Lam Leong Fai v Chan Tak Choi

HCA 1395/2019

[2026] HKCFI 4178

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1395 OF 2019

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J U D G M E N T

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INTRODUCTION

1.This is the trial of a partnership dispute between Mr Lam Leong Fai, the Plaintiff (“Mr Lam”) and Chan Tak Choi, the 1^st Defendant (“Mr Chan”) and his son, Chan To On, the 2^nd Defendant (“Chan Junior”).

2.Since 2004, Mr Lam and Mr Chan have been partners of 百樂麻雀娛樂公司 (the “Partnership”), which operated a mahjong parlour (the “Mahjong Parlour”) situated at Shop A and Shop B, G/F, Fuk Kiu Building, No 143, 143A and 145, Fuk Wa Street, Kowloon (the “Premises”).

3.Mr Chan is and has been the sole holder of a Mahjong or Tin Kau Licence since 2004.

4.On 28 July 2004, Mr Lam and Mr Chan entered into a handwritten partnership agreement (the “Original Agreement”). The Original Agreement provided, inter alia, that Mr Chan’s and Mr Lam’s interests in the Partnership were 10% and 90% respectively.

5.From around May 2005, the Partnership operated the Mahjong Parlour pursuant to the Original Agreement at No 143, Fuk Wa Street, Kowloon.

6.On 20 March 2011, in view of the Mahjong Parlour’s anticipated expansion, Mr Lam and Mr Chan signed a supplemental partnership agreement (the “Supplemental Agreement”; together with the Original Agreement, the “Partnership Agreement”), which provided, inter alia, that Mr Chan’s original benefits would remain unchanged (“原有福利維持不變”).

7.Following the expansion in around 2012, the Mahjong Parlour operated at the Premises.

8.In 2019, Mr Lam commenced these proceedings claiming that Mr Chan breached the Partnership Agreement by, inter alia, removing him as a management agent of the Mahjong Parlour, and appointing the 2^nd Defendant, Mr Chan’s son, to act in place of him.

9.Mr Lam has since abandoned most of the reliefs he sought (including injunctions and declarations), and the only remaining relief sought by Mr Lam is his claim for damages.

10.On the other hand, Mr Chan counterclaims for, inter alia, orders for dissolution and winding up of the Partnership and for the taking of all necessary accounts and inquiries. The request for dissolution of the Partnership was resisted by Mr Lam until he filed his written opening submissions on 24 November 2025, in which he indicated that he agreed to a dissolution of the Partnership.

11.Hence, the remaining three issues to be resolved in this trial are narrowed to:

(1)  The true profits of the Partnership for the period between August 2013 and March 2020.

(2)  The nature of certain payments made to Mr Chan over the years, being (i) salary (人工), (ii) the original owner’s remuneration (牌租 / 枱租) (the “Original Owner’s Remuneration”) (iii) tips (下欄) and (iv) special subsidy (特別津貼) (together, “Mr Chan’s Disputed Entitlements”). Mr Lam’s case is that these are merely “labels” for Mr Chan’s drawings of his 10% profit share from the Partnership (the “Sham Label Arrangement”).

(3)  The validity of Mr Lam’s claim for damages.

DISSOLUTION OF THE PARTNERSHIP

12.As Mr Lam no longer resists the dissolution of the Partnership, I make an order that the Partnership be dissolved pursuant to section 37 of the Partnership Ordinance (Cap 38).

13.On the evidence, I agree with Mr Lam SC for the Defendants that, in any event, the Partnership ought to be dissolved on the undisputed basis that there were substantial irregularities in Mr Lam’s keeping of accounts (see Cheesman v Price (1865) 35 Beav 142 (cited in Annotated Ordinances of Hong Kong: Partnership Ordinance at §37.16) at 851). In particular:

(1)  The experts agree that the Management Accounts of the Partnership for the period between August 2013 and December 2020 (which were verified by Mr Lam) did not accurately reflect the financial status of the Partnership and involved substantial double-counting of expenses (See: the joint report of Mr Yeo and Mr Yuen dated 26 July 2023 (the “Joint Report”) at §§15-16). I am of the view that this is a very serious matter which may attract other consequences.

(2)  Further, on Mr Lam’s admission, the books and records kept by him on behalf of the Mahjong Parlour were incomplete.

14.Mr Lam submitted that he agrees to the dissolution of the Partnership because as a matter of practical reality, he had no choice. He submitted that the unilateral removal of him as the managing agent of the Mahjong Parlour by Mr Chan had had severe and multifaceted negative impacts on the operations of the Mahjong Parlour, compliance of government laws and regulations, and the reverence of the Partnership.

