Kwok Hang Tat and Another v. Chan Kwok Man

HCA004209/1982

IN THE HIGH COURT OF JUSTICE

BETWEEN

_____

Coram: Hon. Mantell J.

Date of Hearing: 29th November, 1983.

Date of Judgment: 29th November, 1983.

__________

JUDGMENT

__________

1. This matter comes before me in an action estimated to last seven days. In the event, it has been disposed of in less than a day, the greater part of which was been taken up by adjournments and conferences. I make no criticism of counsel because by the time this action reached me the pleadings were in a quite  unsatisfactory state both from the point of view of the parties and from the point of view of the court.

2. It is a curious case. In the result, there has been very little dispute between the parties. In the first instance, the two plaintiffs were seeking a declaration that the partnership in which they were involved with the defendant amongst others had been dissolved by a notice dated 20th May 1982. There is an issue on the pleadings not very clearly defined, I am afraid to say, as to whether or not both plaintiffs were, in fact, members of the partnership though I think it is the defendant's case that only the second named plaintiff was a member of the partnership. In the event, that has not mattered because by his counterclaim, the defendant has also sought a declaration that the partnership was dissolved by notice on 20th may 1982, if not earlier. And so, that part of the claim as between the parties is easily disposed of and I shall, in due course, make a declaration in those terms.

3. It was the defendant's contention that he was entitled to a 50% holding in this partnership as at the date of dissolution and that was a live issue on the pleadings until today. But today it disappeared as an issue in the action because Mr. Tong is prepared to submit to a declaration that the defendant did own 50% of the shareholding at the date of dissolution, and no wonder, because he tells me that the liabilities of this partnership far exceed its assets and in consequence in making that admission, he is not really giving anything away at all. Nonetheless, the concession or admission has been gratefully received on behalf of the defendant and I shall, therefore, in due course, give the defendant the relief he asks for in that regard, namely, that at the material date he did have a 50% shareholding in this partnership business.

4. Thereafter, the plaintiffs in their Statement of Claim go on to ask for various orders relating to the winding up or reconciliation of the affairs of the partnership which include a prayer for an order appointing a receiver or manager and that accounts be taken. Also, they ask for an injunction as against the defendant. But all those matters have previously been disposed of. I think that preceding the dissolution of this partnership, the matter came before Mr. Justice McMullin who made an order ex-parte on the application of the plaintiffs and that matter was returned for a hearing inter-partes before Mr. Justice Jackson-Lipkin on 28th May 1982. As a result, cross undertakings were taken from the parties which, in effect, disposed of the application for injunction and various orders were made including the appointment of a receiver. I need not refer in detail to the terms of the orders, save to say that in effect, they dispose of that part of the plaintiffs' claim. They have not been pursued today except that in the last few minutes Mr. Tong has asked me to make some sort order confirming that of Mr. Justice Jackson-Lipkin, but I do not propose to do anything of the sort. So subject to the question of costs, that disposes of the plaintiffs' claim. But it does not dispose of the defendant's counterclaim.

