Employment Update, Hong Kong - October 2007

09 October 2007

Luke Ryan, Megan Yeung

Hummingbird Music Limited v Dino Acconci and Giulio Acconci (HCA 836/2007; 18 June 2007)

Background

An artist will usually enter into a contract with a professional management company, appointing the company as his exclusive manager. If a claim for breach of contract arises before the expiry of the contract term, the Court will not order specific performance of the contract, as this type of contract requires a substantial degree of mutual trust and confidence for its performance. Similarly, the Court will not grant injunctive relief which will have the same practical effect as an order for specific performance. In Hummingbird Music Limited v Dino Acconci and Giulio Acconci, the Hong Kong Court of First Instance reaffirmed these principles.

Facts

The Defendants, two Hong Kong pop singers, appointed the Plaintiff Company as their manager and worldwide exclusive agent. In early 2007, the relationship between the parties soured and the Defendants purported to terminate their contracts. The Plaintiff issued proceedings against them seeking (i) a declaration that the contracts were still binding and enforceable, (ii) injunctions to restrain the Defendants from entering into any new engagements (other than through the Plaintiff’s exclusive agency), and (iii) damages.

The Court held that whilst the Plaintiff had not expressly sought an order for specific performance, this was the intended effect of the orders sought. The Court considered whether this form of relief was appropriate in this case, but declined to order specific performance as the performance of the contracts involved the provision of personal services and a high degree of trust and confidence between the parties. The Court also declined to order injunctions barring the Defendants from using other agents, as an injunction would have had the same effect as specific performance.

The Court noted that there had been a clear breakdown of the relationship between the parties, and that it was quite probable that if they were forced to deal with each other exclusively there would be disagreements as to the suitability of future projects and/or promotional activities. This would result in further litigation, particularly as the contracts would, if specific performance was ordered, run until 2011.

Effect on employers

Whilst this case involves the contractual relationship between an agent and an individual, it is not dissimilar to that of an employer and employee. Both involve the provision of personal services and generally require a high degree of trust and confidence. On this basis, even if an employer successfully sues an employee for breach of an employment contract in Hong Kong, it is unlikely that the employer will be awarded an order for specific performance, but will instead be awarded damages.

It should be noted however that additional remedies are available to employees in Hong Kong pursuant to the Employment Ordinance, and where an employee has been wrongfully terminated, a court has the power to order the reinstatement of the employee.