15.Putting aside the validity of this submission, this is a situation which Mr Lam should have known prior to the commencement of the present action and in fact shortly after the removal of him as the managing agent. I see no reason why he chose to resist the relief for the dissolution of the Partnership. Such stance led to the increase and indeed wastage of unnecessary litigation costs.

16.Further, I note that Mr Lam’s submission is only that he now must rely on the cooperation of the current managing agents (Ms Cheng and Chan Junior) to handle liaison works with the relevant authorities and thus led to inefficiency in the management of the Mahjong Parlour. There is no evidence that it renders the Mahjong Parlour impossible or difficult to operate. Mr Lam has not tendered any evidence as to how frequent such liaison works were required. This Court does not accept that the removal of Mr Lam led to the unsustainability of the Mahjong Parlour as a business.

17.As far as costs is concerned, for the reasons set out below, I do not find it necessary to do any apportionment.

18.However, if an apportionment is required, I am of the view that adopting a broad-brush approach (see Graham M. Morley v Kwan Wo San & Ors (unrep, HCA 4366/2003, 30 December 2009), Mr Lam, the Plaintiff should pay for  60% of the costs from the commencement of these proceedings as significant time and costs were spent on the issue of dissolution at every stage of the proceedings (including on expert reports), including for proving the basis for loss of confidence and Mr Lam’s wilful and persistent breaches of the Partnership Agreement.

19.In my judgment, Mr Lam should not have resisted Mr Chan’s request for dissolution of the Partnership. I have taken into account the particulars set out in Annexes 2 and 3 of Mr Chan’s Opening and am convinced that:

(1)  It has been evident since at least 2019 that the parties simply cannot continue working together, making it just and equitable for the Partnership to be dissolved. This is reflected in letters from Mr Lam and his solicitors Messrs Wan Yeung Hau & Co to the Office of the Licensing Authority.

(2)  The same conclusion is clear from the recorded conversation on 2 December 2019, shortly after the commencement of these proceedings, where Mr Lam refused to provide accounts for Mr Chan’s review and refused to acknowledge Mr Chan’s interest as a partner.

(3)  Most importantly, there are unexplained accounting irregularities. I am persuaded that Mr Lam is aware of these issues even before the expert reports were filed. Indeed, Mr Lam fairly agreed in cross-examination that he did not fulfil his duties as a partner to safekeep Partnership accounts and documents, and when asked why he did not explain the substantial understatements in profits in the Management Accounts, he said he did not have any explanation (“冇解釋”).

(4)  Thus, I am of the view that the relief of dissolution should never have been resisted in the first place.

PROFITS OF THE PARTNERSHIP FROM 1 AUGUST 2013 TO 31 DECEMBER 2020

20.This issue is simple. As Mr Yuen did not attend the trial for cross-examination, his expert report and his contribution to the Joint Report are inadmissible pursuant to §3 of the Order of DHCJ Grace Chow dated 18 September 2025.

21.On balance, I accept and adopt Mr Yeo’s expert evidence. Mr Yeo’s approach of estimating profits for the 160 operation dates with missing Daily Tables is inherently more reasonable. Instead of assuming zero profits for those dates (Mr Yuen’s approach), he relied on other primary records such as the Condition 7 Accounts and average figures from historical data to come to his estimations.

22.Mr Yeo was subject to Mr Lam’s cross-examination, but I agree with his methodology and conclusions. Mr Lam submitted that Mr Yeo’s entire projection for missing years was based on a “simple calculation on daily commission…then I extend that to the whole period. The average.” This method is criticized as unfairly inflating or distorting the actual figures. I disagree. The absence of data is a problem created by Mr Lam. In my view, it is unfair to assign a zero figure to those dates with no financial information. Doing the best one can, I agree that adopting a historical average is the closest proxy one can adopt to come up with a closer and fairer estimate.

23.Accordingly, I find that the total profit of the Partnership in the Examined Period is HK$57,073,639 as broken down annually in Joint Report - Mr Yeo’s View at §13(2).

SHAM LABLE ARRANGEMENT

24.Mr Lam’s case is that Mr Chan had withdrew cash under various labels which were recorded in the Partnership’s cash book and signed by Mr Chan (the “Notebook”). Although such withdrawals were not labelled as “10% profit share”, they were in fact structured and periodic, suggesting a systematic extraction of funds from the Partnership.

