Ho Lai Ming t/a Tung Hing Transportation Co v. Chu Chik Leung and Another
Read the full judgment text of DCCJ 2739/2003 on BabelCite. This District Court judgment.
1. Since 1 st June 1996 the Plaintiff as sole proprietor of Tung Hing Transportation Company (“ Tung Hing ”) carried on business of medium goods vehicle (噸車, “ MGV ”) transportation service. She is the wife of Mr Chu Tsan Yung (“ Mr Chu ”). The 1 st Defendant is Mr Chu’s “疏堂子侄” and his wife is the 2 nd Defendant.
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DCCJ2739/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 2739 OF 2003 ------------------------ BETWEEN
------------------------ Coram : H H District Judge Marlene Ng in Court Dates of Hearing : 7th, 8th, 9th May 2007, 25th, 26th and 27th June 2007, and 3rd July 2007 Date of Handing Down Judgment : 20th September 2007 ------------------------ JUDGMENT ------------------------ I. Introduction 1.Since 1st June 1996 the Plaintiff as sole proprietor of Tung Hing Transportation Company (“Tung Hing”) carried on business of medium goods vehicle (噸車, “MGV”) transportation service. She is the wife of Mr Chu Tsan Yung (“Mr Chu”). The 1st Defendant is Mr Chu’s “疏堂子侄” and his wife is the 2nd Defendant. 2.Partial summary judgment was granted against the 1st Defendant for HK$156,450.00 before he was adjudicated bankrupt. Mr Ho, counsel for the Plaintiff, confirmed the Plaintiff would not restore her adjourned application for leave to proceed against the 1st Defendant after trial. I am therefore only concerned with the Plaintiff’s claim against the 2nd Defendant. II. Background 3.At a dinner gathering in/about October 2000 (“Oct’00 Meeting”), there was an agreement to form a partnership business to carry on cross-border container transportation service (“Partnership Agreement”). The Plaintiff and the 1st Defendant as partners established “Tung Hing Transportation Company (Container Department)” (“Partnership Business”). It commenced business in July 2001 but was dissolved in May 2002 when the Plaintiff and the 1st Defendant signed a dissolution agreement dated 4th May 2002 (“Dissolution Agreement”). 4.During the term of the Partnership Business, the Plaintiff transferred/deposited various “payments” to the 1st Defendant (“Payments”) through a joint account of the 1st and 2nd Defendants with Standard Chartered Bank (“SCB”) (“SCB D1&2 Joint Account”) and two accounts of the 2nd Defendant with SCB and Bank of China (“BOC”) respectively (“SCB D2 1st Account” and “BOC D2 Account”) (collectively, “Three Accounts”). The Plaintiff claimed the total Payments representing her advances to the partnership capital/funds exceeded the sum of HK$407,182.00 (“Sum”), but she limited her claim against the 2nd Defendant to such Sum. 5.The Plaintiff annexed to her pleadings of 12th November 2003 a schedule of Payments (which schedule was revised on the first day of trial and now reproduced as columns B-F of the schedule attached to this Judgment (“Schedule”)) that identified the Payments comprising the Sum (“Sum Payments”) by crossing out the other Payments listed therein (“Other Payments”) (“Plaintiff’s Schedule”). There is no dispute the Sum Payments were deposited in the Three Accounts as set out in column G of the Schedule. Column H of the Schedule was added to show the bank accounts from which the Payments were withdrawn. Column I of the Schedule set out the Plaintiff’s handwritten notations (“Notations”) on the supporting documents (eg transfer customer receipts, ATM customer advices, Hong Kong dollar deposit slips) she retained in respect of the Payments listed in the Schedule (“Payment Records”). Except for the Notation “良–芬户口” (which in my view was no more than a reference to the SCB D2 1st Account into which the relevant Sum Payment was deposited) in item 24, none of the Notations referred to the 2nd Defendant. 6.For easy understanding, pages in the trial bundle are referred to below by an alphabetical prefix denoting the file number followed by an Arabic numeral suffix denoting the page number. III. Plaintiff’s claim 7.The Plaintiff’s claim metamorphosed in the course of trial and is summarised in the following paragraphs. 8.The Plaintiff claimed she gave the Sum Payments to the 1st Defendant to be used solely for the purpose of the Partnership Business, but in breach of his “fiduciary duties owed to the Plaintiff in [the Partnership Business]” he misappropriated and misused them for personal purposes. She further claimed the 2nd Defendant dishonestly assisted the 1st Defendant’s breach by (a) helping him manage the Partnership business, (b) contributing to his share of the partnership capital/funds, (c) permitting him to use/operate the Three Accounts in breach of fiduciary duty or breach of trust, and/or (d) failing or refusing to make enquiries with the Plaintiff when she ought to have done so. So the 2nd Defendant was liable to account to and pay the Plaintiff the Sum “or alternatively damages”. Mr Ho abandoned reliance on any cause of action based on alleged unconscionable receipt of the Sum Payments. 9.Upon my further enquiry on the fifth day of trial (which was a follow-up on my earlier enquiry to Mr Ho during his opening submissions) as to the locus standi of the Plaintiff in her personal capacity for suing the 2nd Defendant for accessory liability in respect of the breach of fiduciary duty by the 1st Defendant as the Plaintiff’s partner in handling partnership monies, Mr Ho clarified that since the Plaintiff gave the Sum Payments (ie her advances to the Partnership Business) to her co-partner (ie the 1st Defendant) to be used for the Partnership Business, a constructive trust arose in favour of the Plaintiff (but not the Partnership Business) upon the 1st Defendant’s misappropriation or misuse of the Sum Payments. Consequently, the 1st Defendant was liable to account to and pay the Plaintiffthe Sum, and the 2nd Defendant was liable as accessory. 10.Mr Ho drew support for the above contention from Clause 3 of the Dissolution Agreement (“Clause 3”), the construction and effect of which will be discussed in paragraphs 168-175 below. On the sixth day of trial, he submitted that Clause 3 (which stood apart from clauses 1, 2 and 4 of the Dissolution Agreement that dealt with partnership matters (“Clauses 1, 2 and 4”)) amounted to an express admission by the 1st Defendant of misappropriation or misuse of the Payments comprising the sum of HK$391,353.00 referred therein (which but for an accounting error due to insufficient documentation at the time of dissolution of the Partnership Business should have been the Sum, “Clause 3 Sum”) that were without supporting invoices, receipts and documents. 11.Mr Ho expressly abandoned the alternative argument that the 2nd Defendant was liable as accessory for the 1st Defendant’s breach of an implied agreement under Clause 3 to repay the Clause 3 Sum (which should have been the Sum) as a personal debt due to the Plaintiff pursuant to alteration of the character of the Sum Payments by virtue of Clause 3 from partnership monies to monies held under constructive trust in favour of the Plaintiff (but not the Partnership Business). By the same token, Mr Ho also abandoned the contention that Clause 3 amounted to an implied admission by the 1st Defendant that he was liable to repay the Clause 3 Sum (which should have been the Sum) to the Plaintiff as personal debt. 12.Just before closing submissions Mr Ho confirmed that the summary in paragraphs 8-10 above set out the parameters of the Plaintiff’s case. With great pragmatism, Mr Wong, counsel for the 2nd Defendant, decided not to take any pleading point. In light of such concession, Mr Ho agreed that the 2nd Defendant was entitled to raise any defence contention supported by evidence and/or by law applicable thereto. Just before closing submissions, Mr Wong at my invitation gave a brief synopsis of the 2nd Defendant’s defence (see paragraphs 16-17 below) which together with her pleadings set out the parameters of her case. 13.However, Mr Ho in his closing submissions shifted emphasis to an alleged agreement between the Plaintiff and the 1st Defendant in/about July 2001 (“July’01 Agreement”). Although the Plaintiff merely averred in paragraph 15 of the Amended Statement of Claim that “[in] or about July 2001, it was agreed between the Plaintiff and the 1st Defendant that the 1st Defendant would ask the Plaintiff to pay expenses for the [Partnership Business] provided that such payment must be supported by documentary evidences, such as receipts and invoices”, Mr Ho’s written closing submissions on law (“Ho’s Law Submissions”) stated as follows :
14.Prior to Mr Ho’s closing submissions, there was no reference to any implied obligation under the July’01 Agreement to repay the Sum Payments to the Plaintiff (but not to the Partnership Business) if there were no supporting documents. I declined to allow Mr Ho to rely on any argument of implied contractual term. Having confirmed the parameters of the Plaintiff’s case before closing submissions and having been warned there should not be further shifting of goalposts that might prejudice the 2nd Defendant, it was too late for the Plaintiff to raise such new contention after Mr Wong had finished his closing submissions. 15.The Plaintiff went on to claim that the 2nd Defendant was guilty of actual dishonesty (a) because she knew of the 1st Defendant’s breach of trust by assisting him to compile accounting information by computer, and (b) as evidenced by her “oral assurance given to the Plaintiff at the meeting in February 2002” (“Feb’02 Meeting”), and also of blind-eye dishonesty in failing to make enquiries with the Plaintiff when she ought to have done so. IV. 2nd Defendant’s defence 16.The 2nd Defendant claimed the purpose for transferring/ depositing the Sum Payments into the Three Accounts was to (a) defray the expenses of the Partnership Business for which the 1st Defendant had already provided all supporting documents to the Plaintiff, and (b) advance money on account of drawings/wages to the 1st Defendant intended for his personal use. The 1st Defendant did not misappropriate or misuse the Sum Payments, which were not held on trust, so there was no basis for alleging dishonest assistance on the part of the 2nd Defendant. 17.Further, even if the 1st Defendant were in breach of trust as a result of misappropriating or misusing the Sum Payments, the Plaintiff in her personal capacity had no locus standi since the Sum Payments and/or the Sum comprised partnership monies. The present claim was also premature in that (a) the Plaintiff should have asked for final accounts of the Partnership Business (“Final Accounts”), and (b) the 1st Defendant would only have to make payment in relation to the Clause 3 Sum if he were found liable after taking Final Accounts. Without Final Accounts there was also no ascertainable loss (if any). V. Burden and standard of proof 18.The burden is on the Plaintiff to establish by sufficiently cogent evidence on the balance of probabilities (see In re H and ors (minors) (sexual abuse : standard of proof) [1996] AC 563, 586-7) the 2nd Defendant was guilty of actual or blind-eye dishonesty. VI. Principles on dishonest assistance 19.A person who dishonestly assists in a breach of fiduciary duty or breach of trust will be personally liable to account to or compensate the beneficiary of such fiduciary duty or trust for any loss caused by such breach. Such liability is founded on the accessory’s personal wrong-doing that is secondary to the fiduciary’s or trustee’s liability, but without a breach of fiduciary duty or breach of trust, there is no loss for which the accessory is liable to account. 20.Both counsel agreed the relevant test was as laid down in Royal Brunei Airlines Sdn Bdh v Philip Tan Kok Ming [1995] 2 AC 378 and confirmed in Barlow Clowes International Ltd (in liquidation) & ors v Eurotrust International Ltd & ors [2006] 1 All ER 333. 21.Lord Nicholls in Royal Brunei Airlines Sdn Bdh described the test for dishonesty in this context at pp.389-391 as follows: 22.In Barlow Clowes International Ltd Lord Hoffmann re-affirmed the objective test of dishonesty at pp.336-337 as follows :
23.As regards the extent of knowledge required on the part of the accessory, I also refer to the powerful dissenting judgment of Lord Millett in Twinsectra Ltd v Yardley & ors [2002] 2 All ER 377, 406 and 411-412 (see also Barlow Clowes International Ltd at p.341 per Lord Hoffman) :
24.With the aforesaid elements of accessory liability for dishonest assistance in mind, I now turn to the factual evidence in the present case. VII. Overview of the witnesses 25.The Plaintiff and the 1st and 2nd Defendants gave evidence and were vigorously cross-examined. In assessing witnesses’ credibility, the court should consider the totality of the witnesses’ evidence against the documentary evidence, inferences based on inherent improbabilities and/or undisputed facts (see Star Glory Investment Ltd v Kai Tua (H.K.) Technology Ltd & ors HCA3523/2002, Chung J (unreported, 13th August 2005) at paragraph 12). 26.I disagree that the Plaintiff is “clearly not a sophisticated or educated lady with awareness and risk aversion”. Bearing in mind she operated Tung Hing as a sole proprietorship since 1996, I find her to be a reasonably experienced businesswoman. I am unimpressed by her evidence on the core issues (such as the Sum Payments), which does not sit well with the contemporaneous documents. When confronted by her own records, her explanations became strained and unconvincing. 27.The 2nd Defendant strikes me as honest and reliable on the core issues. Although she previously assisted the 1st Defendant in his own business and worked on an on-and-off basis, she was primarily a homemaker who looked after her parents (“Parents”) and daughter (“Daughter”), and managed the Parents’ and her own households. The 1st and 2nd Defendants were married in late 1996 and apparently had a close and trusting relationship. I find it unsurprising that the 2nd Defendant did not maintain strict segregation of bank accounts with the 1st Defendant and/or sometimes offered wifely assistance (eg home clerical help) to him. The 2nd Defendant’s frank and open admissions in relation to these matters gave credence to her case. 28.The 1st Defendant no longer had any personal interest in the trial, but I bear in mind (a) he had not paid the judgment sum pursuant to the partial summary judgment against him and/or (b) he might be wishful of protecting his wife’s interests. Nevertheless, I am persuaded he is a truthful witness on the core issues. He gave evidence in a clear and straightforward manner that was generally consistent with the contemporaneous documents. 29.I have slight reservation over a minor matter, but on careful consideration of all the circumstances and counsel’s submissionsit has no impact on the overall credibility of the 1st and 2nd Defendants on the core issues or on the outcome of this case. VIII. Issues 30.The issues in this case can be summarised as follows :
