Liu Mon Yun t/a Arts Centre v. Law Yuk Yee
Read the full judgment text of DCCJ 4895/2004 on BabelCite. This District Court judgment.
1. This case arose out of 3 equal partnerships formed between the plaintiff and the defendant since 1993. The plaintiff and the defendant were equal partners throughout. The 3 partnerships were dissolved simultaneously in October 2003. The plaintiff was responsible for the accounting of 2 partnerships (i.e., Arts and Crafts趣藝社, and Arts Fair Company 藝豐行). The defendant was responsible for the accounting of 1 partnership (i.e., Arts Centre 博藝社). Arts Fair Company held a warehouse (“Factory
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DCCJ 4895/ 2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 4895 OF 2004 ____________________ BETWEEN
Coram: Deputy Judge E. Yip in Court Date of Hearing: 21st July 2006 – 27th July 2006 Date of Handing Down Judgment: 8th August 2006 __________________________ REASONS FOR DECISION __________________________ Introduction 1.This case arose out of 3 equal partnerships formed between the plaintiff and the defendant since 1993. The plaintiff and the defendant were equal partners throughout. The 3 partnerships were dissolved simultaneously in October 2003. The plaintiff was responsible for the accounting of 2 partnerships (i.e., Arts and Crafts趣藝社, and Arts Fair Company 藝豐行). The defendant was responsible for the accounting of 1 partnership (i.e., Arts Centre 博藝社). Arts Fair Company held a warehouse (“Factory Unit”) for storage of goods. After the dissolution, the plaintiff operated the 3 partnerships as a sole proprietor. The Factory Unit was sold. Both parties act in person. The plaintiff’s claim is multifarious and quite unorganized. The present case is more an accounting exercise to see what monies were due to whom than an ordinary trial. After clarification and comparison of each party’s case, most of the claimed or counterclaimed items can be disposed of by consent. It remains for me to adjudge upon a few remaining factual issues. 2.I shall refer the plaintiff’s Re-amend Statement of Claim as “S/C” and the defendant’s Re-amended Defence and Counterclaim as “DCC”. 3.There is a substantial counterclaim for interest by the defendant, who provided loans to the partnerships. Purely for consistency and convenience’s sake, I shall take the trial date of “24 July 2006” as the date to compute the accumulated interest. The factual issues to be determined 4.By consent, most of the items and amounts claimed by the plaintiff and counterclaimed by the defendant respectively are agreed and no longer require a trial. A schedule of such items and amounts is annexed to this paper. The only outstanding items and amounts are as follows:
Under S/C para 11(b) 5.The plaintiff says that the defendant had collected to her own pocket the account receivables of Arts Centre. The plaintiff now reduces the sum in the pleadings [A9] to $43,263.63 to the plaintiff. The defendant admits $40,767.03. The difference between parties is the sum of $4,993.20. It concerns an entry of the same amount in the accounts [B466]. It was a transaction recording a sale from the defendant’s own shop (operated and owned by the defendant and the defendant’s husband and also called Arts Centre but situated in Causeway Bay, “Causeway Bay Shop”) to Arts Centre. 6.The plaintiff gives evidence. She alleges that the Causeway Bay Shop had never supplied any goods to Arts Centre. The defendant gives evidence. She alleges that the Causeway Bay shop had sometimes supplied goods to Arts Centre because Arts Centre was in bad terms with some suppliers, who refused to supply goods to Arts Centre. The Causeway Bay Shop was in good terms with the suppliers. As a result, the Causeway Bay Shop would sometimes supply goods to Arts Centre at cost price. Neither party can put forward any concrete evidence. 7.At the time of the closing submissions, both the plaintiff and the defendant request to accept the case of the plaintiff. I would go by their request to prefer the plaintiff’s case. I find that the plaintiff is entitled to the sum of $43,263.63 from the defendant. Under S/C para 13(c) 8.The plaintiff’s case as pleaded [S/C A11] was that she had paid from her own pocket to settle the HSBC bank overdraft amounting to $2,238.43 for Arts Fair Company. The defendant should pay $1,119.15 [i.e., $2,238.43 x ½] to the plaintiff. 9.The defendant gives evidence. She alleges that Arts Fair Company’s bank statement had shown a credit balance of $8,485.07 on 14 October 2003 [the date of the dissolution]. 10.At the time of the closing submissions, both the plaintiff and the defendant request to accept the case of the plaintiff. I now go by this request. As result, the plaintiff is entitled to the sum of $1,119.15 from the defendant. Under DCC para 18.1 a. and DCC para 18.2. f. 11.Both parties do not dispute the defendant’s one-off loan to Arts Centre on 29 October 2002 [Exh. D3] and recurring loans to Arts Fair Centre from 9 January 1997 onwards [A82-85]. Nor do they dispute the respective outstanding principals (after some discussions in court). On that date, Arts Centre still owed the defendant $1,503.00 as principal. The plaintiff’s liability would be $751.50 (i.e., $1,503.00 x ½). Arts Fair Company still owed the defendant $150,000.00 as principal. The plaintiff’s liability would be $75,000.00 (i.e., $150,000.00 x ½). 12.The dispute is whether interest was payable, and if so, at what rate. The defendant counterclaims interest. She alleges 5% p.a. for the loan to Arts Centre [DCC para 18.1 a.] and 6% p.a. for the recurring loans to Arts Fair Company [DCC para 18.2 f., which is the same as S/C para 13(g)]. The plaintiff says that both parties had not mentioned whether interest was payable or not at the time the defendant provided the loans. So no interest was payable. The law governing interest from loans to the partnership 13.Section 26 of the Partnership Ordinance (Cap. 38) provides, among others, as follows:
