Lam Fai Ho, Derek v. Chiu Che Kuen and Another
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DCCJ 1470/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1470 OF 2006 ---------------------------------------- BETWEEN
---------------------------------------- Coram : Deputy District Judge W. C. Li in Chambers (open to public) Date of Hearing : 3rd January 2007 Date of Handing Down Decision : 8th January 2007 DECISION 1.The Plaintiff (“P”) and the 1st Defendant (“D1”) are solicitors in Hong Kong. The 2nd Defendant (“D2”) is a firm of solicitors in Hong Kong. Prior to 23 September 2004, P was the sole proprietor of D2, and on and since 23 September 2004, D1 was the sole proprietor/partner of D2. 2.By a written agreement dated 8 September 2004 made between P as the Seller and D1 as the buyer (“the said agreement”), P sold the firm (D2) to D1 as a going concern for a consideration of HK$280,000.00. By virtue of Clause 2 of the said agreement, the consideration was to be paid in the following manner: (i) HK$60,000.00 on or before 8 September 2004; and (ii) HK$220,000.00 together with interest thereon at the rate of 5% per annum within one year from 8 October 2004 by 12 monthly instalments of not less than HK$18,300.00 each plus interest. 3.D1 took over D2 but failed to pay the whole of the said consideration to P within one year. Only $60,000.00 and 10 instalments were paid to P. P now claims against D1 for the remaining 2 instalments totaling HK$36,666.70 together with interest of 5% p.a. thereon accruing from 8 August 2005. 4.By virtue of Clause 6 of the said agreement, P and D1 also agreed that any monies due and owing to, and receivable by D2 for work done and services rendered prior to 23 September 2004, D1 should repay or refund such monies received by D2, through D2 to P. A sum of $240,000.00 due and owing from a client, Team Leader Development Limited (“Team Leader”), for work done from 1997 to 2004, i.e. work done before the transfer of business from P to D1, was paid by the said client to D2 on 23 May 2005. This sum of $240,000.00 was due and owing by D1 and D2 to P, and P claims against D1 and D2 for payment of the same. 5.P sent D2’s bill of costs to Team Leader for outstanding fees for work done on 22 September 2004. Team Leader sent a cheque to D2 in payment for the same, together their letter to D2 dated 23 May 2005. A copy of the letter and the cheque drawn by Henderson Real Estate Agency Limited dated 12 May 2005 for $240,000.00 were also exhibited by P. The outstanding amount due from Team Leader was also certified by D2’s accountant, United CPA & Co., Certified Public Accountants, by their letter dated 4 July 2005. 6.D1 in his Defence denied the claim and put P to strict proof thereof. D2 also denied the claim and put P to strict proof. It was also alleged that P had kept a bank account of D2 at the Bank of China after 23 September 2004. No particulars were given of this allegation. It was further argued that there were conveyancing transactions in the firm before 23 September 2004 that required follow up and remedying action like making statutory declarations as to lost title deeds and obtaining certified true copies of the same from the Lands Office. The defendants argued that these could give rise to possible negligence claims in the future. These matters raised in D1 and D2’s Defence were also the subject of their counterclaim against P. 7.The defendants also argued that by virtue of Clause 4 of the said agreement, the P agreed to act as a consultant to D2 for not less than 6 months after he ceased to be a salaried partner for a term of not exceeding 3 months after 23 September 2004. P ceased to be a salaried partner 1 month after 23 September 2004. Then P remained as a consultant until 2 December 2004. According to the said agreement, P as a consultant to D2 was not required to attend the office of D2 and could conduct his business (if any) at his own home by the use of electronic mail, facsimile transmission or the use of the telephone. The only significance I could see of this consultancy arrangement was the lending of P’s name to D2 for the purpose of retaining the goodwill to existing clients. After P ceased to be a consultant, D1 continued to pay the monthly instalments to P under the said agreement. 8.P applied by way of Summons for summary judgment against D1 and D2 under Order 14 of the Rules of the District Court, Cap. 336. 9.The monies claimed by P against D1 and D2 were shown to be due and owing. Both D1 and D2 had not shown a defence to the claim. A mere denial of liability is not sufficient to show a triable issue. The complaint raised on the conveyancing cases that required follow up action was only a futile attempt to argue that there could be possible, future negligence claim against D2. How a negligence claim could arise in these conveyancing cases was not particularised. Indeed I failed to see any claim arising therefrom. These appeared to be matters that would normally be encountered in the conveyancing practice of a solicitors’ firm. These conveyancing matters were also cases of D2 prior to the time D1 had become the proprietor of D2. If any liability does arise, it would not be a concern for D1. The fact remains that there were no claim against D2 arising out of these cases. 10.It is trite law that mere assertions in an affidavit does not, ipso facto, provide leave to defend. The defendant must show that he has a real or bona fide defence, that is, his defence is reasonably credible. If the defendant’s evidence is incredible in material aspects, then it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence. 11.D1 and D2’s defence and counterclaim in this case are lacking in substance and in credibility. There was no defence shown and the counterclaim appeared to be no more than a sham. For this reason, D1 and D2’s counterclaim should and are therefore dismissed and judgment against D1 and D2 entered in favour of P. 12.Judgment is therefore entered against D1 in favour of P for the sum of HK$36,666.70 together with interest thereon at 5% per annum from 8 August 2005 to the date of the Writ, i.e. 23 March 2006. 13.Judgment is also entered against D1 and D2 in favour of P for the sum of HK$240,000.00. 14.Interest at judgment rate is ordered to be payable by D1 to P on the judgment amount in paragraph 12 above, and by D1 and D2 to P on the judgment amount in paragraph 13 above, from the date of the Writ, i.e. 23 March 2006, to the date of handing down of this decision, and further interest at judgment rate is ordered to be payable by D1 for the judgment amount in paragraph 12, and by D1 and D2 for the judgment amount in paragraph 13, to P from the date of handing down to the date of full satisfaction of the judgment amounts herein. 15.I also order costs of this action be to P against D1 and D2, to be taxed if not agreed, with certificate for counsel.
Representation: Mr. Kenny C.P. Lin was instructed by Messrs. Tso Au Hyim & Yeung for the Plaintiff. Mr. Timon R.L. Shum was instructed by Messrs. Tam Pun & Yipp for the Defendants. |