31.Issues (a) and (b) are dealt with in Parts IX to XXI below. Next, Parts XXII to XXVI below deal with issues (c) to (f) and (i). Finally, in Part XXVII below, I will deal with issues (g) and (h). IX. Yat Lee Transportation Company (“Yat Lee”) 32.From about April 1993 to end of 1996, the 1st Defendant carried on a home-style cross-border container transportation business known as Yat Lee. The 1st Defendant was responsible for front-line work, and at his request the 2nd Defendant handled miscellaneous matters, eg dealing with financial matters, taking telephone calls from customers when he was in Mainland China, preparing/issuing invoices to and collecting transportation charges from customers, and making payment arrangements for business expenses. But she did not prepare “托運單” (“Delivery Records”) which were done by the 1st Defendant. Yat Lee’s income was largely deposited in her bank account(s). 33.There were referrals of delivery jobs between Tung Hing and Yat Lee, so the Plaintiff occasionally liaised with the 2nd Defendant. Each month Tung Hing and Yat Lee would set-off transportation charges payable to each other, and Tung Hing would pay any surplus due to Yat Lee by transfer/cheque deposits from, say, the two joint accounts of the Plaintiff and Mr Chu with SCB (“SCB P/Chu 1st and 2nd Joint Accounts”) to, say, the two personal accounts of the 2nd Defendant with SCB. But this did not mean the 2nd Defendant had a close relationship with Yat Lee’s (ie the 1st Defendant’s) customers who simply had her bank account details for effecting payment. 34.I find the 2nd Defendant did not have any interest in Yat Lee, and her back office role was merely to assist the 1st Defendant. She did not deliberately lie when she said she “had never worked in a transport company” in her affirmation dated 27th December 2006 filed for opposing the Plaintiff’s summary judgment application against her (“D2’s Affirmation”). Given Yat Lee’s home-style nature, she did not consider herself to have intimate knowledge or true experience in running a business or to have worked in a proper transportation company. There is also no substance to the complaint that the 2nd Defendant failed to mention her back office role at Yat Lee in D2’s Affirmation. Such matter was not significant for the summary judgment application, and the 2nd Defendant did refer to her role in her third witness statement. Mr Ho next criticised her for (a) denying prior business dealings with the Plaintiff in her pleadings and (b) saying she had no monetary dealings with the Plaintiff in her third witness statement. But I note the 2nd Defendant did refer to dealings between Tung Hing and Yat Lee in her third witness statement, and she corrected the clerical error in (b) at the outset of her oral evidence. There is no mileage in Mr Ho’s criticisms. X. 1st and 2nd Defendants’ post-Yat Lee work 35.The 1st Defendant worked as an employed container truck (“CT”) driver (“CT Driver”). As at October 2000, he no longer had his own transportation business because the Mainland Chinese authorities detained his two CTs (“D1’s Vehicles”) and he did not have sufficient money to pay the penalty for their release (“Penalty”). The 1st Defendant sold D1’s Vehicles after he paid off the Penalty by about six instalment payments in/about 2005. 36.The 2nd Defendant worked as a receptionist until her resignation at/about end of August 1997 due to her pregnancy. When the Daughter went to school in October 2000, she started to look for work again. XI. Home purchase by the 2nd Defendant 37.I set out the background of the 2nd Defendant’s purchase of the Property (see below) because it was suggested (see paragraphs 192-198 below) the 2nd Defendant knew or ought to have known that part of the Sum Payments were misappropriated or misused for Mortgage Repayments (see below). 38.When the Daughter reached school age, the 2nd Defendant wanted to move house in search of better schooling for her. On 29th September 2000, the 2nd Defendant signed a sale and purchase agreement to buy a property at Mayfair Gardens, Tsing Yi, New Territories in the same block where the Parents lived (“Property”) for HK$1.3 million. The 1st and 2nd Defendants decided to purchase the Property sinceit would be convenient (a) for the 2nd Defendant’s mother to look after the Daughter whilst the 2nd Defendant would go and work, and (b) for the 2nd Defendant to look after her elderly and/or disabled Parents. The 2nd Defendant’s siblings promised to give her about HK$3,000.00 per month in lieu of engaging a domestic helper for the Parents if she would move close to and look after the Parents. 39.At that time, the 2nd Defendant and her family resided at a public housing unit. Asthe registered tenant of such public housing unit, the 2nd Defendant successfully applied in her sole name for an interest-free mortgage loan of HK$800,000.00 from the Hong Kong Housing Authority under the Home Purchase Loan Scheme and for an interest-bearing mortgage loan of HK$500,000.00 from SCB for full payment of the purchase price of the Property. The 2nd Defendant became the sole purchaser and mortgagor of the Property, and 1st Defendant became the guarantor of the mortgage loans. 40.I disagree the 2nd Defendant’s purchase of the Property through mortgage loans demonstrated an “enterprising trait”. I do not doubt her reasons (which were not entirely fiscal in nature) for moving house and purchasing the Property. Although the 1st Defendant (then earning about HK$10,000.00 odd per month) would be primarily responsible for the monthly mortgage repayments (“Mortgage Repayments”), the 2nd Defendant could look forward to further income from her part-time job and from her siblings after moving to the Property. In any event, how she acquired the Property is irrelevant since the decision to borrow the mortgage loans was made before the genesis of the Partnership Business. XII. Partnership Agreement 41.I prefer the 1st Defendant’s evidence that there was no discussion with the Plaintiff about business collaboration before the Oct’00 Meeting. (1) Oct’00 Meeting 42.The Plaintiff claimed that in/about October 2000, the 1st Defendant, the 2nd Defendant (who brought the Daughter with her), Mr Chu and herself had a dinner meeting at a restaurant near Mayfair Gardens. The 1st and 2nd Defendants’ first witness statements and D2’s Affirmation also said something similar. But when the 1st and 2nd Defendants gave evidence, they said the 2nd Defendant and Daughter had dinner at the Parents’ home and were not present at the dinner meeting, and it was after the dinner meeting that they came to meet the Plaintiff and Mr Chu briefly at the restaurant entrance before they all left. 43.Having observed the 1st and 2nd Defendants’ demeanour when they gave evidence and having considered the totality of the evidence, I accept that the aforesaid statements in their first witness statements and D2’s Affirmation might have been mistaken. But even if no weight is placed on the assertion that the 2nd Defendant was absent during the dinner gathering, I still find it inherently improbable she actively urged the Plaintiff to participate in the Partnership Business. Indeed, irrespective whether the 2nd Defendant was present at the Oct’00 Meeting, I do not accept she had any significant role in the discussions leading up to the Partnership Agreement. (2) 1st Defendant or Plaintiff initiated offer for business collaboration? 44.It is immaterial who initiated the business proposal since it is common ground that the Plaintiff and the 1st Defendant reached the Partnership Agreement at the Oct’00 Meeting. It is therefore also immaterial whether the 2nd Defendant made any representations to persuade the Plaintiff to establish and carry on the Partnership Business. On balance I reject any suggestion that at the Oct’00 Meeting the 1st and 2nd Defendants played on the Plaintiff’s inexperience in container transportation service and together cajoled her to participate in the Partnership Business. 45.I find the Plaintiff and the 1st Defendant approached the Oct’00 Meeting and Partnership Agreement as equals. The Plaintiff had capital/funds but no business experience for expanding into container transportation service, so she was interested in the 1st Defendant’s experience as cross-border CT Driver, knowledge of container transportation business and customer connections. On the other hand, the 1st Defendant did not have enough money to carry on his own transportation business, so he was interested in the Plaintiff’s capital resources. In my view, they both considered business collaboration would be mutually beneficial. (3) Terms of the Partnership Agreement 46.Save for one or two matters, Mr Ho was correct in saying there was no material discrepancy as to the terms of the Partnership Agreement asserted by the Plaintiff and the 2nd Defendant respectively. 47.Background Although the Plaintiff’s pleadings claimed the 1st and 2nd Defendants represented they had a lot of customers, she was careful to say in her first witness statement the 1st Defendant represented he had a lot of customers. The former assertion is plainly an unpersuasive attempt to embellish the facts to give an impression that the 2nd Defendant had an important role in the Partnership Business. 48.Sharing of work It was agreed the 1st Defendant would handle front-line business operations of the Partnership Business (eg employ and liaise with CT Drivers, solicit container transportation business, arrange delivery of containers, handle maintenance of CTs, manage the CT station at Lok Ma Chau, prepare/submit to the Plaintiff Delivery Records and supporting documents for CT Drivers’ executed delivery jobs and incurred miscellaneous expenses (雜支, “Misc Expenses”)) (“Front Line Work”) whilst the Plaintiff would handle back office administrative and financial work (eg calculate and pay wages for CT Drivers, arrange advance payments of Misc Expenses (“ME Advances”) to CT Drivers, prepare/issue invoices (“Invoices”) to and receive transportation charges from customers, arrange settlement of business expenses, and manage partnership finances) (“Back Office Work”). 49.On balance I do not accept the 2nd Defendant promised to help the 1st Defendant in his Front Line Work and to manage the Partnership Business. After moving to the Property the 2nd Defendant would be (a) looking for work and she in fact secured a part-time job in November 2000 (see paragraph 64 below) and (b) looking after the Parents and continuing to care for the Daughter. I find it improbable she would have time to carry out Back Office Work or she would have assured the Plaintiff she would do so. The Plaintiff eventually admitted she just assumed so because the 2nd Defendant assisted the 1st Defendant during Yat Lee days. But the circumstances in October/November 2000 were quite different, and I believe the 2nd Defendant would be too busy to take up any active role in the Partnership Business. 50.Profit/loss The Plaintiff and the 1st Defendant were to share profits/losses of the Partnership Business equally. The Plaintiff’s allegation that she would share profits with the 1st and 2nd Defendants is clearly another embellishment attempt to involve the 2nd Defendant (see paragraphs 55-57 below). 51.Capital contribution There is no dispute the Plaintiff and the 1st Defendant were required to make equal capital contribution for the Partnership Business. The issue is when they were required to do so. 52.At first, the Plaintiff claimed it was agreed they would both make equal capital contributions to set up the Partnership Business. Mr Ho submitted it would be improbable for the Plaintiff, a sole proprietor of “modest means” and new to container transportation service, not to insist on capital contribution by the 1st Defendant. But I have found in paragraph 45 above that the 1st Defendant joined the Partnership Business as equal partner not because of his means but because of his front-line experience and customer connections. Further, the Plaintiff had more than “modest means” since she claimed she had access to Mr Chu’s monies. 53.The Plaintiff then acknowledged in her second witness statement and under cross-examination that at the Oct’00 Meeting the 1st Defendant told her he did not have funds and asked her to put up the working capital first, and he would later transfer D1’s Vehicles to the partnership as capital contribution. Upon further cross-examination, the Plaintiff claimed that in September/October 2000 she did ask the 1st Defendant to show her D1’s Vehicles and the vehicle documents, and after a while he confessed the vehicles had been detained. At another stage the Plaintiff gave evidence that the 1st Defendant told her about these matters in/about November 2000 (see paragraphs 79-83 below). Still further the Plaintiff claimed in her first witness statement that in/about February 2001 the 1st Defendant told her “the 1st and/or 2nd Defendants’ vehicles” were detained in Mainland China (see paragraph 88 below). I find such conflicting allegations unreliable. 54.I prefer the 2nd Defendant’s case that at the Oct’00 Meeting the 1st Defendant told the Plaintiff D1’s Vehicles (which belonged to the 1st Defendant and not to the “1st and/or 2nd Defendant”) were detained in Mainland China, and they agreed (a) “最終[the 1st Defendant](在計算[the Partnership Business]的帳目後)需要提供款項去令[the Plaintiff]及[the 1st Defendant]雙方投資在[the Partnership Business]的資金數額均等”, (b) in the meantime the Plaintiff would provide all necessary capital (including the provision of CTs) for the Partnership Business because the 1st Defendant did not have enough money, and (c) when D1’s Vehicles were eventually released from Mainland China (but the date of which was uncertain) they would be transferred to the Partnership Business as part of his capital contribution. 