25.Mr Lam SC, on the other hand, submitted that there is no dispute in Mr Lam’s pleaded case (settled by Senior Counsel) that the Supplemental Agreement was entered into to provide additional benefits to Mr Chan as a result of the expansion of the Mahjong Parlour, “on top of his 10% profit share”. There is no basis to suggest that the Supplemental Agreement somehow diminished Mr Chan’s entitlements under the Original Agreement (including his 10% interest in the Partnership).

26.The key issue is thus whether Mr Chan’s Disputed Entitlements formed part of the original benefits (“原有福利”) in Clause 1 of the Supplemental Agreement.

ANALYSIS AND DETERMINATION

27.I find Mr Chan to be a very honest witness. Despite his old age, he gave his evidence in a candid and forthright manner. His answers at trial were consistent with the evidence in his pleadings, witness statements and the contemporaneous documentary evidence. I accept his evidence as a matter of fact as I am convinced, he was telling the truth to the Court.

28.I agree that Mr Lam’s credibility is crucial to this case, as the only evidence in favour of the Sham Label Arrangement is his assertion. There is otherwise no evidence in support, and even Mr Lam’s own witness, Madam Cheng, disavowed any knowledge of the Sham Label Arrangement.

29.I find Mr Lam to be a wholly incredible witness and made things up as he went along. His oral evidence was unbelievable and inconsistent on virtually all the important contested issues.

30.First, I find it surprising that he repeatedly resiled from his own pleadings and witness statements. For instance, despite the precise figures pleaded in the Annex to his own Reply and the accompanying note explaining each of the purported “labels”, he orally claimed that he did not have any recollection of how the Annex came about (沒有印象), and that for the item special subsidy (特別津貼), he did not know even what it was (“我唔知咩嚟”). This is inexplicable given that is his own pleaded case.

31.Secondly, he shifted the responsibility to Madam Cheng, claiming, for example, that he had seen only the first page of the Notebook, as the Notebook was kept by Cheng, and that he did not know the exact figures inside (實數) as they were calculated by Madam Cheng. Yet:

(1)  Both his and Madam Cheng’s evidence was that Madam Cheng all along acted on Mr Lam’s and his late father’s (before his death) instructions.

(2)  Indeed, in Mr Lam’s own words, “all matters related to the Mahjong Parlour were handled by me, or by staff members under my instruction” (“該麻雀館相關的事務皆由本人，或由本人指示該麻雀館的員工，處理”). See: Mr Lam’s WS at §23.

(3)  Further, Madam Cheng’s unequivocal evidence was that she was not responsible for calculating the amount Chan was entitled to receive from the Mahjong Parlour (“本人沒有負責計算[陳先生]所應得該麻雀館的款項”). See: Madam Cheng’s WS at §30.

32.Thirdly, Mr Lam gave implausible and hardly believable evidence on many occasions:

(1)  When asked if Madam Cheng was now working at a mahjong parlour operated at the original Premises by a company called Tung Chi Company Limited (東賜有限公司), Mr Lam initially claimed that he did not even know what business was operated at the Premises and that he did not have any involvement in it, until he was forced to admit that he was a director of this company, and the said company was 90% owned by his son and 10% owned by Madam Cheng.

(2)  Despite the clear position in his pleadings that Mr Chan was entitled to bonuses (see Reply at §9A(2) and Annex 1), he belatedly sought to dispute this in his witness statement at §59 (adopting a contradictory position from what he stated at §54(2) of the same document and in his Opening Submissions dated 24 November 2025 at §41.

(3)  He even claimed he did not know what Condition 7 Accounts were, even though he had highlighted in his own witness statement the significance of Condition 7 Accounts and claimed that he had arranged for employees of the Mahjong Parlour to prepare them (“有鑑於第一被告人一路以來對該麻雀館的事宜不問不聞，故本人安排麻雀館的員工預備其第7條結算表”): see: Mr Lam’s Supp WS at §12. This is not to mention his own case that he was well aware of the laws and regulations as well as the conditions of the Licence and had accordingly been conscientiously discharging his duties as a partner of the Partnership and Management Agent of the Mahjong Parlour (See: Defence & Counterclaim at §7; Reply at §5; Mr Lam’s WS at §§21, 23, 28). I agree that given his many years of experience operating the Mahjong Parlour, Mr Lam must have been familiar with the conditions of the Licence, of which Condition 7 is an integral part.

(4)  When asked about the transfer of his residential property to his son in November 2023 (only a few months after the filing of the expert reports), Mr Lam was also evasive. In response to the question of whether he was still living at that property, he answered no, and stated that his son lived there. It was only upon further questioning that Mr Lam admitted that he lived with his son.

