairs was that it did not cost Northshore any money. Even if the defendant breached his fiduciary duty, equity does not require that he be ordered to pay Northshore compensation in respect of it.
3. I do not consider that the payment of the bonus to Mrs Ma was, objectively viewed, in the interests of Mulberry. It cannot be justified. It was significantly higher than any bonus paid to any other employee and was paid less than six months after she started. In my view, its procurement was in breach of the defendant's duty.
4. To be fair, counsel for the defendant properly said little, if anything, to defend it.
5. Mulberry is entitled to be compensated for this breach. There will be an order the defendant pay to Mulberry the amount of $45,000.

Conclusion

1. The defendant is ordered to pay the first plaintiff $45,000 plus interest thereon from the date the bonus was paid. The claims of the first plaintiff are otherwise dismissed.
2. The claims of the fourth plaintiff are dismissed.
3. Unless the parties agree costs, they are to exchange position papers within 10 days after the date of this judgment stating their positions on costs and brief reasons supporting them and to provide them to my Associate.
4. I will stand the proceedings over to a convenient date at which time I will deal with any costs issues remaining. At that time the parties are to draw to my attention any further issues which remain to be determined.

Endnotes

1. T156 lines 17-18.
2. T156 lines 27-29.
3. T167 lines 27-30.
4. T176 line 20. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 September 2022