55.Mr Chu and the 2nd Defendant The Plaintiff’s attempts in her pleadings and witness statements to coat the 2nd Defendant with an obligation to make capital contribution and an entitlement to profit-sharing are plainly embellishment attempts to suggest involvement of the 2nd Defendant when there was none. 56.At first the Plaintiff said both the 1st and 2nd Defendants should make capital contribution because “佢哋一齊做嘢架嘛，「股東」只係一個名稱”. But she confessed she would chase the 1st Defendant first if they failed to make contribution. Under cross-examination, the Plaintiffconceded the 2nd Defendant’s financial assistance towards the 1st Defendant’s share of capital contribution was merely “輔助性質”, and likewise the 1st Defendant could not dictate how the Plaintiff’s share of the capital contribution was to be sourced between Mr Chu and her. The Plaintiff further acknowledged there was no express discussion as to the 2nd Defendant’s entitlement to profit-sharing, and she later clarified it was for the 1st Defendant to deal with his share of the profits including sharing such profits with the 2nd Defendant. 57.In my view, it is evident the Plaintiff, a reasonably experienced businesswoman who ran her own business since 1996, well knew that neither Mr Chu nor the 2nd Defendant had any separate right of profit-sharing or obligation to contribute partnership capital. In the end, she was constrained to say it was her own subjective surmise that the Partnership Business was between the two Chu families. I find the Partnership Business had nothing to do with the 2nd Defendant, who was not involved in capital contribution, provision of CTs, business management and/or profit-sharing. 58.1st Defendant as CT driver The true dispute is whether the 1st Defendant would also act as CT Driver apart from being a partner. 59.At first, the Plaintiff said the 1st Defendant only handled documentation and liaison with customers and CT Drivers, and did not work as cross-border or local “接駁” CT Driver since the Partnership Business had employed CT Drivers. Local “接駁” delivery work included (a) delivering containers to the CT station at Lok Ma Chau for transfer onto cross-border CTs for the journey to Mainland China, and (b) collecting containers at the CT station from cross-border CTs for delivery to local destinations (“Local Delivery”). 60.The Plaintiff saidthat prior to the Oct’00 Meeting the 1st Defendant telephoned to tell her he could be a cross-border CT Driver, but strangely the Plaintiff claimed he did not mention and she did not ask about this at the Oct’00 Meeting. Upon further cross-examination, she said the 1st Defendant in fact “要兼埋個司機佢係指中港司機 …… 佢本來就係揸貨櫃車，但係佢話佢唔可以揸大陸嘅貨櫃，所以佢就唔可以上路”, which was why he was restricted to management and liaison duties. 61.But the business documents and records of the Partnership Business showed that the Plaintiff knew (without demur) the 1st Defendant at least carried out Local Delivery (see paragraphs 158-163 below). I prefer the 2nd Defendant’s case that the 1st Defendant told the Plaintiff he would drive CT provided by the Plaintiff for the Partnership Business to obviate the need for employing another CT Driver. So apart from profit/loss-sharing, the 1st Defendant would be entitled to monthly wages as CT Driver in the same way as any other CT Driver for the Partnership Business. 62.Summary In my view, the Plaintiff and 1st Defendant entered into the Partnership Agreement on the aforesaid terms. After the Oct’00 Meeting, the 1st Defendant told the 2nd Defendant about the Partnership Agreement. I accept the 2nd Defendant understood the 1st Defendant would receive remuneration from the Partnership Business. XIII. 1st Defendant’s work/income after Oct’00 Meeting 63.From October 2000 to June 2001, the 1st Defendant worked as an employed CT Driver with average monthly earnings of aboutHK$10,000.00 odd. After commencement of business in July 2001, he worked full-time for the Partnership Business until its dissolution. During the term of the Partnership Business, he still received some income from his previous employment and from his own Yat Lee business, which were deposited in the SCB D1&2 Joint Account. XIV. 2nd Defendant’s work/incomeafter the Oct’00 Meeting 64.Between November 2000 and April 2001, the 2nd Defendant worked as a part-time saleslady with average earnings of about HK$6,500.00-HK$7,200.00 per month. She agreed that the statement in D2’s Affirmation that she was a full-time sales representative at the time of the Oct’00 Meeting was incorrect. I accept her explanation that her solicitors mixed up her intention to look for work in October 2000 and her securing employment in November 2000. But this is immaterial because when the first Mortgage Repayment was due at the end of November 2000 the household income comprised not only the 1st Defendant’s wages as employed CT Driver but also the 2nd Defendant’s income from her part-time job and from her siblings. 65.The 2nd Defendant resigned abruptly on 5th April 2001 due to the Daughter’s illness. When the Daughter recovered, she obtained short-term part-time employment from 27th April to 4th May 2001. From June 2001 to July 2004, she worked as part-time office assistant (messenger) earning about HK$3,000.00 per month. 66.In my view, the 2nd Defendant’s employment pattern coupled with her need to look after the Daughter and Parents strongly indicate that she had no intention to participate in the Partnership Business. I disagree she requested and/or the 2nd Defendant agreed to assist in Back Office Work at the Oct’00 Meeting or at any subsequent time. XV. SCB D1&2 Joint Account 67.It is necessary to consider the operation of the SCB D1&2 Joint Account because it is the Plaintiff’s case that the Sum Payments were mainly deposited into such account, and could be used by both the 1st and 2nd Defendants. 68.The 1st Defendant as guarantor of the mortgage loans and main breadwinner of the family was primarily responsible for Mortgage Repayments. Although his wage payments as employed CT Driver were not punctual throughout his career, he would from time to time give the 2nd Defendant varying sums of money for household expenses which were supplemented by the 2nd Defendant’s income. 69.On 5th October 2000, the 1st and 2nd Defendants opened the SCB D1&2 Joint Account for the purpose of letting SCB debit Mortgage Repayment at the end of each month. A joint account would facilitate the 1st Defendant to deposit cheques payable to him directly into such account for Mortgage Repayments and other household expenses. 70.The first Mortgage Repayment of HK$9,156.18 was due on 30th November 2000, but despite the 1st and 2nd Defendants’ initial intention as aforesaid the SCB D1&2 Joint Account was not used for Mortgage Repayments. 71.There is no dispute the 2nd Defendant instructed SCB to debit the Mortgage Repayments from the SCB D2 1st Account. It therefore did not matter whether the 1st Defendant requested the 2nd Defendant to so instruct SCB or whether she did so on her own initiative after discussion with him. 72.Shortly after the Oct’00 Meeting (ie in/about November 2000), the 1st Defendant told the 2nd Defendant (a) there would be monetary dealings between himself and the Plaintiff in relation to the Partnership Business, and (b) he would take over the use of the SCB D1&2 Joint Account since it was convenient for the Plaintiff to transfer monies to him through SCB. I find on balance that since November 2000 the 1st Defendant used such account both for his own purpose (eg deposit of customer payments from the business of Yat Lee, income from his previous employment as CT Driver, deposit of a personal loan from SCB (see paragraph 196 below)) and for the purpose of the Partnership Business (eg deposit of advance Payments). Mr Ho complained this was not mentioned in D2’s Affirmation. But the purpose of such affirmation was merely to raise a credible defence to oppose the Plaintiff’s summary judgment application, and the 1st and 2nd Defendants’ witness statements did canvass the operation of the SCB D1&2 Joint Account. 73.I find the above arrangement was also motivated by the 2nd Defendant’s concern that monies for Mortgage Repayments and for the Partnership Business might become mixed up with the risk that (a) SCB might unknowingly debit partnership monies at the end of the month and/or (b) the 1st Defendant might inadvertently withdraw monies intended for Mortgage Repayments thereby attracting late payment interest. Another relevant consideration was the potential savings as a result of the 2nd Defendant’s exemption (arising from her status as mortgagor with SCB) from payment of service fee on her bank accounts with SCB even if the account balance fell below the required minimum. Further, when the 2nd Defendant asked the 1st Defendant to consider using his bank account with the BOC, he explained that the Plaintiff (whose funds were mainly with SCB) requested him to use an account with SCB because it would be more convenient for her to transfer monies to him. 74.Mr Ho submitted the 2nd Defendant lied in D2’s Affirmation in saying that in about November 2000 the 1st Defendant asked her to use another account to make Mortgage Repayments “because he would not contribute on the [Mortgage Repayments] for he would invest all his monies in the [Partnership] Business”. However, I accept such statement was mistaken since it is common ground that (a) the 1st Defendant did not make any actual advances to the Partnership Business and (b) some Payments were transferred from the SCB D1&2 Joint Account to the SCB D2 1st Account from which Mortgage Repayments were debited (see paragraph 192 below). I find the 2nd Defendant merely meant the 1st Defendant intended to use the SCB D1&2 Joint Account largely for his and the Plaintiff’s “金錢往來，[the 1st Defendant]唔想再喺呢個户口係要嚟供樓作出貢獻，所以叫[the 2nd Defendant]開過個”. 75.Mr Ho submitted that the 2nd Defendant’s failure to make enquiries with the Plaintiff about letting the 1st Defendant use the SCB D1&2 Joint Account for receiving the Payments suggested she “would be responsible for looking after [the Payments] ……”. On the contrary, I find it was no more than a husband-wife arrangement for the 1st Defendant to have sole use of the SCB D1&2 Joint Account, which arrangement was already in place before the first Mortgage Repayment and more than half a year before the Payments listed the Schedule. 76.Indeed, the Plaintiff also recognised the SCB D1&2 Joint Account as the 1st Defendant’s account. The Plaintiff’s Notation of “東興存良户口” on the Payment Record for a transfer of HK$10,000.00 on 29th September 2001 from the SCB TH Account (see below) to the SCB D1&2 Joint Account and his statement of “以上欠款[ie the Sum Payments]已經核實清楚所有存於朱植良户口內的款項” at the bottom of the Plaintiff’s Schedule both suggested that the Plaintiff regarded the SCB D1&2 Joint Account as “良户口” or “朱植良户口”. I find her assertion that these Notations were shorthand for the 1st and 2nd Defendants’ bank account specious. 77.Since November 2000 the 2nd Defendant no longer had control over withdrawals from or deposits into the SCB D1&2 Joint Account, and the Mortgage Repayments were mainly debited from the SCB D2 1st Account and another personal bank account of the 2nd Defendant with SCB. The 1st Defendant continued to use the SCB D1&2 Joint Account as his bank account even after dissolution of the Partnership Business (eg for deposit of his wages from subsequent employment). 78.I now turn to the specific transactions the Plaintiff claimed illustrated the 2nd Defendant’s knowledge that the Payments were solely for the purpose of the Partnership Business. XVI. Sale of the Plaintiff’s MGV 79.In/about November 2000, the 1st Defendant sold a MGV for HK$160,000.00 for the Plaintiff. The deposit of HK$55,000.00 was paid to the Plaintiff, but the 1st Defendant failed to pay her the balance of the sale proceeds, which had merged as part of the partial summary judgment against the 1st Defendant. But it was not part of the Plaintiff’s claim against the 2nd Defendant. 80.However, the Plaintiff claimed there was a connection with the 2nd Defendant because the 1st and 2nd Defendants told her there was a need to purchase CT(s) to meet their customers’ business demands, so she sold the MGV to raise funds to purchase CT(s) pending the availability of D1’s Vehicles within a reasonable time (which she understood to be six to nine months). The Plaintiff further claimed “neither the 1st nor 2nd Defendant” paid her the balance of the sale proceeds of the MGV. 81.I prefer the 1st Defendant’s evidence that the Plaintiff did not tell him the sale of the MGV was for purchase of CT(s) or for her capital contribution to the Partnership Business. I find on balance the 2nd Defendant was not involved in arranging the sale, and the Plaintiff’s allegations were embellishment attempts to suggest involvement of the 2nd Defendant and to dress up the sale proceeds as her capital contribution to the Partnership Business. 82.First, the MGV was the Plaintiff’s personal property and the sale proceeds were her own monies as evidenced by the 1st Defendant’s payment of the deposit sum to the Plaintiff, the Plaintiff’s demand for payment of the balance of the sale proceeds to her, and the partial summary judgment against the 1st Defendant in her favour. Secondly, there is no satisfactory explanation why, if both the 1st and 2nd Defendants were obliged to pay her the balance of the sale proceeds, the Plaintiff did not pursue any claim for the same against the 2nd Defendant herein. Thirdly, I have found the 1st Defendant told the Plaintiff about the detention of D1’s Vehicles at the Oct’00 Meeting (see paragraph 54 above), so it was pursuant to the Partnership Agreement that the Plaintiff purchased CT(s) for the Partnership Business. Fourthly, on 4th May 2002 the Plaintiff as lender and the 1st Defendant as borrower signed an undated statement of accounts (“Account Statement”) that acknowledged the Plaintiff “并借款存於[the 1st Defendant’s]户口合計HK$156,450.00 (以年息6%壹年內歸還)”. There was no suggestion in the Account Statement that the 2nd Defendant should pay the sum of HK$156,450.00 (which was equivalent to the partial summary judgment against the 1st Defendant and inclusive of the balance of the sale proceeds of the MGV) or any part thereof to the Plaintiff. 