33.On Madam Cheng’s evidence, she confirmed having no knowledge of the Sham Label Arrangement and that this arrangement had never been communicated by Mr Lam or Mr Lam’s father to her.

34.In relation to Ho Ying Pan’s witness statement and Mr Yuen’s Report and Mr Yuen’s contributions to the Joint Report, as they did not attend Court to be cross-examined, their evidence is inadmissible pursuant to §3 of the Order of DHCJ Grace Chow dated 18 September 2025.

DISPUTED ENTITLEMENTS

35.First, I agree that Mr Lam’s pleaded case is that the Supplemental Agreement was entered into to provide additional benefits to Mr Chan as a result of the expansion of the Mahjong Parlour, “on top of his 10% profit share”. Thus, Mr Lam SC is correct in submitting that there is no basis to suggest that the Supplemental Agreement in fact diminished Mr Chan’s entitlements under the Original Agreement (including his 10% interest in the Partnership).

36.Secondly, the contemporaneous documents evidence that (i) salary (人工), (ii) owner’s remuneration (牌租 / 枱租), (iii) tips (下欄), (iv) special subsidy (特別津貼) and (v) 花紅were consistently paid to Mr Chan at the time of the Supplemental Agreement as set out by Mr Lam himself in Reply Annex 1, in accordance with established formulae for each item as detailed in the Note to Annex 1.

37.It is also Mr Lam’s pleaded case that Mr Chan was entitled to 10% of the net profits of the Mahjong Parlour, bonuses (花紅) and $30,000.

38.I agree that the reality is that these payments were agreed upon by Mr Lam and Mr Lam’s father in view of Mr Chan’s contribution to the Partnership and status as the licence holder. Importantly, when asked whether he agreed to pay Mr Chan bonuses, Mr Lam admitted that he agreed, but claimed that he had no choice (“我冇得晤同意，如果唔係佢晤開工”). As the licencee, his consent and participation were crucial to the continued operation of the Mahjong Parlour.

39.I am of the view that (i) salary (人工), (ii) the original owner’s remuneration (牌租 / 枱租) (the “Original Owner’s Remuneration”), (iii) tips (下欄) and (iv) special subsidy (特別津貼) all formed part of the original benefits (“原有福利”) in Clause 1 of the Supplemental Agreement.

40.Mr Lam said that the “labels” recorded in the Notebook do not reflect the true situation and are essentially shams. The threshold for proving an allegation of sham is a high one. In summary:

(1)  A sham in the legal sense only exists where (i) the parties intended that the documents or acts they have done would not create the legal rights or obligations they appear to create; and (ii) it was intended that the documents or acts would mislead a third party into believing the parties had created those rights and obligations.

(2)  The test of intention is subjective. All parties must have intended to create different rights and obligations from those appearing from (say) the relevant document, and in addition they must have intended to give a false impression of those rights and obligations to third parties.

(3)  The intention must be a common intention, but reckless indifference may be taken to constitute the necessary intention.

See:  Artech Development Ltd v Posismo Ltd [2018] HKCFI 344 at §§12-14; Chen Yung Ngai Kenneth & anor v Ho Yuk Wah David (A Bankrupt) & ors [2020] HKCFI 2518 at §§144-147.

41.I agree with Mr Lam SC’s comprehensive submissions that the case of sham labels is not made out on the evidence.

42.First, as was the case in Wong Chi Kei v To Yuk Fung [2020] HKCFI 1565, where it was held at §25 that “there is no objective evidence by which it can sensibly be suggested that each of the parties intended that the documents were prepared simply for the purposes of giving a false impression as to the true position”, there is no contemporaneous evidence whatsoever to support the Sham Label Arrangement.

43.On the contrary:

(1)  The Notebook consistently recorded payments of Mr Chan’s Disputed Entitlements without any reference to the Sham Label Arrangement.

(2)  Neither the Original Agreement nor the Supplemental Agreement mentions the Sham Label Arrangement or the purported mechanism for (1) adding up the payments made to Chan, (2) comparing this against 10% of the annual profits and (3) waiving any shortfall where the former exceeded the latter and paying Chan the shortfall if the latter exceeded the former (which apparently never happened) (the “Purported Set-off Mechanism”).

(3)  There is also no documentary evidence of the Purported Set-off Mechanism e.g. written receipts signed by Chan to confirm that he had duly received his 10% profit share through the entitlements. The fact is that Mr Lam took the trouble to ensure that Mr Chan signed the Notebook to confirm every payment received, twice every month.

