Tam Cho and Others v. Lo Hoi Kun and Another

HCA005797/1984

BETWEEN:-

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Coram:  The Honourable Mr. Justice Penlington in Chambers.

Date of hearing:  16 October 1984

Date of delivery of judgment: 31 October 1984

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JUDGMENT

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1. This application concerns a partnership of 17 persons which was formed in April of 1978 the main Purpose apparently to provide a wholesale outlet for the partners who were all fish farmers in the New Territories. The total capital contributed by the partners amounted to $540,000.00. The aim of the partnership was to take over the existing business known as Hop Kee New Territories Seafood Company and to operate Stall No. 7 of the Cheung Sha Wan Fish market.  Some of the partners have now dropped out of the business. Two of them are deceased and one, Chan Tai, can't be located. There are then some 11 persons now having an active interest. Of these there are the 1st Plaintiffs, To Yeung and Tam Cho, the 2nd Plaintiff, Cheung Shuet Chau who is the a administratrix of one of the original partners Sin Pui Cheong, the 1st Defendant, Lo Hoi Kun, and the 2nd Defendant, Hui Man. In the writ originally filed the 1st Plaintiffs held themselves out as suing on behalf of themselves and all the other Partners in the business excluding the two Defendants. This, however, clearly is not correct as in fact all the other partners have now filed affidavits in which they state that the 1st Plaintiffs were not authorised by them to sue on their behalf and in fact they support the 1st and 2nd Defendants, are content with the way the business is being run and do not wish to have the partnership dissolved.

2. It was the original case of the 1st Plaintiffs that the Defendants had not registered the partnership business correctly with the Business Registration Office, that they had refused to produce proper accounts and they had refused to enter to what would have been a lucrative contract to act as agent for the sale of seafood imported from Taiwan. When the 2nd Plaintiff was joined however it was also the case that by reason of the death in July of 1983 of Sin Pui Cheong, one of the original partners, the partnership automatically came to an end by operation of law.  It was the case that this was a partnership at will and there was no provision in the Articles drawn up for it to continue notwithstanding the death of the partner. The allegations of misconduct in the running of the partnership and failure to produce accounts has been strongly denied by the Defendants who say that in fact after the initial difficulties the partnership has now becoming Profitable and that it is very much the interest of the Partners that it should continue as is. They say that they are quite happy to have the shares in the partnership valued and to pay out the Plaintiffs on basis of such valuation. The other existing partners also concurred in that proposed line of action.

3. It is however the case for the Plaintiffs that notwithstanding the desires of the other partners they have no right to buy out the Plaintiffs' shares and that the partnership must be dissolved the assets realised and then pay out to the partners in accordance with their respective shareholding. The Plaintiffs therefore seek orders that the Defendants cease carrying on the business at the Cheung Sha Wan Fish Market under the name Hop Kee, that the Plaintiffs, together with a firm of accountants, J.C. Leong & Co., be appointed Receivers and Managers of the partnership business and that all books of account and other property be forthwith handed over to them. It is not in dispute that the business is at the moment being managed by the 1st Defendant.

4. I am satisfied from the affidavits that there is certainly a triable issue raised by the Plaintiffs in this case and indeed it may well be that in respect of the legal position following the death of Sin Pui Cheong, the new partnership has indeed come to an end. That is however to be decided when this matter comes on for trial. Turning then to the second consideration as to the balance of convenience I am satisfied that the balance clearly lies with the Defendants. My view the orders should only be made if there was evidence that assets of the partnership were being dissipated or that the partnership was being run in a manner prejudicial to the Plaintiffs and that even if an award for damages was made at the trial of the matter the Defendants would not be good for such damages.  Here the Defendants are supported by the other shareholders and they have produced accounts prepared by Messrs. Lui & Mak, Certified Public Accountants, for the year ended 31st December 1982 and 31st December 1983. These accounts show that business, while it initially was losing money, has now begun to prosper and it seems to me that it is in the interest of all the parties that that situation should be allowed to continue until trial. If eventually an order is made appointing a Receiver I would have thought that it would have teen much better for the existing firm of accountants, who are no doubt much more conversant with the partnership business than a new firm, would be the logical Receivers together possibly with one of the Plaintiffs and one of the Defendants. However that is a matter to be decided at the trial.  I am satisfied that the orders sought t should not be granted and the application is therefore dismissed.

5. The Defendants are entitled to their costs.

Representation:

Miss Lily Yew (Lawrence T.S. Ong & Co.) for the Plaintiffs.

Miss Cathie Wong (Howell & Lo) for the Defendants.