83.In my view, the balance of the sale proceeds of the MGV was the 1st Defendant’s personal debt due to the Plaintiff and had nothing to do with the 2nd Defendant. XVII. Personal loan to the 1st Defendant 84.Between October and December 2000, the Plaintiff transferred/deposited a total sum of HK$13,000.00 as follows : (a) on 12th October 2000 a cash deposit of HK$5,000.00 into the 1st Defendant’s account with Sin Hua Bank (“SHB”) which is now BOC, (b) on 18th November 2000 a transfer deposit of HK$5,000.00 from Tung Hing’s account with SCB (“SCB TH Account”) to the 2nd Defendant’s personal account with SCB (“SCB D2 2nd Account”), and (c) on 30th December 2000 a transfer deposit of HK$3,000.00 from the SCB P/Chu 2nd Joint Account to the SCB D2 2nd Account. I accept the 1st Defendant’s explanation that he had access to the SCB D2 2nd Account via an ATM card which was kept at home for use by both the 1st and 2nd Defendants. This meant he could arrange for deposits/withdrawals into/from such bank account without prior notice to the 2nd Defendant. The 1st Defendant failed to repay the loan of HK$13,000.00, which had merged as part of the partial summary judgment against the 1st Defendant. 85.There is no claim against the 2nd Defendant for the loan of HK$13,000.00, but the Plaintiff suggested there was a connection in that (a) the Plaintiff lent such loan to “1st and/or 2nd Defendants” and (b) despite 1st Defendant’s promise “they” would repay her shortly (which she thought would be one to two months) “neither the 1st and/or 2nd Defendant” repaid such loan. I reject such contention. First, it does not sit well with the Plaintiff’s own Notations on the customer advice/receipt for the first and third loan sums of “借現金5,000 …… 存入良户口” and “良借” respectively, which clearly showed they were loans to the 1st Defendant. Secondly, there is no explanation why on the Plaintiff’s own case she did not claim against the 2nd Defendant as a co-borrower who was jointly/severally liable together with the 1st Defendant. Thirdly, I refer to paragraph 82 above and say it is obvious from the Account Statement that the loan of HK$13,000.00 (which was part of the sum of HK$156,450.00 referred therein) had nothing to do with the 2nd Defendant. 86.In summary, I accept the loan of HK$13,000.00 was a personal debt owed by the 1st Defendant to the Plaintiff and had nothing to do with the 2nd Defendant who was not aware of the same at the material time. XVIII. Alleged intended purchase of new CT(s) 87.The Plaintiff transferred the following sums from the SCB TH Account to the SCB D1&2 Joint Account : (a) HK$150,000.00 on 24th February 2001 and (b) HK$20,000.00 on 28th April 2001 (collectively, “Vehicle Sum”). 88.The Plaintiff claimed the Vehicle Sum was for the purchase of new CT(s) for the Partnership Business. She said she contributed her CTs about two to three odd months after the Partnership Agreement, but 1st Defendant did not provide the “1st and/or 2nd Defendants’ vehicles”and gave evasive answers when pressed by the Plaintiff. In/about February 2001, the 1st Defendant told the Plaintiff he required an advance for purchasing CTs because “the 1st and/or 2nd Defendants’ vehicles” were detained in Mainland China (see paragraph 18 of the Plaintiff’s first witness statement). Consequently, the Plaintiff transferred the Vehicle Sum into the SCB D1&2 Joint Account. Later the 1st Defendant admitted to her he misappropriated the Vehicle Sum for “personal use”, but promised to repay the same “to which [the Plaintiff] agreed to deduct from the [Partnership Business]”. 89.But having considered the totality of the evidence, I am not persuaded the Vehicle Sum was for purchase of CTs or for working capital of the Partnership Business. The Plaintiff’s Notations of “良” and “[the 1st Defendant]借” on the customer receipts for the two transfer deposits comprising the Vehicle Sum, and the Account Statement that showed the Purchase Balance (see below) as part of the loan of HK$156,450.00 to 1st Defendant (see paragraph 82 above) plainly demonstrated the Vehicle Sum was the Plaintiff’s personal loan to the 1st Defendant. 90.The 1st and 2nd Defendants in their first witness statements said the Plaintiff transferred the Vehicle Sum to the 1st Defendant for “運作所需”, and “於轉賬後” the 1st Defendant told the 2nd Defendant the Vehicle Sum was for the working capital of the partnership. But I accept on balance that (a) the 1st Defendant’s statement was mistaken, (b) he borrowed the Vehicle Sum without telling the 2nd Defendant, and (c) he used a substantial part thereof to partially reduce the outstanding Penalty. The 2nd Defendant became aware of such loan when the 1st Defendant signed the Account Statement on 4th May 2002. Upon the 2nd Defendant’s subsequent enquiry, the 1st Defendant fobbed her off with the suggestion that it was for the operation needs of the Partnership Business, so she assumed it was for paying the operation expenses (雜支) of the Partnership Business (“Operation Expenses”). 91.Upon deposit of the sum of HK$150,000.00 to the SCB D1&2 Joint Account on 24th February 2001 (see paragraph 87 above), the 1st Defendant transferred HK$6,000.00 and HK$9,000.00 to the SCB D2 1st Account for household expenses as reflected by the withdrawal of HK$5,000.00 from the SCB D2 1st Account on the following day and by SCB’s debit of Mortgage Repayment of HK$9,004.89 on 28th February 2001. The 1st Defendant plainly used part of the sum of HK$150,000.00 for personal purpose, but since it was a personal loan he did not misappropriate such sum. 92.More importantly, irrespective of whether the Vehicle Sum was intended to be a personal loan to the 1st Defendant or to be used for the purpose of the Partnership Business, I am satisfied the 2nd Defendant did not know of the same because by such time she no longer had knowledge of or control over deposits into the SCB D1&2 Joint Account. 93.I disagree with Mr Ho’s submission that the 2nd Defendant resigned from her employment as part-time saleslady because she intended to assist the 1st Defendant in respect of the Partnership Business and “would no doubt have taken the Plaintiff’s injection of capital [ie the Vehicle Sum] into her consideration” and not because of the Daughter’s illness “if any, [which] is only an excuse”. This proposition was not put to the 2nd Defendant when she gave evidence. I see no reason to doubt the Daughter’s illness. When she recovered after two weeks’ hospitalisation, the 2nd Defendant quickly sought short-term part-time employment and later longer term employment as office assistant (messenger), which does not sit well with Mr Ho’s contentions at all. 94.In about June 2001, the 2nd Defendant’s mother granted a loan of HK$280,000.00 (“Mother Loan”) largely for partial payment of the Penalty and partly for payment of Mortgage Repayments and household expenses. In my view, the Mother Loan was actually lent to the 1st Defendant, but the 2nd Defendant as wife and daughter liaised with the 1st Defendant and the Mother to arrange the Mother Loan. This did not mean she took any active role in assisting the 1st Defendant in the Partnership Business. The Mother Loan would have to be repaid unless the Mother passed away whereupon it would be treated as part of the 2nd Defendant’s beneficiary share in her estate. 95.The Mother Loan was deposited into the BOC D2 Account on 26th June 2001 and withdrawn in cash for the 1st Defendant on the same day. However, the 1st Defendant used the Mother Loan for (a) partial repayment of the Vehicle Sum by depositing HK$130,000.00 into the SCB TH Account leaving an outstanding sum of HK$40,000.00 (“Purchase Balance”) which had merged with the partial summary judgment against the 1st Defendant, (b) partial payment of the Penalty, and (c) payment of various household expenses. 96.I disagree the 2nd Defendant knew the purpose of the Mother Loan was to make partial repayment of the Vehicle Sum “to the Plaintiff which ought to have aroused suspicion of misappropriation of assets by the 1st Defendant”. But even if she were so aware of the partial repayment of the Vehicle Sum (which I disagree), the Mother Loan was still for the 1st Defendant’s personal purpose and not for the Partnership Business. 97.The Plaintiff’s alleged agreement for the Purchase Balance “to deduct from [the Partnership Business]” was different from the requirement in the Account Statement for the 1st Defendant to repay inter alia the Purchase Balance to the Plaintiff. The Plaintiff also could not satisfactorily explain why she did not include the Purchase Balance as part of the Clause 3 Sum or Sum (ie part of the Payments which the 1st Defendant misappropriated without producing any supporting document), but treated it as part of the outstanding loan of HK$156,450.00 due from the 1st Defendant in the Account Statement. 98.On the aforesaid analysis, I find on balance the Vehicle Sum and Purchase Balance had nothing to do with the 2nd Defendant. XIX. Purchase of mobile telephone by the 2nd Defendant 99.When the 1st Defendant told the Plaintiff he required another mobile telephone as back up so that calls could be diverted to the New Phone (see below) when his own mobile telephone (“D1’s Phone”) was busy or running out of battery, she told him to submit supporting documents for reimbursement. In the circumstances, the 1st Defendant requested the 2nd Defendant to purchase (which she did) a new mobile telephone (“New Phone”) and to apply for a telephone service plan for the same on his behalf. Consequently, the invoice/receipt for the New Phone and the documentation for the telephone service plan were in her name. There is no reason to doubt that the 1st Defendant made the aforesaid request because (a) he spent a lot of time at the CT station at Lok Ma Chau, (b) shops selling mobile telephones would be closed by the time he got off work, (c) all along the 2nd Defendant helped him purchase mobile telephone (including D1’s Phone) and service plan, and (d) there were many shops selling mobile telephones near the 2nd Defendant’s place of work. I find the 2nd Defendant was merely assisting her husband when she purchased the New Phone, and it was the 1st (and not the 2nd) Defendant who used the New Phone for the purpose of the Partnership Business. XX. Commencement of business 100.On 1st June 2001, the Plaintiff rented a desk office at Castle Peak Road, Kowloon. The Partnership Business commenced business in July 2001. The 1st Defendant engaged CT Drivers and began to work on a full-time basis for the partnership. The 2nd Defendant knew he did preparatory work for the Partnership Business whilst still otherwise employed as CT Driver, but she did not know the date of commencement of business of the partnership. 101.On/about 29th June 2001, the Plaintiff opened a savings bank account with SHB in the name of Tung Hing (without specifying “Container Department”) (“SHB PB Savings Account”) for the Partnership Business. She operated such bank account freely without the concurrence of the 1st Defendant, and made aide memoire Notations against transaction entries in thepassbooks which she retained. She also opened a current account for the Partnership Business with SHB (“SHB PB Current Account”), but did not attempt to obtain bank statements from SHB (now BOC) for discovery in the present proceedings. 102.I reject the Plaintiff’s claim that when the 1st Defendant submitted Delivery Records and supporting documents to her in/about July/August 2001, they mutually agreed not to receive any remuneration until the Partnership Business turned profitable. Such assertion was only elicited under cross-examination when the Plaintiff was confronted with the Invoices, “司機外判支出對數單” (“Wages Statements”) and Delivery Records of the Partnership Business that showed the 1st Defendant was entitled to remuneration as CT Driver. After commencement of business, the Plaintiff would still have income from her continued operation of Tung Hing, but the 1st Defendant had no other concurrent income. I find it improbable that the 1st Defendant being the main breadwinner of the family would agree to go without any income until the partnership turned profitable. With his experience as CT Driver and my finding that he would be CT Driver for the Partnership Business (see paragraphs 58-61 above), I find he was entitled to wages as CT Driver (see also paragraphs 158-163 below). XXI. Purchase of computer 103.When the Partnership Business commenced business the Plaintiff purchased a computer for the 1st Defendant. She claimed that since the 1st Defendant told her he did not know how to use it, she believed it must have been used by the 2nd Defendant (who therefore played an important role in the Partnership Business) to prepare Delivery Records. In the present proceedings, the Plaintiff only made discovery of Delivery Records computer-typed by the 2nd Defendant for the period from 14th March to 13th April 2002 (E970-E1003), but since she did not complain of any inability to calculate wages for CT Drivers or to issue Invoices for the period from July 2001 to mid-March 2002, she must have received the primary information other than by way of the aforesaid computer-typed Delivery Records. This flies in face of the suggestion that since commencement of business the 2nd Defendant used the computer to prepare Delivery Records and/or manage the Partnership Business. 104.I prefer the 1st Defendant’s evidence that initially he wanted to learn how to use the computer, but gave up after three months because inputting computer data was too tiresome. So he gave his handwritten records and supporting documents to the Plaintiff. It was only in March 2002 that he asked the 2nd Defendant to help him input computer data (see discussion in paragraphs 184-186 below). In the circumstances, the 1st Defendant’s request for a computer did not denote the 2nd Defendant’s involvement in the Partnership Business. XXII. Sum Payments (1) Plaintiff’s case 105.The Plaintiff claimed that in/about July 2001, pursuant to the Partnership Agreement, it was agreed the 1st Defendant might ask the Plaintiff/Tung Hing for advance Payments to pay Operation Expenses provided they had to be supported by supporting documents (ie the July’01 Agreement). So between July 2001 and May 2002, the Plaintiff deposited inter alia the Sum Payments into the Three Accounts designated by him. But the 1st Defendant failed to provide supporting documents. When chased by the Plaintiff, the 1st and 2nd Defendants said they needed more time to submit the supporting documents. When the Plaintiff realised she was being cheated (ie the Sum Payments were misappropriated for the 1st and 2nd Defendants’ own purposes), she dissolved the Partnership Business in May 2002. (2) 2nd Defendant’s case 106.The 2nd Defendant claimed that in/about October 2000 (ie shortly after the Oct’00 Meeting) it was informally agreed the 1st Defendant could ask the Plaintiff for advance Payments for Operation Expenses against supporting documents to be submitted later. The 1st Defendant was entitled to monthly wages as CT Driver, but the Plaintiff failed to punctually calculate or pay his monthly wages (see paragraphs 158-163 below). So when he needed money for personal use (eg household expenses including Mortgage Repayments), he would ask the Plaintiff for extra Payments in excess of Operation Expenses for his own use being advances on his drawings/wages (“Payment Arrangement”). Consequently, the Sum Payments were (a) partly for the 1st Defendant’s own personal use and (b) mostly for payment of Operation Expenses as specified by him. In respect of (b), the 1st Defendant had submitted all supporting documents including (if there were no such documents) brief records written up by him that described the nature/amount of incurred Operation Expenses. (3) My findings 107.I prefer the 2nd Defendant’s case. On balance I reject the July’01 Agreement and disagree the 2nd Defendant was (a) aware of or discussed with the Plaintiff about the Sum Payments, (b) involved in the management of the Partnership Business or responsible for sorting out the supporting documents, or (c) obliged to pay the Sum to the Plaintiff. 