44.Secondly, the fact that Madam Cheng had never been told about the Sham Label Arrangement by Mr Lam or Mr Lam’s father, in my views, shows that Mr Lam’s case is improbable as its Mr Lam’s case that Madam Cheng was responsible for the accounts and administrative matters of the Mahjong Parlour. Madam Cheng was Mr Lam’s father’s personal assistant and accountant of the Mahjong Parlour since 2008. She was responsible for calculating and arranging for payments of the entitlements to Mr Chan over the years. Her absence of knowledge defeats Mr Lam’s case.

45.Thirdly, I accept that the inherent improbability also stems from the fact that Mr Lam could not explain how the Purported Set-off Mechanism would have worked. I find it incredible that Mr Lam could compare the payments made to Mr Chan against his 10% profit share without knowing how much had been paid to Mr Chan that year, Mr Lam said that he could calculate this mentally (心 算). This is not believable at all.

46.Mr Lam further asserted that Mr Chan could also carry out the comparison himself and would have asked Mr Lam for the shortfall if Mr Chan found that his 10% profit share exceeded the payments he had received. This is incredible:

(1)  It is undisputed that Mr Chan never saw the Management Accounts, which recorded the annual net profits of the Mahjong Parlour.

(2)  Mr Lam claimed that Mr Chan could work out the profits of the Mahjong Parlour himself from the Handwritten Daily Tables posted in the Mahjong Parlour every day (See: e.g. for an example of a Handwritten Daily Table). Yet, the Handwritten Daily Tables were removed from the Mahjong Parlour’s notice board daily after close of business, meaning that for Mr Lam’s suggestion to work, Mr Chan would need to copy the figures every single day throughout the year.

(3)  I accept that this is unrealistic when it is Mr Lam’s case that Mr Chan did not go to work and was seldom at the Mahjong Parlour.

(4)  More importantly, the annual profits cannot simply be calculated from the Handwritten Daily Tables and require deduction of operating expenses, of which Mr Chan would have had no knowledge.

47.Fourthly, I also accept that the timing and manner of Mr Chan’s payments were inconsistent with the Sham Label Arrangement. Despite the suggestion in the Reply at §9A(3) that withdrawals were made “from time to time”, and the reference to the purpose being to take care of Mr Chan financially (“在財政上‘照顧’第一被告人”), the payments made to Mr Chan were in fact consistently made at regular intervals (twice every month) and calculated using precise formulas which differed for each type of entitlement. These payments were not arbitrary nor based on Mr Chan’s financial needs or the timing of such needs.

48.Fifthly, I also agree that the entire purpose of the Label Arrangement is illogical:

(1)  On the documentary evidence, the labels only appeared in the Notebook.

(2)  In cross-examination, Mr Lam claimed that the Sham Label Arrangement was to deal with public officers (“應付公職人員”). However:

(a)  The Notebook was never intended (nor is there any evidence that it was submitted) to be inspected by public officers. The “labels” did not appear in the Condition 7 Accounts (which were intended to be submitted for inspection) or the Management Accounts. Nor was it suggested that the Notebook was ever shown to the accountant which Mr Lam arranged at the end of each year.

(b)  In fact, in Mr Lam’s WS at §63, he said that “these labels were merely for the Mahjong Parlour’s record-keeping and to enable [Mr Chan], as a partner, to receive the amounts he was entitled to from the Mahjong Parlour in accordance with the Partnership Agreement and the Supplemental Agreement” (“該等標籤只是用以該麻雀館作紀錄及好讓[陳先生]身為合夥人能按合夥協議從該麻雀館取得[陳先生]應獲的款項”).

(3)  As the Notebook was only an internal record, it is difficult to see why parties had to take the trouble to not only record the purported sham labels, but also list out every single working day of the month on each page and arrange for Mr Chan to sign next to each and every entry.

(4)  In fact, Mr Lam never even suggested in his pleadings or in the witness statements who were the third parties that the arrangement was to give any false impression to. Any assertion of what would be effectively a sham (even if the word “sham” was not used) thus fails in limine.

49.Sixthly, specifically in relation to the bonus:

(1)  In his Reply at §9A(2), Mr Lam pleaded that the total of 4 “shares” of bonus formed part of “D1’s Entitlement”, and in Annex 1, where Mr Lam compares the annual payments to Mr Chan versus what Mr Chan was entitled to, he included in the latter figure the bonus (Item (3)) (alongside Item (1) (10% of net income) and Item (2) (additional monthly HK$30,000 pursuant to Supplemental Agreement).

(2)  I accept that there are no room and no pleaded basis for Mr Lam to argue that the bonuses received should be deducted from Mr Chan’s 10% interest in the Partnership.