5. The defendant, of course, admits the fact of the partnership but for the participation of the first named plaintiff about which no pronouncement is needed from me. He goes on to claim, apart from the relief already referred is a declaration that the partnership was enjoyed equally by himself and the 2nd plaintiff, and therefore ,a declaration that he is entitled or was entitled a 50% share of the partnership. He also goes onto seek an order that a fit and proper person be appointed to receive the debts and other property, assets or effects belonging to the partnership and that further consequential enquiries be made. Well, that part of the claim has not been proceeded with for the very same reason that the plaintiffs did not proceed with the corresponding portion of their claim, although I note that the defendant is not satisfied with the conduct of, the affairs of the partnership by the present receiver and  that there may be quite separate litigation in the future. As between the partners,the conduct of the receiver, of course, cannot give rise to a cause of action unless it be said that the receiver has somehow been acting improperly at the behest of the plaintiffs. It is not said and I need ,not concern myself about it. Also, the defendant seeks injunctive relief, not dissimilar to that originally sought by the plaintiffs and that has not been pursued, I presume for the same reason, namely, that it is covered by the cross undertakings given before Mr. Justice Jackson-Lipkin. Then, apart from the general prayer for any further orders or directions which the court may think it necessary or fit to make, the defendant claims damages and with regard to this claim I was constrained to make, the criticism which I have made and do make of the defendant's pleadings. Now, it is prefectly, properly pleaded that it was an implied condition and term of the partnership that the partners will not do anything or  act to the detriment of the interest of the partnership and it is readily conceded that that must have been an implied term of this partnership agreement. Also, in paragraph 13, there is an allegation that the sum of $10,085 was paid by way of agency commission and $1,310.50 by way of solicitor's charges to the 1st and 2nd plaintiffs and out of partnership money, those payments were unjustified. Well, insofar as that paragraph claims a liquidated sum, then, of course, sufficient particulars have been given of any loss and damages said to have occurred as a result of the wrongful acts of the 1st and 2nd plaintiffs. Mr. Tong has admitted that those sums should be repaid to the partnership or into the partnership account. So, there will be, in due course, an order that those two sums be paid by the plaintiffs to the. receiver who has control of the partnership affairs. And likewise, under paragraph 14, Miss Wong has pleaded as a liquidated sum, in part at any rate, a payment to the first named plaintiff of $10,000 as a monthly salary which, she says, was paid wrongfully out of partnership funds. In fact, it is accepted by both counsel that the total sum paid to the 1st plaintiff was $15,000 and Mr. Tong has admitted that that also should be repaid to the partnership. But as to paragraphs 15, 16, 17, 18 and 19, each of which make, if I may say so, rather imprecise allegations against the plaintiffs of acts which are said to be in breach of the partnership agreement and which, it is said, have led to loss and damage but there are to be found no particulars of any loss or damage or as to how such loss or damage came to be sustained. Miss Wong, having taken instructions from her lay client and from her professional clients, has not sought leave to amend or any further adjournment so as to put her pleading in order, but in the event has abandoned any claim against the plaintiffs under those paragraphs.

6. I have said that I shall not deal with the question of costs until I have given judgment in this matter which I now proceed to do.

7. There will be a declaration that this partnership was, dissolved by notice dated 20th May 1982 as and from that date. There will be a declaration that as at the date of the dissolution of the partnership, the defendant held 50% share of the partnership. I make no order as I indicated I would not with regard to the appointment of a receiver or to the taking of any account or enquiry but I do make an order that the plaintiffs pay the sum, which is the aggregate of the sums claimed in those two paragraphs, $26,395.50 to the receiver of the partnership for and on behalf of the partnership.

Argument as to costs

8. Well, I have now heard submissions on the question of costs which have taken just about as long as any submission made during the hearing. But, again, I make no criticism of that because, in fact, it is not an easy question to resolve as must be obvious from the declarations and orders which I have made. It really calls for a judgment of Soloman of which I am quite incapable, however, doing the best I can, and bearing in mind that the costs of the interlocutory hearing were reserved to me, I propose to make the following orders. I make no order as to costs in relation to interlocutory hearing. That was a matter which as to its substantial content, was resolved by cross undertakings and it seems to me that it would be quite wrong to penalize either party in the matter of costs over that. In the hearing before me today, the plaintiffs have succeeded in part on their claim in that they have achieved a declaration in one of the terms sought. The difficulty is that the claim for the declaration was never resisted by the defendant in the pleadings and although it is said that it is necessary for the parties to come to court in order to get a declaration and it cannot be done by consent although that may be true, the fact of the matter is that if all the parties to a partnership have agreed that the partnership should be dissolved there is no need for the intervention of the court and, I think, the appropriate order to make on the plaintiffs' claim is no order as to costs.

9. I come now to the question of the defendant's counterclaim. Now, the defendant has succeeded in part insofar as the defendant was seeking relief which corresponded to that claimed by the plaintiffs. He has obtained a declaration that he is entitled to a 50% share of the partnership. The defendant has succeeded with regard to part of his claim that the plaintiffs should repay certain moneys into the partnership funds, in total some $26,000 and that has to be reflected in costs. However, in July, at the time when it was still possible to save some costs, the plaintiffs by a letter did make it plain that the question of shares in the partnership was to them no longer one of the importance and there was no reply to that letter and that is a fact to which I think it right to take into account, and the defendant has had to abandon by the greater part of his counterclaim during the course of the hearing simply because it was never adequately pleaded and that is a matter to which I am, under the rules, entitled to take into account. In the exercise of my discretion, I propose, therefore, only to award the defendant a proportion of his costs on his counterclaim and I am going to do it in that way rather than leave to the taxing master the very difficult question of resolving how much of the costs relates to any particular issue in the case and what I propose to do, in the circumstances, is to give the defendant one-third of his costs on the counterclaim.

Representation:

Ronny Tong (Rowdget W. Young & Co.) for Plaintiffs.

Miss H. C. Wong (Yung, Yu, Yuen & Co.) for Defendant.