108.There is no dispute that in the course of the 1st Defendant’s Front Line Work he required working capital to pay Operation Expenses. The 1st Defendant said (and I accept) that on occasions he had to make urgent cash payments for the Partnership Business and would pay first if he had sufficient money and then seek reimbursement by submitting supporting documents to the Plaintiff in due course. But if he did not have enough money, he would pursuant to the Payment Arrangement ask the Plaintiff to advance Payments (including the Sum Payments) to him by stating the relevant purpose and amount and instructing her to deposit the same into designated bank accounts (including the Three Accounts). As explained above in paragraph 106 above, the 1st Defendant would sometimes ask for Payments (including some Sum Payments) for his own purpose. 109.Upon/after deposit of the Payments (including the Sum Payments) into the Three Accounts, the Plaintiff would make aide memoire Notations on the Payment Records. The 1st Defendant withdrew or transferred inter alia the Sum Payments or part thereof from, say, the SCB D1&2 Joint Account for payment of Operation Expenses (for which he submitted original supporting documents to the Plaintiff whenever he attended the office) and for payment of his own expenses (eg household expenses to be set-off against his drawings/wages). He did not retain copies of the supporting documents because the Plaintiff was responsible for managing partnership finances and preparing income/expenditure accounts. (4) Payment Records 110.The Payment Records contradicted the Plaintiff’s case that (a) all Sum Payments were solely for the purpose of the Partnership Business, and/or (b) none of them was applied for such purpose. On the contrary, the Payment Records showed she knew some Sum Payments were intended for the 1st Defendant’s own purpose. 111.Item 69 of the Schedule On 29th March 2002, HK$9,000.00 was transferred from the SCB TH Account to the SCB D1&2 Joint Account against the Plaintiff’s Notations of “[the 1st Defendant]借款供樓” and “良取9,000供樓” on the Plaintiff’s Schedule and the relevant Payment Record respectively. The Plaintiff tried to explain this away by saying she first wrote down “良取” on the Payment Record when the 1st Defendant requested monies for Misc Expenses and it was much later (ie after her discovery of his misappropriation upon her refusal of his request of “不如當借畀佢供樓”) that she wrote down “9,000供樓”. I find this to be an unpersuasive afterthought, and the Plaintiff could not satisfactorily explain why she did not write down “良什支” first and/or “虛報” (or similar description as in column I of items 2, 6, 11, 30, 44, 49, 51, 58-60, 62-64, 72 and 78 of the Schedule) later as she allegedly did for other Payment Records. I do not accept her unconvincing suggestion that she sometimes wrote in such manner and sometimes she did not. 112.Item 25 of the Schedule The Plaintiff wrote the Notation “良借用” in the Payment Record for transfer of HK$30,000.00 from the SCB TH Account to the SCB D1&2 Joint Account on 30th October 2001. She claimed it merely meant the Sum Payment “係我公司[Tung Hing]借出嚟畀阿良做雜支，但係我無寫”. This again is an unconvincing afterthought which flies in face of the plain meaning of the Notation (ie 1st Defendant borrowed the Sum Payment) and which is echoed by the Plaintiff’s corresponding entry of “[the 1st Defendant]取公司(私人借)” in the Plaintiff’s Schedule. The phrase “(私人借)” would have been unnecessary if the intention of the Notation was to identify Tung Hing as the source of the Sum Payment. Further, the Plaintiff could not satisfactorily explain why some other Payments also sourced from Tung Hing were not similarly identified and why she did not write down “虛報” or some similar description (see paragraph 111 above). Plainly the 1st Defendant must have told her such Sum Payment was for his own use. 113.Items 13, 14, 23 and 61 of the Schedule The Plaintiff explained that her Notations of “良借” in the Payment Records for transfers of the Sum Payments from the SCB TH Account to the SCB D1&2 Joint Account were just an abbreviated record of receipt by the 1st Defendant (“良”) of the Sum Payments lent by Tung Hing (“借”). I find this to be an inept effort to escape the obvious meaning that these Sum Payments were for the 1st Defendant’s personal purpose. Such conclusion is corroborated by a similar Notation of “良借” on the transfer customer receipt of 30th December 2000 for the third sum (HK$3,000.00) of the loan of HK$13,000.00 which I have found to be a personal loan to the 1st Defendant (see paragraphs 84-86 above). The Plaintiff could not satisfactorily explain why the Notations for items 13, 14, 23 and 61 of the Schedule would have a wholly different meaning. (5) Plaintiff’s Schedule 114.The Plaintiff’s case is also shaken by her own descriptions in the Plaintiff’s Schedule, which showed the Sum Payments were not limited to the purpose of payment of Operations Expenses. 115.Items 22 and 34 of the Schedule In respect of her Notation of “[the 1st Defendant]私人停車場” in the Plaintiff’s Schedule or Payment Records for transfers of HK$3,000.00 and HK$2,000.00 from the SCB TH Account to the SCB D1&2 Joint Account on 20th November and 13th December 2001 respectively, the Plaintiff at first said she would not quibble (“咁咪是但囉”) over reimbursement of parking fees (without receipt) for the 1st Defendant’s private car. Later, she resiled from such explanation by claiming “私人” only described such car which was used for partnership purpose. I reject the latter explanation and find that she all along knew the relevant Sum Payments were intended for the 1st Defendant’s personal purpose. 116.Item 42 of the Schedule The Plaintiff claimed that her Notations of “良借[illegible]取聯名(FM. HK)押金” in the Payment Record and “[the 1st Defendant]借朱太私人([the 1st Defendant]私人上路押金)” in the Plaintiff’s Schedule for the transfer of HK$20,000.00 from the SCB TH Account to the SCB D1&2 Joint Account on 9th January 2002 only meant such sum was sourced from her personal account. This flies against the plain meaning of the Notation that the Sum Payment was for the 1st Defendant’s private purpose. The Plaintiff said such Sum Payment was for payment of the Penalty (押金) and/or for fixing the 1st Defendant’s cross-border driving licence. But I cannot see how these problems (which the 1st Defendant should have resolved before injecting D1’s Vehicles into the partnership or becoming cross-border CT Driver for the partnership) were partnership matters. They only lend weight to the conclusion in paragraph 61 above that the 1st Defendant was intended to be CT Driver during the term of the Partnership Business. (6) Alleged set-off and payment of Operation Expenses by the Plaintiff 117.The Plaintiff claimed the 1st Defendant only submitted supporting documents for Operation Expenses to the value of HK$89,290.56 (“Deducted Sum”) based on her monthly summaries from July 2001 to May 2002 (“Summary Sheets”) drawn from itemised breakdowns of monthly incurred Operation Expenses over the same period (“Calculation Sheets”) (E1022-E1118). She further claimed (a) the Deducted Sum had been set-off against Payments other than the Sum Payments (“Proposition (a)”), (b) the 1st Defendant did not submit supporting documents for the Sum Payments (“Proposition (b)”), and (c) she had to pay Operation Expenses herself because the 1st Defendant misappropriated and misused the Sum Payments intended for such purpose (“Proposition (c)”). 118.Propositions (a)and (b) I find it likely that the Plaintiff failed to disclose all of the supporting documents submitted to her by the 1st Defendant which exceeded the Deducted Sum. This immediately raises doubts as to (a) the underlying basis of the Plaintiff’s allegation of breach of trust due to misappropriation or misuse of the Sum Payments, and (b) the accuracy of the amount of the Sum claimed. 119.For instance, the amounts of incurred Operation Expenses of HK$50,720.00 and HK$5,000.00 written by the Plaintiff in the Calculation Sheet for July and August 2001 (E1023) (and hence also the Deducted Sum) failed to take into account “部份什支” (ie ME Advances) of HK$20,000.00 and HK$5,000.00 paid by the 1st Defendant to CT Drivers俊 and 紫陽 as shown in their Wages Statements for August 2001 (E1119 and E1122) prepared by the Plaintiff. 120.As further example, the Deducted Sum omitted to include cash sums of HK$1,000.00 and RMB¥1,000.00 (or HK$947.00) paid by the 1st Defendant to CT Driver 俊as ME Advances shown in his Wages Statement for September 2001 (E1129). In the same vein, Mr Wong submitted (and I agree) the Plaintiff omitted to include the following ME Advances given by the 1st Defendant to CT Drivers in the Deducted Sum :
121.The Plaintiff could not satisfactorily explain how the sum of HK$36,947.00 was reimbursed to the 1st Defendant or set-off against the Payments. I reject her vague assertions of set-off against loans she granted to the 1st Defendant prior to the Partnership Business (which she did not particularise) or against the Other Payments (which she could not specifically identify). Although she claimed to have kept personal records of such set-off, she did not disclose them in the present proceedings. 122.The Plaintiff could not satisfactorily explain her criteria for cherry-picking the Sum Payments and not the Other Payments for claim against the 2nd Defendant. She eventually confessed there was no sensible criteria (“我是但架咋，我冇也基礎 ……但係最主要係我都要揀一揀係邊啲比較佢真係會有去用到，同埋我自己比較唔敢肯定嘅數目，去能唔能夠追討到佢嘅數目……”). In my view, there is no justification for such arbitrary and self-serving set-off that ignores the 1st Defendant’s rights as co-partner. 123.Further, Mr Wong argued (and I accept) that even on the basis of supporting documents disclosed by the Plaintiff, Operation Expenses paid by the 1st Defendant exceeded the Deducted Sum since the following Operation Expenses with supporting documents were omitted from the Deducted Sum :
Although HK$1,690.00 is not a substantial sum, it raises a doubt as to the accuracy of the Sum claimed in the present proceedings. In the end, the Plaintiff conceded that if her calculations were inaccurate or if she omitted to include an incurred partnership expense, the Deducted Sum would have to be adjusted upwards. This strongly underlines the need for Final Accounts. 124.Proposition (c) There are no documents to show the Plaintiff had to pay Operation Expenses because the 1st Defendant misappropriated or misused the Sum Payments intended for such purpose. Whilst the Plaintiff claimed she had to pay licence fees of three CTs of the Partnership Business because the 1st Defendant misappropriated three Sum Payments of HK$4,694.00 each given to him in January/February 2002 (column C of items 49, 50 and 60 of the Schedule) and she had documentary proof of her payment of such licence fees, she did not disclose such documents in the present proceedings. 125.Both counsel accepted the principles for the maxim omnia praesumuntur contra spoliatorem set out in Tullett & Tokyo International Securities Ltd v APC Securities Co Ltd [2001] 2 HKC 713. Such maxim “…… is a simple rule of thumb that a court is likely to draw adverse inferences against a party who fails to produce an item in circumstances where the item should have been produced and an adequate explanation for its non-production is not forthcoming” (see PC International Marketing Limited v Best Power Enterprises Limited CACV208/2004 (unreported, 10th May 2005) per Rogers VP). 126.In my view, the natural inference for the aforesaid non-disclosure is that the alleged documents would not have supported the Plaintiff’s contention. But even without such inference, I am satisfied the Sum Payments were given to the 1st Defendant (a) for his own use subject to set-off against his drawings/wages and (b) for the purpose of the Partnership Business for which he had submitted relevant supporting documents to the Plaintiff. I find it improbable the Plaintiff would have given the Sum Payments which exceeded HK$400,000.00 over a period of about 10 months without receiving any supporting document. (7) Sum Payments held on trust? 127.In my view, the Payment Arrangement (which is akin to the arrangement for advancing ME Advances to CT Drivers) shows that the Sum Payments were not held on any trust. Without any trust relationship, there is no basis for claiming accessory liability on the part of the 2nd Defendant. 128.The Plaintiff arranged for payment of ME Advances to cross-border CT Drivers against their subsequent submission (via the 1st Defendant) of supporting documents for incurred Misc Expenses to enable the Plaintiff to calculate their net monthly wages. 129.If the total ME Advances were less than the incurred Misc Expenses, CT Driver would be paid the balance of incurred Misc Expenses and his wages at the end of the month. If the total monthly ME Advances exceeded the incurred Misc Expenses, he would be entitled to retain the surplus which he could use freely subject to set-off against his wages. If his ME Advances exceeded the incurred Misc Expenses and his wages for that month, he would be entitled to retain the surplus and carry it forward as part of his ME Advances for the following month. Such arrangements are verified by the Plaintiff’s own calculations in the Wages Statements of cross-border CT Drivers (eg Wages Statement for CT Driver 俊for August 2001 (E1120)). It is plain that the ME Advances were not held on trust. 