50.Seventhly, specifically for the monthly payment / owner’s remuneration (牌租 / 枱租 / 東工東息), Mr Lam’s current position is that the Original Owner’s Remuneration (initially HK$12,000 with subsequent increases agreed prior to the Mahjong Parlour’s expansion), was a sham label, while the HK$30,000 in the Supplemental Agreement was not. This is illogical and inherently incredible:

(1)  These two items are closely linked, with the latter representing additional 牌租 / 枱租 in view of the Mahjong Parlour’s expansion.

(2)  The linkage between the two items is evident from:

(a)  Annex 1 to Mr Lam’s Reply, which combines the two under the column “2-牌租 / 枱租”; and

(b)  The Notebook, which adds the two items together for every half-month period.

(3)  See, for example:

(a)  December 2012: The 牌租 / 枱租 is HK$45,600, i.e. the Original Owner’s Remuneration as of 2012 of HK$15,600, plus HK$30,000.  

(b)  December 2013: The 牌租 / 枱租 is HK$50,280, i.e. the Original Owner’s Remuneration as of 2013 of HK$20,280, plus HK$30,000. The Notebook entry can be found at (Two entries of “10140 + 15000 = 25140”).

(c)  December 2019: The 牌租 / 枱租 is HK$64,273, i.e. the Original Owner’s Remuneration as of 2019 of HK$34,273, plus HK$30,000. The Notebook entry can be found at (Two entries of “17136.50 + 15000 = 32136.50”).

(4)  In cross-examination, when Mr Lam was asked what the original benefits in Clause 1 of the Supplemental Agreement referred to, he answered “牌租 / 枱租”.

51.Eighthly, specifically for salary (人工):

(1)  Mr Chan had consistently been paid salary up to the time of the Supplemental Agreement in 2011. Mr Chan confirmed that Mr Lam’s father had agreed to continue paying him salary (see Mr Chan’s Supp WS at §23). I accept Mr Chan’s evidence on this aspect as it is consistent with the contemporaneous documentary evidence.

(2)  Whether and what work Mr Chan carried out at the Mahjong Parlour are irrelevant:

(a)  Even if Mr Chan did not actively work (in the same way as other employees) from 2008 onwards, Mr Chan continued to be consistently paid his salary at the same rate both before and after 2008.

(b)  As Mr Chan explained in cross-examination, after 2008, Mr Lam’s father could have chosen not to pay Mr Chan salary, but Mr Lam’s father continued to do so. This is consistent with Mr Chan’s account in his Supp WS at §23 that Mr Lam’s father agreed to continue paying him salary after the change in Mr Chan’s nature of work following his foot ailment.

(c)  It is not Mr Lam’s case that Mr Chan was at any point dismissed as an employee by Mr Lam or Mr Lam’s father.

(d)  Further, it is also not Mr Lam’s case that the salary payments prior to 2008 were genuine while those after 2008 were merely labels or that Mr Chan’s entitlement to salary was somehow contingent on the nature and extent of Mr Chan’s work in the Mahjong Parlour.

52.Finally, I also accept that while strictly speaking irrelevant to the interpretation of the words original benefits “原有福利” in the Supplemental Agreement entered into in 2011, an analysis of the profits calculated by Mr Yeo for the six full financial years ending March 2015 to 2020 shows that the total of Mr Chan’s disputed and undisputed entitlements, plus his unpaid profits, ranges from approximately 21% to 27% of the annual profits. On any view, this is not an unreasonable proportion. By comparison, the Unimplemented 2000 Agreement that Mr Lam’s late father and Mr Chan signed provided that Chan had a 50% interest in the partnership, and on top of that was entitled to salary and bonus (“持牌人…應得之薪金及花紅”).

53.For the sake of completeness, I also accept that over the years, Mr Chan made repeated informal enquiries with Mr Lam on the financial performance of the Partnership and asked to see the Partnership Documents and also requested Mr Lam and Mr Lam’s father to pay him the 10% profit share that he was entitled to.

54.I do not accept Mr Lam’s evidence that Mr Chan never asked to inspect the Mahjong Parlour’s accounts prior to the commencement of this action. The absence of formal or written demands is understandable. As Mr Chan explained in Court, he respected Mr Lam’s father, who was the one that funded the Mahjong Parlour, and after Mr Lam’s father passed away, Mr Chan often felt intimidated by Mr Lam, as Mr Lam had a bad temper. I accept Mr Chan’s explanation as being genuine and represents the truth.

55.I also accept Mr Chan’s evidence that he only came to know in 2017 that Mr Lam’s father had died, some 2 years before these proceedings were commenced.

