Prominent HSBC private banker Mimi Monica Wong ("Monica Wong") recently won an award of HK$62 million from the Hong Kong High Court in her lawsuit against her dancing instructors Saccani and his wife, Fairweather, a 15-time world professional Latin dance champion. The trial attracted enormous publicity and was widely reported both locally and internationally. The HK$120 million or US$15.4 million which Monica Wong agreed to pay for 8 years of ballroom dancing lessons is even by Hong Kong’s extravagant standards, an inordinate amount of money.

The case has bemused many over the dinner table but we will endeavour to analyse the legal basis of the decision. The trial judge, Deputy Judge Muttrie, ruled in his judgment that the public’s interest in the case was entirely irrelevant and "normal contractual principles apply" in this case. The "normal contractual principles" are those concerning implied terms and repudiatory breach.

The Case

The defendants, Saccani and Fairweather, are professional ballroom dancing instructors and together operate a dance studio in Hong Kong. Monica Wong, the Plaintiff, is a passionate amateur ballroom dancer. She took dancing lessons from the defendants from 2002 or earlier.

Monica Wong’s version is that she had a series of 3 oral contracts with the defendants for dance tuition plus the services of Saccani as her partner at dancing parties and international ‘pro-am’ competitions. These contracts were for 3 periods from November 2002 to October 2004, November 2004 to October 2007 and November 2007 to October 2012. The contract fees were respectively HK$10 million, US$6 million and GBP 5 million. Monica Wong paid the fee for the first contract, and in respect of the 2nd and 3rd contracts, she paid in advance sums equivalent to about HK$62 million.

In August 2004, after 2 "humiliating" public practice sessions at the Causeway Bay Li Hua Restaurant, in which Saccani verbally abused Monica Wong with foul language in front of her friends and business associates, Monica Wong decided she could no longer continue with the contracts and commenced action to recover the advance payment of HK$62 million.

Monica Wong put her case on 4 alternative bases as follows :-

  1. Termination of contract;
  2. Repudiatory conduct by Saccani which she accepted;
  3. Termination by her under an implied term of the contracts as to reasonable notice;
  4. Total failure of consideration in respect of the 2nd and 3rd contracts.

The Defendants claimed that there was only 1 contract and the 2nd and 3rd contracts were a revision of the 1st contract. They claimed they were ready, willing and able to perform the services contracted for and, whether or not Monica Wong took up those services, they were entitled to the advance fee paid and the balance of £4 million outstanding, for which they counterclaimed.

The agreements were made orally and the only written records were made later in the form of receipts. The receipts did not record all the terms; in particular they did not record the total price. However, they recorded the basic terms and Saccani signed them.

The Normal Contractual Principles

The Court dealt with each of the above bases but focused on the 2nd and 3rd bases of implied terms and repudiation of contract as the main issues in this case. Overall, the judge found Monica Wong’s version of events much more believable than the defendants. Her evidence also accorded with the terms of the documents.

(1) Termination of Contact

Based on the oral evidence, the Court concluded that it was not clear that the contractual relationship had been terminated by Monica Wong and Saccani by oral agreement. The necessary certainty and unambiguity was lacking.

(2) Repudiation of Contract by Saccani

A party may put itself in breach by evincing an intention, by words or conduct, of repudiating its obligations under a contact.

In this case, it was held that the words spoken at the August dance practice and subsequently, "I never want to see you again", "Everything’s off, no more lessons, no more competitions, l will give you your money back" amounted to repudiation and the obvious implication of the words was that the whole relationship between the parties was at an end as far as Saccani was concerned. It was clear by what he said that he did not intend to be bound further by the contracts and he evinced that intention. The Court further held that Monica Wong accepted the repudiation by her 2 remittance instructions in writing to Saccani.

The Court then implied a term in the contracts that the parties would act towards one another in a manner consistent with the maintenance of the mutual trust, confidence and respect necessary for the proper functioning of the teacher and student and dancing partner relationship between the parties. Saccani by demanding an additional £4 million as advance payment as a condition for going to the Miami competition had destroyed that mutual trust and confidence. It was found that the conduct of Saccani amounted to a repudiatory breach of the 1st contract and anticipatory breach of the 2nd and 3rd contracts.

(3) Implied Term as to Termination

The Court accepted Monica Wong’s plea that it was an implied term of the 2nd and 3rd contracts that either party could terminate the contract by reasonable notice. In this case, 2 months was held to be reasonable and one of Monica Wong’s letters constituted notice.

(4) Total Failure of Consideration

On the judge’s findings, performance of the 2nd and 3rd contracts never commenced. There was a total failure of consideration and Monica Wong was entitled to the return of the advance payments. It was added that the defendants took her money for services in the future in which she would never take up. If she wrongfully dismissed them, their claim was for damages not forfeiture.

The Court also dismissed the Defendants’ counterclaim.

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