130.Even if the Sum Payments were wholly intended for payment of Operation Expenses (which I disagree), given the similarity in nature between advance Sum Payments and ME Advances in that they were partnership monies advanced for payment of partnership expenses against submission of supporting documents, I find the Sum Payments were likewise not held on any trust (see also my findings in relation to the Payment Arrangement and alleged July’01 Agreement, and my analysis of the D1 Wages Statement at paragraphs 159 and 162-163 below). 131.So once the Sum Payments were deposited into the Three Accounts, the 1st Defendant could use them freely subject to giving credit for the same upon taking of partnership accounts. So even if any Sum Payment were unaccounted for by supporting documents (which I disagree), it could be set-off against the 1st Defendant’s entitlements upon taking Final Accounts. (8) Premature claim and locus standi 132.It is the Plaintiff’s case that, as a matter of law, a constructive trust arose in favour of the Plaintiff (but not the Partnership Business) (a) upon the 1st Defendant’s misappropriation and/or misuse of the Sum Payments and/or (b) as result of the alleged implied obligation under the July’01 Agreement to repay the Sum Payments (see paragraphs 8-10 and 13-14 above). Such argument necessarily fails since I have found (a) the 1st Defendant had submitted supporting documents for the relevant Sum Payments to the Plaintiff, (b) there was no misappropriation or misuse by the 1st Defendant, and (c) the Plaintiff was not allowed to argue any implied contractual term under the July’01 Agreement. But even if I am wrong, was there any constructive trust on the Plaintiff’s own case as a matter of law? 133.The question can only be answered by considering the following matters, ie (a) whether the Sum Payments were trust monies under constructive trust in favour of the Plaintiff or partnership monies for which Final Accounts were necessary for ascertaining the rights and liabilities of the partners, and (b) where applicable, the identity of the beneficiary of such constructive trust. 134.In respect of issue (a), I have made relevant factual findings in paragraphs 127-131 above. As a matter of law (see paragraph 135 below), although (i) the Plaintiff/Tung Hing (and/or perhaps Mr Chu) were the ultimate sources of the Sum Payments, (ii) the Sum Payments were mostly transferred directly from the bank accounts listed in column H of the Schedule (eg the SCB TH Account) to the Three Accounts, and (iii) the Three Accounts were not under the control of the Plaintiff, the Sum Payments were advances by the Plaintiff as partner to the Partnership Business and paid to the 1st Defendant as partnership monies. Indeed, the Plaintiff admitted “呢筆錢係屬於[the Partnership Business]嘅錢，係經[the Plaintiff’s]自己[Tung Hing]度轉入去嘅”, which is reinforced further by her evidence that (1) any Payments used for paying Operation Expenses became partnership expenses to be set-off against partnership income, (2) any unused Payments initially intended for payment of Operation Expenses in the hands of the 1st Defendant were monies he owed to the Partnership Business, and (3) the 1st Defendant in misusing the Payments for his own purpose were in fact misusing partnership monies. It is evident that even the Plaintiff’s own evidence does not support the alleged implied obligation under the July’01 Agreement to repay the Sum to the Plaintiff. 135.I am satisfied that according to the general partnership principles discussed in paragraphs 136-138 below (“General Principles”), there is no trustee-beneficiary relationship between the Plaintiff and the 1st Defendant. The Sum Payments were nothing more than items to be included in the Final Accounts, and upon taking such accounts it would be open to the 1st Defendant to show (if he could) that the Sum Payments were wholly or partially his or that a larger sum was due to him. So pending Final Accounts that would take into account inter alia the 1st Defendant’s remuneration as CT Driver, his share of the partnership profits/losses (if any), and his share of the partnership income, the Plaintiff’s claim is premature. Further, even if there were any trustee-beneficiary relationship (which I disagree), the beneficiary would at best be the Partnership Business and not the Plaintiff, and the Plaintiff had no locus standi to maintain the present claim against the 2nd Defendant. 136.The General Principles are summarised in the leading authority of Richardson v The Bank of England (1838) 4 My & Cr 165, 41 ER 65, 67-68 :
(see also Meyer and Company v Faber (No.2) [1923] 2 Ch 421, Gopala Chetty (since deceased) and anor v Vijayaraghavachariar [1922] 1 AC 488 and Lindley & Banks on Partnership 18th ed (2002) para.23-75 at pp.612-613) 137.In Green v Hertzog and ors [1954] 1 WLR 1309, after the partnership business was wound up, one of the partners sought to recover from her former partners sums she advanced to the partnership which she claimed as money lent by her to the partners or the partnership. It was held the action was misconceived in that no action could lie against the partners individually since the liabilities of the partners were joint, and money lent to a partnership of which the person advancing the money was a partner could only be recovered in proceedings for taking accounts in accordance with the English equivalent of section 46 of the Partnership Ordnance Cap.38. 138.These principles have been applied consistently in Hong Kong (see Chan Sau-kut and anor v Gray & Iron Construction & Engineering Co (a firm) [1986] HKLR 84, Shen Dong Sung v Thomas Tak Suen Shuen alias Shum Chuk Suen Thomas and ors HCA1612/1986, Jones J (unreported, 11th March 1987), Leung Wing Yiu v Siu King Yuen and ors [2003] 2 HKLRD 21, and Cheung Man Kok also known as Christine Koo v Fenn Kar Bik Lily HCSD25/2003, Deputy High Court Judge J Poon (as he then was) (unreported, 11th December 2003)). 139.In light of the above authorities, I disagree with Mr Ho’s submission that only the Plaintiff was beneficially entitled to the partnership capital and the 1st Defendant was not entitled to any part of the capital before the dissolution. 140.Mr Ho argued that notwithstanding the Plaintiff’s evidence in paragraph 134 above the present case was an exception to the General Principles, ie the Plaintiff was solely entitled to the Sum because of the 1st Defendant’s independent promise or specific agreement to pay her the Sum if there were no supporting documents for the Sum Payments. He submitted that such promise/agreement took the Sum outside the taking of partnership accounts that accordingly became unnecessary (see Brown v Rivlin CA Civ (unreported, 1st February 1983), Jackson v Stoppard (1834) Exch of Pleas 361, Coffee v Brian (1852) 3 Bingham 54 and Plaza Company and ors v Tso Kar Yin [1959] HKLR 390). 141.It is only in unusual circumstances that the court will permit one partner to sue another otherwise than in an action for an account. In Brown, one partner sued the other partner after dissolution of the partnership and obtained summary judgment for various sums said to be due from the other partner. On appeal Eveleigh LJ held the partnership agreement did not allow ordinary partnership accounts to be taken since it was expressly agreed that the outgoing partner had no share in the partnership assets on leaving the partnership. There was no purpose in taking partnership accounts. 142.In Coffee, the three partners were concerned in the sale of butters. One partner sold the butters and requested another partner to accept bills for the firm. He refused to do so without some security. It was eventually agreed he would pay the bills on assurance that he would be repaid out of the proceeds received of the butters sold. It was held that the money might be recovered from the partner who sold the butters as money had and received to the use of the partner who accepted the bills. Best CJ said at p.55 as follows :
143.In Jackson, the partners agreed to divide the materials and utensils of their business, each taking one half in value, article by article, according to a valuation to be made. After the valuation the defendant agreed to take the whole at the valuation. It was held his partner had an immediate right of action for one half of the value. Bayley B said at p.365 as follows :
144.It is significant that in Coffee the express agreement of the partners provided that certain monies in the hands of one partner would be held as security for the bills (ie monies had and received to the use of the partner who accepted the bills), which took such monies outside joint partnership property. Likewise in Jackson Bayley B made clear there was a “separate transaction” being an express agreement by one partner to purchase the other partner’s share in the partnership assets against a promise to pay value for the same. So it was pursuant to such separate bargain that the monies in the hands of the purchasing partner were taken outside the partnership context and held as monies to the use of the selling partner. 145.Here, even on the July’01 Agreement which I have rejected, the agreement was within the partnership context (ie the Payments would be for the purpose of the Partnership Business with supporting documents to be submitted by the 1st Defendant). It does not follow that an alleged breach of such agreement, say, by failing to submit supporting documents, amounts to an express agreement amongst the partners to bring the monies outside the partnership context (as in Coffee or Jackson). Further, unlike Brown, it cannot be said that the 1st Defendant had no share in the partnership assets. 146.Mr Ho argued the present exception to the General Principles arose from the 1st Defendant’s misappropriation or misuse of the Sum Payments so that the Sum ought to be returned to the Plaintiff on the basis of breach of fiduciary duty, breach of trust “or total failure of consideration” (see paragraph 10 of Ho’s Law Submissions). I pause to note that the complaint of total failure of consideration is irrelevant since it does not support the present cause of action of accessory liability premised on a trust or fiduciary relationship. 147.But even if there were any misappropriation or misuse (which I disagree), Final Accounts are still necessary. No matter how badly the 1st Defendant behaved, I cannot see why (when it was said the Partnership Business suffered losses) the Plaintiff would be able to recover the entirety of the Sum Payments without taking into account her share of the partnership losses. The inequity of such proposition is underlined by Lord Millett in Hurst v Bryk and ors [2000] 2 All ER 193, 203 as follows :
148.On the local front, Shen Dong Sung, Leung Wing Yu and Cheung Man Kok also highlight the fact that even when it was alleged (or even proved) there was serious wrongdoing by one or more partners (eg misappropriation or conversion of funds/assets), the appropriate course was for accounts to be taken. 149.Mr Ho next argued that by reason of the July’01 Agreement (which I have rejected) the Sum Payments were subject to a Quistclose trust in favour of the Plaintiff (but not the Partnership Business) so that the Sum Payments ought to be “returned to the Plaintiff before dissolution of the partnership”. 150.Essentially, a Quistclose trust is a resulting trust that arises when funds are transferred to a recipient (eg monies given by a lender to a borrower) on terms whereby they are not to be at the free disposal of the recipient, but are to be used only for specific purpose(s). The money “remains the property of the lender unless and until it is applied in accordance with his directions and insofar as it is not so applied, must be returned to him” (Typhoon 8 Research Ltd. v. Seapower Resources International Ltd and anor [2002] 2 HKLRD 660, 669). 151.The nature of a Quistclose trust was explained and analysed by Lord Millett (dissenting on a point immaterial to the present discussion) in Twinsectra Ltd as followsat pp.396-397 and 403 :
152.Given that a Quistclose trust “[like] all resulting trusts, …… arises when the lender parts with the money on terms which do not exhaust the beneficial interest” and it is “…… a default trust which fills the gap when some part of the beneficial interest is undisposed of and prevents it from being “in suspense”” (per Lord Millett in Twinsectra Ltd at para.102 at p.404), it does not sit well with Mr Ho’s contention that the character of the Sum Payments only changed from partnership monies to trust monies upon their misappropriation or misuse. 153.In any event, I have found that the Sum Payments were not subject to any trust (see paragraphs 127-131 above). But even if there were a Quistclose trust, the beneficial interest in the Sum would have been vested in the Partnership Business as the party who advanced the Sum Payments to the 1st Defendant irrespective of the ultimate sources of the funds referred to in paragraph 134 above. Mr Ho did not cite any authority for suggesting that the beneficiary of such trust (which he submitted arose on the making of the advance Payments) would upon misappropriation or misuse change identity from the original beneficiary (ie the Partnership Business) to another party (ie the Plaintiff). In my view, the Plaintiff has no locus standi to maintain the present claim. 154.Mr Ho’s second legal proposition in paragraph 11 of Ho’s Law Submissions argued that Clause 3 of the Dissolution Agreement expressly confirmed the 1st Defendant misappropriated the Clause 3 Sum which but for an accounting error should in fact be the Sum and which did not have any supporting documents. I will deal with the construction of Clauses 3 and 4 in paragraphs 168-175 below. Suffice to say here that such argument, which is premised on the 1st Defendant’s misappropriation of the Sum Payments (which contention I have rejected), necessarily fails. 155.Mr Ho in paragraph 17 of Ho’s Law Submissions noted that Brown left open the possibility of attacking the General Principles upon the basis that the monies in question were stamped with a fiduciary character being monies in the nature of trust that would not affect the division of assets. Such argument is plainly drawn from a similar argument referred to in the judgment of Eveleigh LJ in Brown as follows :
