Wendy Wenta Seng Yuen v. Philip Pak Yiu Yuen

HCMC000018B/1983

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

DIVORCE JURISDICTION

NO. 18 of 1983

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BETWEEN

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Coram: Deputy Judge Barnett in Chambers.

Date of hearing: 19th February 1985.

Date of delivery of Decision: 1st March 1985.

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DECISION

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1. In connection with ancillary relief, the Petitioner applied by way of summons for the Respondent to provide further and better particulars of his affidavit of means. After a hearing lasting 3 days, Power J. determined that the only matter which fell to be resolved was whether the Respondent should be required to produce the audited partnership accounts of the firm of solicitors, in which he is a partner, for inspection for the previous 5 years in the face of objection to such production by the other partners.

2. In a judgment in which he closely examined Order 24 and discovery, Power J. decided as follows:

"I am satisfied that where there is an objection by joint owners of a document and where the court is satisfied that there is no contrivance to defeat its powers then the ourt must refuse to order production for inspection. It is however for the Defendant to justify the ground of protection and he will fail to do so if he does not state the exact nature of the joint possession, whether or not he has tried to obtain consent from the joint possessor and why such joint possessor is objecting to the production."

3. After detailing precisely what a partner should state in relation to audited partnership accounts, the learned judge allowed the Respondent the opportunity to furnish an affirmation dealing with all these matters. The Respondent took advantage of the opportunity given to him and filed such an affirmation.

4. The Petitioner was not satisfied with this affirmation and sought further and better particulars. As these were not forthcoming, the Petitioner restored her summons for discovery and gave notice of intention to cross-examine the Respondent upon his affirmation. At the adjourned hearing, the Petitioner indicated that she wished to challenge both the assertion that the Respondent had never had any copy of the documents (that is, the partnership accounts) and does not have such a copy nom, and his assertion that the partners object to the production of such documents. After hearing argument upon the principles relating to cross-examination in interlocutory proceedings, Power J. ruled that the Respondent should attend for cross-examination.

5. The Respondent appealed against that ruling. The appeal was dismissed by the Court of Appeal. The Respondent, therefore, appeared before me and was cross-examined : first, as to whether he has or has had possession of the accounts or copies thereof and secondly, what efforts he had made to obtain his partners' consent to production of the accounts and why the partners objected to production.

6. In relation to his own possession of the accounts or copies, the Respondent, I regret to say, cut a very sorry figure in the witness box. I do not think I have ever seen a more uncomfortable witness. The Respondent was inarticulate in his replies and at times inaudible. He clearly had little confidence in what he was saying. This was hardly surprising because, coming from a man who is a senior partner in a substantial firm of solicitors, his story strained credulity.

7. The Respondent said that the then partnership was dissolved in 1973. There was unhappiness because the wife of one of the partners was making public knowledge of the firm's accounts. That partner retired. The remaining partners who formed a new partnership agreed orally amongst themselves that they should not, in future, have individual possession of the accounts or copies thereof but that they should be kept by the firm's accountant as joint property. Each partner should have access thereto when necessary.

8. The following year more partners joined the firm. Although there was a written memorandum setting out the partners' respective shares in the firm and various other matters, there was no mention of the agreement relating to the accounts. However, the Respondent recalls that the two new partners were told about the oral agreement by one of the existing partners Mr. Yiu. However, he was extremely vague about this and also said that he assumed the existing practice would continue.

9. Subsequently, other partners joined the firm. Again the Respondent assumed that the existing practice in relation to the accounts would continue. He understood some of the new partners to have been advised as to the agreement, although this was hearsay. In relation to other partners he had no knowledge as to whether they knew anything of the agreement.

10. The Respondent contended that the oral agreement first concluded in 1973 is still in force in relation to the partnership accounts. As a result, although he is entitled to access to the accounts or copies thereof, the accounts are all jointly owned by the partners.

11. Until 1982 the Respondent had a 70% share in the firm. Although his share is now reduced to 10%, he is still a senior partner by virtue of the length of time he has been with the firm. Yet he showed an almost total ignorance of and lack of interest in the firm's accounts. According to the Respondent, the firm's accountant deals with the firm's auditors who are a large and reputable company. The Respondent's only real point of contact with the accounts is when the accountant brings the audited accounts and copies to the Respondent for signature. The Respondent was entirely unable to say how many copies to the accounts were sent with the original by the auditors. He said the number varied from year to year. However, under pressure, the Respondent conceded two things:

"Q. But copies sent by auditors) at some stage include copy for each partner.

A. May be so, yes."

and latex on:

''Q. Auditors would usually produce copy for each partner anyway.

A. Would be common.'"

12. I accept that in 1973 there was an oral agreement between the partners of the firm, as then constituted, that the audited accounts and copies thereof should be kept jointly. However, having regard to the content of the Respondent's evidence and the manner in which it was given, I have no doubt but that the agreement was long ago forgotten. Certainly, none of the Respondent's partners has deposed to its continued existence.

13. It is, I believe, normal accounting practice for auditors to supply sufficient copies of the accounts so that each partner may have one. Certainly, as I have indicated, the Respondent conceded that this is common practice. It is my finding that for many years the Respondent has received a copy of the accounts, each of which was and has remained his personal copy. That these copies may be lodged with the firm's accountant is irrelevant. The accountant, as agent or employee of the Respondent, can be compelled by him to produce them to the Respondent at any time.

14. In the circumstances, the Respondent must produce his copies of the audited partnership accounts as sought by the Petitioner. However, the Petitioner must first give an undertaking that she will not disclose the contents of these accounts to anyone other than her legal advisers.

15. In fairness to the Respondent, I should deal with the other half of cross-examination. I must say at once that the Respondent appeared at ease. He gave his answers clearly and confidently. I have no hesitation in accepting his evidence in relation to the attitude displayed by his partners.

16. The Respondent said he approached each partner individually, explained that he might have to produce the firm's accounts and asked whether they objected. Each partner did object, because he or she did not want their private affairs to be made known. One partner, Mr. Yiu, also objected because of the Petitioner's conduct in relation to the firm.

17. Mr. Rodway said that the Respondent's evidence should not be accepted for three reasons. First, in his affirmation the Respondent said he had spoken to the partners then in the office. This indicated that he had spoken to them all on the same day. Yet in his evidence the Respondent said that he had spoken to three partners on one day and two on a later day when they were available. In my view, there is nothing in this point.

18. Secondly, in his affirmation the Respondent starts paragraph 6 as follows:

"The reasons given by those partners for their objections were as follows:"

and he then goes on to set out the various reasons given. Mr. Rodway said that this is entirely unsatisfactory because it gives the impression that all the partners had similar objections whereas we now know that only Mr. Yiu had objections other than his private affairs becoming known. Again, I do not think much of this point. Whilst it might have been better if the affidavit had read that Mr. Yiu said this, Mr. Chan said that and Mr. Heung said something else, I do not accept that there is an attempt to mislead the Petitioner or the court.

19. Finally Mr. Rodway said that the Respondent's evidence does not disclose any effort to try and obtain the other partners' consents. I confess I find it difficult to conceive what else the Respondent might have done. Having explained the position to each partner and having met with each partner's firm objection, I think it unrealistic to have expected the Respondent to press the matter further.

20. I am satisfied that there is no contrivance between the Respondent and his partners to defeat the powers of this court.

Representation:

Mr. Gilbert Rodway, Q.C. & Mrs. V. Penlington instructed by (Helen A. Lo & Co.) for Petitioner.

Miss Jacqueline Leong instructed by (Yu Tsang Loong) for Respondent.