Tsai Kut Kan v. Club Fujiva

HCA001480/1975

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Mr. Registrar Barnett in Chambers

Date of Judgment: 20th May 1976

Mr. R. Tang (C.C. Lee & Co.) for Plaintiff

Miss Esther Toh (Hastings & Co.) for Eiko Maruyama

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DECISION

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1. The Plaintiff obtained judgment against the Defendant for $119,596.20 in respect of a promissory note. The judgment, entered in default of appearance, remains unsatisfied. The Plaintiff now seeks leave to issue a writ of fi. fa. against Madam Eiko Maruyama (the Respondent) as a partner in the Defendant firm.

2. At the conclusion of the hearing, I orally gave my decision in favour of the Plaintiff and said I would give reasons in writing.

3. The point at issue is relatively simple. The Respondent alleges that the partnership was dissolved before the writ was issued and that the Plaintiff knew of this. Therefore, the writ not having been served on the Respondent, the Plaintiff cannot now execute against her.

4. The burden of the Plaintiff's evidence is that in February 1975 he agreed to loan the judgment sum to the Defendant at the request of a Mr. Moy, a partner of the Defendant and also a partner of the Plaintiff in another enterprise. Mr. Moy signed a promissory note for this sum on behalf of the Defendant on 28th February. On 1st March, the Plaintiff and his wife were invited to the Defendant's premises to dinner and the Plaintiff was introduced to the staff as a person who was lending financial support to the Defendant. This was to reassure the staff.

5. The Plaintiff was not made a partner and did not manage the Defendant's Club. However, at Mr. Moy's request, he was given authority to sign cheques for the Defendant. This was by way of security. The Defendant extended credit to its customers and when they paid their bills there would be no fear of the Defendant depositing the payments in its bank without repaying the Plaintiff. In fact, the Plaintiff advanced a total of $200,000 to the Defendant and drew about $80,000 from the bank by way of repayment.

6. At the end of April 1975 the Plaintiff became dissatisfied with the administration of the Defendant and withdrew his support. As far as he was concerned, the Defendant carried on as before, Mr. Moy continuing to manage until he died in December 1975. Indeed, the Plaintiff received from Mr. Moy two cheques totalling $40,000 drawn on behalf of the Defendant on another bank account. This was subsequent to the issue of the writ.

7. The Respondent and a Mr. Man who was called on her behalf challenge the Plaintiff's evidence on two main points. First, they say that at the dinner on 1st March the Plaintiff was introduced as a new partner. Secondly, Mr. Man says that the Plaintiff actively managed the Club until he left at the end of April when a Mr. Chow stated that the Defendant firm had been dissolved.

8. In addition there is put in evidence a copy of the Business Registration Particulars filed by the Defendant. This shows that the Defendant registered in November 1973 with Mr. Moy, a Mr. Chan and the Respondent as partners. However, it bears the endorsement "Business ceased on 1.5.75 as per letter dated 3.6.75."

9. There is also in evidence a cheque dated 29th April 1975 signed by the Plaintiff on behalf of the Defendant apparently for goods purchased by the Defendant.

10. I am bound to say that I largely discount the Respondent's evidence. This is not because I find her untruthful or dishonest but, as Miss Toh concedes, because she knows nothing of business matters generally or of the Defendant's administration in particular and because she speaks no English or Chinese. Her evidence in chief as to the dissolution of the partnership was somewhat vague in that she was only able to say that at some stage she was told she would no longer be a partner. In cross-examination, after agreeing that Mr. Moy spoke to her through an interpreter, she said "....... But not said partnership ceased. He merely mentioned 'I'm not going to trouble you'." In view of this and in view of the fact that as far as the Respondent is concerned both she and the business are still carrying on as usual, I do not think I can attach any weight to her evidence as to the dissolution or as to the introduction of the Plaintiff as a partner.

11. Then it is said that Mr. Man should be believed. It is true his evidence is clear and unequivocal. However, he did not condescend upon any particulars as to how the Plaintiff actively managed the Defendant Club. Further, if the Plaintiff did become a partner there would have been no need for a promissory note. A partnership agreement could more properly have been drawn up and the addition of the Plaintiff as a partner should have been registered in the same way as the cessation of business was registered. And as a partner the Plaintiff would have been entitled to a salary if not a share of the profits. It is not impossible that evidence of this could have been found. All these things tend to detract from the evidence of Mr. Man. It is also surprising that Mr. Chow was not called to substantiate what Mr. Man said, Mr. Chow being the person who apparently announced the dissolution.

12. The Plaintiff's evidence is attacked by counsel on two main fronts. First, because the Plaintiff says he did not return to the Defendant premises after he left in April notwithstanding the large sum he was owed. It is suggested he should have gone frequently to inspect and to see Mr. Moy, particularly if he had no knowledge of dissolution. However, he would have no right to go there and since Mr. Moy remained his partner in the other enterprise at least until June, it would be more natural for him to see Mr. Moy in connection with the other enterprise rather than at the Defendant's premises.

13. Secondly, there is the cheque signed by the Plaintiff which he signed over a chop as general manager. When questioned about this, he said that he had authority to sign and that was the chop that was used. It is said that as a businessman he would not sign just any document and, particularly, not as general manager if he was not one. However, for the cheque to be a valid one drawn by the Defendant rather than by the Plaintiff personally, some form of chop in the Defendant's name would be necessary. It would be natural to use an existing chop. I find the Plaintiff's explanation reasonable.

14. According to all the evidence, the business of the Club is still continuing as it has always done. If there had been a change in ownership, that should have been registered under the Business Registration Ordinance. A copy of notification of such change could easily have been procured and produced in evidence.

15. There was also put in evidence by agreement a letter before action by the Plaintiff's solicitors to the Defendant, dated 26th May 1975. It was further agreed that the letter was sent by registered post on 27th May 1975 and not returned; it was not agreed that it was received by the Defendant. However, it is a fair inference that it was delivered and received. The letter required payment within seven days. As Mr. Tang points out, the date of the letter notifying cessation of business and endorsed on the Business Registration Particulars is 3rd June, 1975.

16. Again, after the Plaintiff left the Defendant Club, it is the Respondent's case that a Mr. Chow became the new manager if not the owner of the Club. Yet it is apparent that Mr. Moy also continued in management and procured 2 cheques drawn on the Defendant in favour of the Plaintiff. If indeed it was a new business, it is strange that it should thus assume liability to the Plaintiff.

17. The matters tend to throw grave suspicion upon the fact of dissolution.

18. The Plaintiff gave evidence at some length. He was closely cross-examined. In my view his evidence was not shaken. He impressed me as a truthful witness, answering with care and candour. None of the arguments I have alluded to detracted from his evidence. I accept what he said. I accordingly find that the Plaintiff was at no time a partner in the Defendant. I also find that the Plaintiff did not know of the dissolution of the partnership, if dissolution indeed there was. On the balance of probabilities, I think there was no dissolution before the writ was issued and served.

19. In the circumstances, I gave leave to the Plaintiff to execute against the Respondent.

20. Dated the 20th day of May, 1976.

Representation:

Mr. R. Tang (C.C. Lee & Co.) for Plaintiff

Miss Esther Toh (Hastings & Co.) for Eiko Maruyama