There is simply no basis for suggesting that the Sum Payments were client’s monies and I have found they were not subject to any Quistclose trust. XXIII. Necessity of Final Accounts 156.Despite the Plaintiff’s assertion that the Partnership Business suffered losses, it is quite impossible to say on the evidence whether or not on taking Final Accounts the 1st Defendant will stand debtor or creditor and, if the former, the extent of his liability. In my view, Final Accounts are essential for ascertaining the rights and liabilities of the Plaintiff and the 1st Defendant. (1) Operation Expenses paidby the 1st Defendant 157.As discussed in paragraph 117-123 above, Operation Expenses should be an item in the Final Accounts. (2) Remuneration for the 1st Defendant’s driving duties 158.The Wages Statements, Delivery Records and Invoices plainly showed that the 1st Defendant actively worked as CT Driver during the term of the Partnership Business and should be entitled to remuneration. His wages should be an item in taking Final Accounts. 159.Wages Statements The Plaintiff prepared a Wages Statement titled “良 司機” for August 2001 (E1124, “D1 Wages Statement”) that described the Local Delivery jobs of “取柜@150.00”, “交柜@150.00”, “加貨@100.00” and “吊柜” performed by “良” as well as the share of transportation charges earned by “良”. The Plaintiff at first claimed “良” merely meant the 1st Defendant arranged other CT Drivers to carry out the delivery jobs listed therein, but this is rebutted by, say, the corresponding Wages Statement for CT Driver 紫陽 for August 2001 (E1122) that (a) recorded 1st Defendant “提柜” and “交柜” in respect of the same containers listed in the D1 Wages Statement and (b) “代交收渡柜10次” was deducted from the income of紫陽 so there was no duplication in calculation of remuneration of such delivery jobs. This clearly showed the 1st Defendant (and not another CT Driver) performed and earned remuneration for such Local Delivery jobs. In the end, the Plaintiff conceded she did not know whether it was the 1st Defendant or other CT Drivers who performed such Local Delivery jobs, and further conceded the 1st Defendant was entitled to receive the remuneration under “良佔運費” in the D1 Wages Statement either for himself or for the relevant CT Driver procured by him. She further confirmed there were similar arrangements by the 1st Defendant during the term of the Partnership Business. 160.Delivery Records The disclosed Delivery Records of March and April 2002 (see paragraph 103 above and paragraphs 184-186 below) recorded inter alia the particulars of delivery jobs executed by CT Drivers, their wage entitlements including “應收人工” and their incurred Misc Expenses. The Plaintiff agreed the Notations “良” or “CY良” meant the 1st Defendant either personally performed or arranged other CT Drivers to perform the delivery jobs. She reiterated that “個「良」字嗰啲我就當係佢做架喇” so that he should receive the wage entitlements. 161.Invoices Some of the Invoices with the Notation “良” marked against some of the itemised delivery jobs plainly showed they were carried out by the 1st Defendant. 162.Remuneration Given the above contemporaneous documents, the Plaintiff was constrained to accept the 1st Defendant was entitled to wages as CT Driver. She said the 1st Defendant’s remuneration “係計咗個數喺度”, but “唔係每個月同佢結算喎”. But given my rejection of the alleged understanding between the Plaintiff and the 1st Defendant described in paragraph 102 above and the dissolution of the Partnership Business, the 1st Defendant’s remuneration as CT Driver should be taken into account in taking Final Accounts. 163.I prefer the 1st Defendant’s evidence that although he submitted details of the delivery jobs he executed and the supporting documents for the incurred Misc Expenses to the Plaintiff, he did not receive any wages as such because she did not punctually calculate or pay his wages. But instead of chasing for his wages he asked for and received Payments in excess of Operation Expenses for his personal use, which he believed would be set-off against his entitlements upon taking partnership accounts. The short answer to Mr Ho’s objection that the 1st Defendant did not complain to the Labour Department against the Plaintiff is that strictly speaking he was not her employee and his wages were payable by the Partnership Business of whom he was a co-partner together with the Plaintiff. (3) Income of the Partnership Business 164.After CT Drivers performed the delivery jobs, the 1st Defendant would submit Delivery Records and supporting documents for incurred Misc Expenses to the Plaintiff for preparing/issuing Invoices in the name of Tung Hing that bore a printed instruction to customers to issue cheques payable to Tung Hing. The Plaintiff deposited cheques or cash from customers into the SHB PB Savings and/or Current Accounts. On occasion she would deposit partnership income into the SCB TH Account and later transfer such sums back to the SHB PB Savings and/or Current Accounts. The 1st Defendant on receiving customers’ cheques would also pass them to the Plaintiff for deposit. 165.Mr Wong submitted that it was not clear how much the Plaintiff actually received on behalf of the Partnership Business out of the total receivables of HK$961,167.00 in respect of the monthly “應收客户賬款” from July 2001 to April 2002 prepared by the Plaintiff (E878-E886). The disposal of post-dissolution income will be discussed in paragraph 180 below.Clearly partnership income should be taken into account upon taking Final Accounts. XXIV. Dissolution of the Partnership Business 166.The Partnership Business was dissolved in May 2002. The Plaintiff claimed that by end of April 2002 there was no improvement in the Partnership Business, but she could no longer afford to advance monies. She lost faith in the 1st and 2nd Defendants, so she decided to put an end to the Partnership Business. However, I prefer the 2nd Defendant’s case that the dissolution came about because of the Plaintiff’s dispute with a customer in/about April 2000. After all, notwithstanding the Plaintiff’s allegation that she lost confidence, she still continued to make Payments till 2nd May 2002 (see items 77-80 of the Schedule). 167.On 4th May 2002, the Plaintiff together with Mr Chu and her brother brought inter alia the Dissolution Agreement, Account Statement and an undated statement of assets (“Assets Statement”) (collectively, “Three Documents”) (in duplicate) to the Property for the 1st Defendant’s signature. When they arrived, the 2nd Defendant was still asleep. After she got up she was a bit apprehensive since there was no prior notice of the visit and she did not know what was happening. I accept the Plaintiff told the 1st Defendant to sign inter alia the Three Documents, and he glanced at them briefly and signed quickly. Then the Plaintiff’s brother and the 2nd Defendant signed the Dissolution Agreement as witnesses. I find that although the 2nd Defendant wanted to look at the Dissolution Agreement, “但係[the Plaintiff]話「妳唔需要咁注重去睇」，[the Plaintiff ]話「妳只不過妳見證佢哋簽名嘅之嘛」，[the 2nd Defendant]話「係咪唔關我事架?」[The Plaintiff]話「係呀，妳見證嘅之嘛，我都唔係同妳合夥做生意」 …… 仲有[the Plaintiff]講話「我細佬都係咁簽喇」，咁樣囉”. It was not mentioned in any of the Three Documents that the 2nd Defendant had any role in the Partnership Business or was in any way responsible for paying the Clause 3 Sum to the Plaintiff. The 1st Defendant retained a duplicate set of the Three Documents. 168.I now turn to the Dissolution Agreement which provides inter alia as follows :
169.Mr Ho relied on Clause 3 to demonstrate the 1st Defendant misappropriated the Clause 3 Sum (which he took from “Tung Hing and/or the Plaintiff”) consequent on his failure to provide supporting documents. In my view, even the Plaintiff’s own evidence showed she was not certain she was entitled to the Clause 3 Sum let alone the Sum. 170.The Plaintiff admitted that the Clause 3 Sum was only a rough calculation because of incomplete documentation in May 2002, and such sum could be increased or reduced depending on subsequent discovery of, say, (a) more Payments that were without supporting documents and/or (b) more supporting documents for the Payments that had already been made. So as at 4th May 2002 the Plaintiff already anticipated possible revision of the Clause 3 Sum upwards or downwards after further checking and set-off. 171.I find that in such context the provision in Clause 4 calling for an accountant to prepare/audit partnership accounts to verify the amount due from the 1st Defendant as partner and for his paymentof the amount due after such accounts makes common/commercial sense. In my view, Clause 4 was included as a practical means to resolve the uncertainty over the Clause 3 Sum, so Clauses 3 and 4 should be read together. Indeed, this is in line with the plaintiff’s own evidence (see paragraph 174 below). In the circumstances, no implied promise to repay the Clause 3 Sum (or the Sum) could be read into Clause 3 in face of the express promise in Clause 4 to pay any amount owed after Final Accounts. I therefore accept that on 4th May 2002 the Plaintiff told the 1st Defendant “你—總言之而家拆夥喇，咁你就同我簽咗份野，到時我計咗數，跟住先同你—睇吓大家邊個爭邊個呀”, “你簽咗喇，到時會計師計咗，就會同你對番數” and “欠公司的款項在帳目交給會計師核實後才清還”, which caused him to focus on Clauses 2 and 4 without paying serious attention to Clauses 1 and 3 (which to him were “比較模糊啲囉”). Nevertheless, the 1st Defendant was frank enough to accept with hindsight he had been careless and should have paid more attention. 172.But in an attempt to isolate Clause 3 from Clauses 1, 2 and 4, Mr Ho argued that “東興運輸公司” in Clause 3 referred to Tung Hing whilst “公司” in Clause 4 referred to the Partnership Business, so the Clause 3 Sum (which should have been the Sum) was different from “股東[the 1st Defendant]所欠公司[the Partnership Business]之款項” in Clause 4, which in turn meant the Final Accounts contemplated in Clause 4 were not a pre-condition for the implied liability under Clause 3 to pay the Clause 3 Sum (or the Sum). 173.In my view, the above argument does not even stand up on the Plaintiff’s own evidence. “公司” was referred to twice in the phrase “股東[the 1st Defendant]所欠公司之款項於公司結束後 ……” in Clause 4. The Plaintiff admitted that the latter “公司” referred to the Partnership Business and the former “公司” referred to both the Partnership Business and Tung Hing because she thought “我嗰啲錢係轉落咗個合夥公司嗰處吖嘛” and the Payments “即係當合夥公司借 – 借咗畀合夥公司嚟畀[the 1st Defendant]用嚟做雜支囉”. But this is a clear misconception because as a matter of law (see paragraphs 136-138 above) once the Plaintiff/Tung Hing advanced monies to the Partnership Business, such monies became partnership monies and were advanced as such by the Partnership Business (or the joint partners) to the 1st Defendant irrespective of the ultimate sources of the funds referred to in paragraphs 134 above. I have no doubt “公司” in Clause 4 where it appeared twice referred to the Partnership Business. 174.The Plaintiff admitted the Final Accounts contemplated in Clause 4 were to audit/verify “[the 1st Defendant]攞走咗公司嗰啲，冇單據嗰啲”, so “股東[the 1st Defendant]所欠公司之款項” in Clause 4 was the same monies as the Clause 3 Sum. In such circumstances, the reference to “東興運輸公司” in Clause 3 necessarily meant the Partnership Business. The following evidence of the Plaintiff is instructive :
175.The Plaintiff’s evidence above defeats Mr Ho’s arguments. I accept the 1st Defendant’s evidence that although “東興運輸公司” in Clause 3 superficially referred to Tung Hing, it actually meant the Partnership Business because the Payments were partnership monies. I note the loose language used by the Plaintiff in the Dissolution Agreement and the Invoices (ie “東興運輸公司(貨柜部)”, “公司” and “東興運輸公司” all referred to the Partnership Business). In the circumstances, Clause 3 does not evidence any misappropriation or misuse of the Sum by the 1st Defendant. XXV. Final Accounts 176.In any event, neither the Plaintiff nor the 1st Defendant engaged any accountant to prepare Final Accounts, so any claim against the 1st Defendant let alone the 2nd Defendant as accessory must be premature. 177.Even if there were insufficient supporting documents and the accounting information were too confusing (which I disagree), it does not mean the Plaintiff could not instruct an accountant to prepare Final Accounts by requiring the 1st Defendant to give credit for any Sum Payment allegedly without explanation or supporting documents from the 1st Defendant. Further, it is also not necessary to have the 1st Defendant’s consensus for instructing an accountant to prepare Final Accounts. I refer to Hurst where Lord Millett said at p.202 as follows :