56.On the issue of limitation, I accept Mr Lam SC’s submission that it is not a bar to Mr Chan’s claim for the taking of accounts, which can and should take into account Mr Chan’s undrawn 10% profits over the years:

(1)  In contrast to a common law claim for breach of contract, where a partner claims a debt or compensation from his partners, he will obtain a declaration to the effect that the sum in question should be allowed to him upon the taking of the partnership accounts: see Partnership Law (7^h edn) at §15.5.  

(2)  Dissolution accounting includes ascertaining a partner’s claim against the partnership assets for underpayment of his profit share. The net assets of the partnership will be used to, inter alia, pay to a partner what is due from the partnership to him for advances, including unpaid profits: see Partnership Law (7^th edn) at §§18.53, 18.55; Partnership Ordinance s.46(b)(ii); Heybridge Ltd & ors v Chan Sze Sze Gabrielle & anor (Unrep., CACV 172/2007, 28 September 2007) at §§2, 33; Chow Kam Hung v Wong Kiu & anor [2023] 1 HKLRD 108 at §5.

57.It follows that the claim for an account by one partner against the other would never become time-barred whilst the partnership is continuing: see Lindley & Banks at §§23-42, 23-45; Noyes v Crawley (1878) 10 Ch D 31 at 39; Halsbury’s Laws of Hong Kong at §290.141; Halsbury’s Laws of England (Vol 68) at §1113.

58.As explained in Manning v English [2010] Bus LR Digest D89 at §41 (applied in Hong Kong in Chow Kam Hung v Wong Kiu & anor [2023] 1 HKLRD 108 at §49):

“In relation to the taking of a partnership account, … a claim for payment of a net balance from one former partner to another does not become a ‘debt’ until it has been ascertained by the dissolution account, and thus is not actionable or recoverable until after the account has been taken.”

59.For completeness, while the English Court of Appeal’s decision in Hopper v Hopper [2008] EWCA Civ 1417 may be read as suggesting a distinction between the limitation period for capital (which only begins to run on dissolution of the partnership) and the limitation period for undrawn profits, this does not affect the analysis above:

(1)  I agree that this decision is not binding, and in any event was only obiter dicta. While the Court recorded the argument that a claim for undrawn profits was subject to a six-year limitation period whereas the limitation period for capital only begins to run on dissolution of the partnership (§14), it did not need to resolve this, as it affirmed the lower court’s decision that there was an agreement between the partners that undrawn profits would be added to capital (§16).

(2)  The Court’s reasoning is also doubted by the learned editors of Lindley & Banks at §§23-43, 23-192. See also Holden v Holden [2023] EWHC 3292, where the Court noted that there remained an unresolved debate as to whether the principle that time does not begin to run until a partnership is dissolved held good for all elements of accounts or only in relation to the determination of capital balances (§191), but did not need to resolve the issue (§196).

(3)  In any event, similar to the case in Hopper v Hopper (supra), the Management Accounts here did not show undrawn profits being allocated to a current account. Hence, it is unnecessary to come to a resolution of this issue.

(4)  The undrawn profits for the Examined Period (beginning on 1 August 2013) in any case fall within the limitation period of 6 years prior to the commencement of these proceedings (in August 2019).

THE PLAINTIFF’S CLAIM

60.I accept that Mr Lam has not pleaded or proved any loss and damages on his claim, nor was there any breach. Indeed, on the first day of trial, Mr Lam confirmed to the Court that he was unable to quantify his alleged losses. That should be the end of analysis.

61.In any event, Mr Chans’ removal of Mr Lam as Management Agent was not in breach of the Partnership Agreement, as (1) the Partnership Agreement only provided that Mr Lam would be responsible for the Mahjong Parlour’s internal operations, and there is nothing in the Partnership Agreement requiring Mr Chan to appoint or continue to appoint Mr Lam as his agent, or restricting Mr Chan’s right to terminate the appointment of Mr Lam as his agent, and (2) Mr Lam remained in actual control of the Mahjong Parlour’s internal operations. There are multiple factors which contributed to the decrease in the profit of the Mahjong Parlour, Mr Lam cannot discharge the burden of proof that his removal as the management agent contributed solely to the said decrease in profit. Even if it is a contributing factor (where there is no evidence), this Court cannot arbitrarily assign a figure to be the loss attributed to Mr Lam’s removal as the managing agent of the Mahjong Parlour.