My findings 14.At the time of the closing submissions, both the plaintiff and the defendant request me to accept the case of the plaintiff. I now go by this request. I find that there was no express or implied agreement for interest. The aforesaid section is applicable. Therefore the defendant is entitled to 8% p.a. on both the one-off loan and the recurring loans. 15.As regards DCC para 18.1.a., if it was 5% p.a., the interest for the one-off loan would be, according to the defendant’s calculation purely not disputed by the plaintiff, $21,102.74 from Arts Centre up to 24 July 2006. If it was 8%, it would be $21,705.67 (i.e., $21,102.74 x 108/105). As a result, the defendant is entitled to get back $10,852.84 (i.e., $21,705.67 x ½) from the plaintiff by way of interest. 16.Therefore, under DCC para 18.1.a, the defendant is entitled to the total sum of $85,852.84 (i.e., $75,000.00 by way of principal + $10,852.84 by way of interest) from the plaintiff. 17.As regards DCC para 18.2.f., if it was 6% p.a., the interest for the recurring loans would be, according to the defendant’s calculation purely not disputed by the plaintiff, $100,522.00 from Arts Fair Company up to 24 July 2006. If it was 8%, it would be $102,418.64 (i.e., $100,522.00 x 108/106). As a result, the defendant is entitled to $51,209.32 (i.e., $102,418.64 x ½) from the plaintiff by way of interest. 18.Therefore, under DCC para 18.2.f, the defendant is entitled to the total sum of $51,960.82 (i.e., $751.50 by way of principal + $51,209.32 by way of interest) from the plaintiff. Under DCC para 18.4 19.Both parties do not dispute that on 6 January 2003 the defendant drew a crossed cheque, which named the plaintiff as the payee for $50,000.00 on 6 January [D952-954] or that its original purpose was as a loan to the plaintiff to pay her second daughter’s school fee and expenses for studying in Taiwan. The sum was deposited into the plaintiff’s personal bank account on 8 January 2003 [A953-954]. No principal or interest had ever been paid to the defendant. The plaintiff alleges that upon receiving it, she had got money from her brother instead. She told the defendant that the cheque would not be used. She was instructed the defendant to use it as the defendant’s loan to Arts Fair Company and hence it would be for Arts Fair Company to repay the defendant. The defendant denies having so instructed the plaintiff and hence it would be for the plaintiff solely to repay the defendant. 20.At the time of the closing submissions, both the plaintiff and the defendant request me to accept the case of the plaintiff. I now go by this request. I find that it was for Arts Fair Company to repay this principal of $50,000.00 to the defendant. Therefore the defendant is entitled to $25,000.00 (i.e., $50,000.00 x ½) from the plaintiff by way of principal. 21.As regards the interest, there is no dispute that at the time of the loan, there was no agreement as to whether interest was payable, and if so, at what rate by Arts Fair Company. Section 26 of the Partnership Ordinance (Cap. 38) would take effect to construe interest at 8% p.a. The accumulated interest from 8 January 2003 to 24 July 2006 would be the sum of the following:
22.The total would be $14,071.23. The defendant is entitled to $7,035.62 from the plaintiff by way of interest. 23.Therefore, under DCC para 18.4, the defendant is entitled to the total sum of $32,035.62 from the plaintiff. The overall position The plaintiff’s claim 24.From the Annex and the above findings, the plaintiff is entitled to the total sum of $160,993.59 comprising the following:
The defendant’s counterclaim 25.From the Annex and the above findings, the defendant is entitled to the total sum of $229,726.28 comprising the following:
The conclusion 26.The defendant shall recover $68,732.69 ($229,726.28 less $160,993.59) from the plaintiff. This sum shall carry judgment rate from today. The general rule is for costs to follow the event. I make an order nisi for the plaintiff to pay the defendant’s costs. This cost order shall become absolute 14 days from today. Dated this 8 August 2006
Ms. Liu Mon Yun trading as Arts Centre, in person, for Plaintiff. Law Yuk Yee, in person, for Defendant. ANNEX The items and amounts agreed The plaintiff’s claim as per Re-amended Statement of Claim By consent, the following amounts would be in full satisfaction of various items of claim [A9-11] as follows: Under para 11(a) $1,746.35; Under para 11(c) $3,539.50; Under para 11(d) $2,923.50; Under para 11(e) $50,854.30; Under para 13(a) $38,786.33; Under para 13(b) $4,791.45; Under para 13(d) $11,277.50; Under para 13(e) $1,353.00; Under para 13(f) $219.60. The items and amounts claimed under para 11(b), para 13(c), and para 13(g) will be determined by trial. The defendant’s counterclaim By consent, the following amounts would be in full satisfaction of various items of claim [A25] as follows: Under para 18.1 b. $20,877.00; Under para 18.1 c. $1,025.00; Under para 18.1 d. $17,500.00; Under para 18.1 e. $0; Under para 18.2 g. $1,050.00; Under para 18.2 h. $0; Under para 18.2 i. $0; Under para 18.2 j. $1,300.00; Under para 18.3 k. $1,500.00; Under para 18.3 l. $16,625.00; Under para 18.3 m. $0. |