XXVI. Post-dissolution events 178.After dissolution of the Partnership Business, the Plaintiff continued with the cross-border transportation business to enable two CT Drivers to earn income to purchase CTs of the Partnership Business by making instalment payments of the purchase price. She could not remember the actual sale proceeds she received. 179.The Assets Statement signed by the Plaintiff and the 1st Defendant acknowledged that the Plaintiff lent HK$335,000.00 in cash to enable “公司購入資產” (ie purchase of CTs for the Partnership Business). The Plaintiff admitted that such CTs were partnership assets and she stood creditor in respect of her advance of HK$335,000.00 to the Partnership Business. Her insistence at the same time that such CTs or their sale proceeds were hers or Tung Hing’s illustrates her misconception (see paragraph 173 above). In my view, her advance to the Partnership Business and the eventual sale proceeds of the CTs are items in taking Final Accounts. 180.After the dissolution, the Plaintiff continued to receive transportation charges which she deposited into the SCB TH Account without any transfer back to the SHB PB Savings and/or Current Accounts. But in the present proceedings she did not disclose any documents in relation to her receipt of such post-dissolution partnership income. Although the Plaintiff accepted that such partnership income should be set-off against partnership expenses (see Clause 1), she claimed such set-off had already been made against many unpaid bills of the Partnership Business without identifying or particularising such bills. In my view, such post-dissolution income is another item in taking Final Accounts. 181.Having considered the totality of the evidence, I reject the Plaintiff’s claim that between May and July 2002 the 2nd Defendant spoke to the Plaintiff by telephone and assured her all monies claimed by her and owed by the 1st and/or 2nd Defendants would be repaid. There was no commercial relationship that would justify the 2nd Defendant giving such assurance. It was also pointless to do so because with her limited income from her part-time job and from her siblings she would not have been above to satisfy such alleged assurance. XXVII. 2nd Defendant’s alleged dishonesty (1) Plaintiff’s case 182.The Plaintiff claimed that after commencement of business of the Partnership Business she did Back Office Work. But because (a) the information in the Delivery Records supplied by the 1st and 2nd Defendants was too confusing, (b) many items of Operation Expenses had no supporting documents, and (c) the Partnership Business was then operating at a loss, the Plaintiff in/about November 2001 requested the 2nd Defendant to work at the office to help her manage the Partnership Business, but the 1st Defendant said the 2nd Defendant could only work from home. Then at the Feb’02 Meeting at the office, the Plaintiff requested the 2nd Defendant to work at the office to manage the Partnership Business whilst she continued to issue Invoices and pay Operation Expenses, to which the 2nd Defendant agreed. When the Plaintiff asked the 2nd Defendant about the Payments during the Feb’02 Meeting, the 2nd Defendant replied there should be supporting documents and she would give them to the Plaintiff after the 1st Defendant sorted out the Operation Expenses. In/about March 2002, the 2nd Defendant started to take over Back Office Work, designed a proforma Delivery Record, and used the computer to prepare documentation and calculate wages for CT Drivers. She also directly liaised with the Plaintiff to “對數”. (2) My view 183.In light of my aforesaid analysis/findings and of the matters discussed below, I prefer the 2nd Defendant’s case that she had no communications with the Plaintiff in November 2001 and/or February 2002, and had never been to the office. (3) Delivery Records 184.On 4th May 2002, the Plaintiff took away various Delivery Records for the period from 14th March to 13th April 2002 from the Property. As explained in paragraph 160 above, a Delivery Record was an internal administrative record prepared from primary information provided by CT Drivers in relation to each executed delivery jobs. The Delivery Records would be submitted to the Plaintiff together with supporting documents for incurred Misc Expenses for calculating wages and issuing Invoices. In/about March 2002, the 1st Defendant asked the 2nd Defendant (who was more skilled with computers) to design a proforma Delivery Record for his use. After designing the proforma, she gave it to the 1st Defendant who made photocopies for use as blank forms. In March/April 2002, the 1st Defendant sometimes prepared Delivery Records by hand and sometimes asked the 2nd Defendant to input data from his handwritten versions to create computer-typed versions (some of which bore the 2nd Defendant’s manual corrections of typographical errors/omissions). The 2nd Defendant returned the computer-typed versions to the 1st Defendant, who submitted them together with supporting documents from CT Drivers to the Plaintiff. 185.The 2nd Defendant agreed that at about the same time she wrote out the top section of “4月份司机取公司什支” (E1182) that set out the Misc Advances given to two CT Drivers for March and April 2002. She did so at the request of the 1st Defendant who often came home with scraps of loose paper. Time and again she reminded him to make better records, so when he asked her to help mark down particulars from his scraps of paper she did so because she knew “…… 我老公做嘢不嬲都係「Ya Ya Wu」架”. 186.I find the 2nd Defendant offered nothing more than home clerical help to her husband. This did not show dishonesty on her part. First, she only copy-typed primary information provided by the 1st Defendant. Secondly, the Delivery Records were merely internal administrative records that did not involve calculations of overall partnership income/expenses. Thirdly, it is unclear how designing the proforma and copy-typing the Delivery Records in March/April 2002 are relevant to her (a) alleged knowledge that the Sum Payments deposited into the Three Accounts were not at the free disposal of the 1st Defendant, and/or (b) alleged management of the Partnership Business during its term. (4) Debt collection 187.I disagree that in/about mid-November 2001 the 2nd Defendant accompanied the Plaintiff and the 1st Defendant to Kwai Chung in an unsuccessful attempt to collect outstanding transportation charges from 恆發運輸公司. The 1st Defendant frankly agreed he introduced such customer to the Partnership Business, but I accept it was part of the Plaintiff’s Back Office Work to follow up on Invoices and if necessary to chase for payment. (5) Telephone charges 188.In/about August 2001, the 1st Defendant submitted to the Plaintiff various statements of account (some in the name of the 2nd Defendant) for reimbursement of telephone charges. I disagree this shows that the 2nd Defendant was involved in the Partnership Business. 189.At the material time, the telephone service plan for local calls for D1’s Phone was in the 1st Defendant’s own name. The 2nd Defendant was the applicant for the umbrella telephone service plan for overseas call for their home telephone, her own mobile telephone (“D2’s Phone”) and D1’s Phone. The 1st Defendant asked the 2nd Defendant to arrange payment of the telephone charges and then give him the account statements for seeking reimbursement of the charges that were for partnership purpose. 190.Most CT Drivers and customers would call the 1st Defendant on D1’s Phone. The 1st Defendant primarily used D1’s Phone for business calls to CT Drivers and “報關員” at “蛇口”/Shenzhen, but would use the New Phone as back up or D2’s Phone (if she were with him) when the battery and/or telephone time of D1’s Phone ran low. I find the 2nd Defendant would not make business calls to CT Drivers. Indeed, the account statement of 8th September 2001 showed only a few telephone calls on D2’s Phone over a few days, which is hardly sufficient to establish that the 2nd Defendant managed the Partnership Business. 191.At the 1st Defendant’s request, the 2nd Defendant also applied for mobile telephone numbers for his colleagues (ie CT Drivers employed by the Partnership Business) because they expressed admiration for the nice mobile telephone numbers she got for the 1st Defendant. These mobile telephone numbers were used for partnership business. She paid the relevant charges and gave the receipts to the 1st Defendant to submit for reimbursement. I do not find such arrangement sufficient to show that she managed the Partnership Business. (6) Sum Payments and Mortgage Repayments 192.The 2nd Defendant frankly accepted that most monies deposited into her personal bank accounts (including the SCB D2 1st Account) largely came from the 1st Defendant. She also agreed that the bank statements for the SCB D2 1st Account revealed (a) there were transfer deposits to such account from the SCB D1&2 Joint Account and (b) Mortgage Repayments were debited from such transfer deposits. But at the material time she just assumed the transfer deposits were from the 1st Defendant and did not check their sources. 193.The Mortgage Repayments were not always paid punctually. Sometimes there were insufficient monies for Mortgage Repayment (eg December 2000 and May 2001), but such outstanding sum would be cleared by a debit of two months’ worth of Mortgage Repayment in the following month (eg January and June 2001). Sometimes payment was late (eg the sum of HK$8,337.82 due in December 2000 was debited on 18th January 2001). Although the 2nd Defendant preferred regular payment to avoid late payment interest, she would not panic when there were insufficient monies for a particular month because she was used to the irregular timing of the 1st Defendant’s wage payments throughout his career as CT Driver. She knew he would catch up with Mortgage Repayments when he received his wages. Indeed, the 1st Defendant continued to be responsible for the Mortgage Repayments until he went bankrupt. 194.In my view, even though the 2nd Defendant assumed the monies deposited in her personal bank accounts came from the 1st Defendant, she would not have known they were not at his free disposal. There were no sufficiently suspicious circumstances that would have reasonably and/or objectively caused her to make enquiries. 195.I accept the 2nd Defendant did not have prior notice of deposit of the Sum Payments into the Three Accounts. In any event, there was no reason for her to doubt the monies given to her or transferred to her personal bank account(s) by the 1st Defendant for household expenses and Mortgage Repayments were not his. She knew the 1st Defendant worked full-time for the Partnership Business. She believed (which I find to be objectively reasonable) he would receive remuneration for his work and such remuneration would be deposited in the SCB D1&2 Joint Account. The 2nd Defendant was a daughter, wife and mother with modest income from her part-time job and from her siblings whilst the 1st Defendant was the main breadwinner of the family. In all the circumstances, it was improbable that the 2nd Defendant thought or suspected the 1st Defendant would not have any remuneration or earnings pending the Partnership Business turning profitable. Furthermore, the amounts given or transferred by the 1st Defendant were not suspiciously large or obviously disproportionate to the usual income of CT Driver. The irregularity in the timing of such payments/deposits by the 1st Defendant was also consistent with the 2nd Defendant’s experience of the lack of punctuality in relation to his wage receipts as CT Driver. 196.Further, as far as the 2nd Defendant knew, the monies in SCB D1&2 Joint Account comprised not only partnership monies intended for Operation Expenses but also the 1st Defendant’s personal monies, eg (a) his remuneration received from the Partnership Business, (b) his earnings from his previous employments as CT Driver, (c) monies which the 2nd Defendant transferred back to him at his requests (see paragraph 197 below), and (d) the proceeds of a personal loan of HK$29,400.00 from SCB deposited in the SCB D1&2 Joint Account on 8th May 2001. 197.I find the above to be usual familial financial transfers/ deposits which do not support any suggestion of dishonesty. Indeed, the normalcy of such transactions is also reflected by the fact that the 1st Defendant would sometimes ask the 2nd Defendant to give back monies from the payments/transfers he deposited into her personal bank account(s)for his personal use. For instance, the 2nd Defendant paid him the following sums by transfer deposits from the SCB D2 1st Account to the SCBD1&2 Joint Account :
198.In my view, there is no sufficient evidence of dishonesty on the part of the 2nd Defendant and no objective basis for any suspicion by the 2nd Defendant that the 1st Defendant misappropriated or misused the Sum Payments. It would be unreasonable to expect her to ask her husband or the Plaintiff to clarify the source of each payment/transfer to her for household expenses. The 2nd Defendant put it succinctly when she said “我點解問[the Plaintiff]? 我同佢不嬲都冇兩句嘅，佢男家啲人”. I disagree with Mr Ho’s submission that the 2nd Defendant’s failure to make enquiry reflected blind-eye dishonesty. XVIII. Conclusion 199.The Plaintiff’s claim is dismissed. There is no reason why costs should not follow event. Save for the matter referred to in paragraph 201 below, I grant a costs order nisi that the Plaintiff do pay the 2nd Defendant’s costs of the action (including all costs reserved, if any) to be taxed if not agreed with certificate for counsel. I also grant legal aid taxation of the 2nd Defendant’s own costs until 30th April 2007 when her legal aid certificate was discharged. 200.I would like to say a few words about the trial bundle. The initial trial bundle that comprised four box files and one paper folder of over 860 pages failed to comply with Practice Direction 5.6 which requires documents to be arranged in chronological order from the front and paged consecutively. Unfortunately, apart from the pleadings and court documents, the initial trial bundle was prepared on the basis of witness statements and their exhibits. The first, second and third witness statements of the 2nd Defendant comprising 492, 9 and 208 pages were identified in the index as such, but their respective 117, 1 and 7 exhibits were not even listed. It was a hopeless task to look for any document within the trial bundle. At my directions a revised trial bundle was prepared and the 2nd Defendant added a further documents bundle. This highlights the need for compliance with Practice Directions 5.6. Although I have reserved the issue of costs in relation to the preparation of the trial bundle, it is perhaps unnecessary to deal with this issue since I have made an adverse costs order nisi against the Plaintiff. 201.The other costs issue relates to the preparation of the witness statements. As noted above, the 2nd Defendant’s witness statements were voluminous, but a large portion of her first witness statement (about 100 pages and 80 exhibits) described and dealt with the Notations in the Plaintiff’s Schedule and Payment Records for each and every Payment listed therein. Since the Plaintiff’s Schedule and Payment Records emanated from the Plaintiff, it is difficult to envisage what dispute would arise from the factual existence of the aforesaid Notations. As it turned out there was none. Such information could easily have been presented in the form of the Schedule (comprising four pages) together with a short summary of the knowledge and/or observations of the 1st and/or 2nd Defendants. Further, instead of perusing and (where appropriate) adopting the 2nd Defendant’s witness statements, the 1st Defendant’s witness statements (which bore close similarity to the narrative information and exhibits of the 2nd Defendant’s witness statements) largely repeated the contents thereof. Plainly, party and party costs in relation to such matters need to be addressed, which costs do not necessarily follow event. Both counsel asked for leave to address on this matter. In the circumstances, I refrain from making any order nisi on this cost issue. It is hoped that both parties can come to some sensible understanding on this issue. If not, there be liberty for either party to restore this cost issue before me within twenty-one days.
Representation : Mr Simon Ho instructed by Messrs Huen & Partners for the Plaintiff Mr Damian Wong instructed by Messrs Benny Kong & Peter Tang for the 2nd Defendant Schedule
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Cases cited in this judgment
Further hearings and rulings under DCCJ 2739/2003