62.Further, Mr Lam SC highlights that Mr Lam applied for but later withdrew on two separate occasions interim injunctions for Mr Lam to be appointed as Management Agent, and indeed his solicitors confirmed in a letter dated 4 August 2021 (where Mr Lam proposed to withdraw Mr Lam’s 1^st Injunction Summons two years after it was taken out) that:

“We are pleased to note that during these 2 years, our client has been in a position to continue to take part in the management of the Mahjong Parlour”.

63.Hence, I do not find it possible to attribute any loss of profits, if so, by how much, to the act of change of managing agent.

64.Mr Lam also submitted that during the Covid-19 pandemic (2020-2022), the Hong Kong government offered a subsidy totalling HK$500,000 to eligible licence holders, disbursed in six batches. Mr Lam believes that this subsidy as temporary financial assistance for the mahjong parlour business, not for the license holder’s private use. Whilst that may be correct, it is the licence holders who were eligible for such subsidy. As to what should be the arrangement between the licence holders and the operators, that is a matter of agreement between the parties. There is no evidence on this issue before the Court.

DISPOSITION

65.By reasons of the matters stated above, I make the following orders: -

(1)  The Plaintiff’s claims be dismissed.

(2)  The Partnership between Mr Chan and Mr Lam be dissolved hereof and forthwith.

(3)  The affairs of the Partnership be wound up.

(4)  For the purposes aforesaid, all necessary accounts and inquiries be taken and made before a Master of the High Court.

(5)  Mr Lam does render true and accurate accounts and full information of all things relating to the business of the Partnership from the commencement of the Partnership on 28 July 2004 to Chan or his legal representatives.

(6)  In the taking of the account, the total profits of the Partnership between 1 August 2013 and 31 December 2020 is HK$57,073,639, with the following breakdown:

(a)  Between August 2013 and March 2014: HK$3,930,225;

(b)  Between April 2014 and March 2015: HK$11,261,368;

(c)  Between April 2015 and March 2016: HK$8,023,032;

(d)  Between April 2016 and March 2017: HK$7,162,011;

(e)  Between April 2017 and March 2018: HK$8,619,349;

(f)  Between April 2018 and March 2019: HK$8,431,397;

(g)  Between April 2019 and March 2020: HK$9,569,700; and

(h)  Between April 2020 and December 2020: HK$76,557.

(7)  Mr Chan is entitled to a 10% interest in the Partnership, including 10% of its annual net profits since the commencement of the Partnership on 28 July 2004, which has never been paid to Mr Chan.

(8)  On top of his 10% interest in the Partnership, Mr Chan is entitled to the sum of HK$11,830,467 already paid to him, as set out in Annex 1 to the Re-Re-Amended Reply and Defence to Counterclaim dated 22 November 2023.

(9)  There be payment of all sums found due to Mr Chan to reflect his 10% interest in the Partnership, including 10% of its annual net profits since the commencement of the Partnership on 28 July 2004, upon taking such account and inquiry.

(10)  There be liberty to apply, including directions in relation to the taking of the accounts.

66.As far as costs is concerned, I make a costs order nisi that the costs of the Defendants in these proceedings, including all costs reserved, and with certificate for two Counsel for the trial commencing on 11 December 2025, be paid by Mr Lam to the Defendants, on a party-to-party basis if no agreement can be reached. This costs order nisi will be made absolute within 14 days from the date hereof unless an application is taken out to vary the same within the 14-day period.

67.I am of the view that a certificate for two counsel is appropriate in the present case as although Mr Lam is acting in person, his Notice to Act in Person was only filed on 28 August 2025, less than a month before the Pre-Trial Review on 18 September 2025. Before then, Mr Lam had been represented by a Senior Counsel and a Junior Counsel when the Reply and the first two rounds of amendments thereto were filed (respectively on 15 April 2020, 6 November 2020 and 9 September 2022), and by a Junior Counsel in the last round of amendments to the Reply (on 22 November 2023).

68.I also note that the scope of the disputes between the parties was only narrowed down very close to the commencement of the trial. Mr Lam only agreed to dissolution when he filed his Opening Submissions on 24 November 2025. Mr Lam only indicated that he was not calling his expert on the first day of trial i.e. 11 December 2025, even though (1) DHCJ Grace Chow had directed him to inform the Court and Chan whether his expert would be giving evidence at trial by 27 November 2025, and (2) in Mr Lam’s Opening Submissions at §48, he confirmed that he would be calling his expert to testify at the trial.

69.Finally, I thank the parties for their assistance to this Court.

The Plaintiff, acting in person

Mr Douglas LAM, SC and Ms Jasmine CHEUNG instructed by Bobby Tse & Co for the 1^st and 2^nd Defendants