Leung Tong Fuk v. Chan Yuk Kwun

[English Translation – 英譯本]

1994 No.A6389

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

CIVIL ACTION

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BETWEEN

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Coram: Hon Mr Justice Yeung in Court

Dates of hearing: 28 to 31 October 1996

Date of judgment: 12 November 1996

JUDGMENT

1. Leung Tong Fuk, the plaintiff herein, instituted proceedings in this Court on 1 July 1994, claiming against the defendant Chan Yuk Kwun for the following:

(1)   50% interest in shop no. 108 on 1^st floor, Golden Computer Centre (高登商場), the current value of which is approximately HK$750,000;

(2)   HK$400,000, being the unpaid price of goods.  The plaintiff is claiming this item on behalf of one Lian Yi Company (transliteration) (聯億公司) of Taiwan;

(3)   $145,000, being the amount obtained by the defendant from the sale of the plaintiff’s goods;

(4)   $70,000, being the sum payable by the defendant to the plaintiff upon dissolution of a partnership.

Background:

2. The defendant Chan Yuk Kwun is a brother-in-law of the plaintiff Leung Tong Fuk.  From 1982 to July 1987, the two of them carried on the business of selling computer components.  In the course of their partnership business, they run a number of shops, including Hung To Electronics Company (transliteration) (鴻圖電子公司), Kai Nin Trading Company (transliteration) (佳年貿易公司), Sydney Computer Company (transliteration) (雪梨電腦公司) and Man Sun Company (transliteration) (萬新公司).  Although their names were different, these companies carried on the same kind of business.  At the early stage, they sold computer components and assembled computers for customers.  The computer components came from Taiwan, with the main supplier being Lian Yi Computer Company of Taiwan (Lian Yi).  In mid 1985, as a result of disputes over payment for goods, Lian Yi ceased to supply goods to the partnership business, which then became one of repairing computers for customers.  The business went on until July 1987 when the partnership was brought to an end.

3. The number of shops gradually reduced during the course of the partnership, and when it came to its final stage, only Hung To Electronics Company remained in operation.  The plaintiff Leung Tong Fuk was the registered owner of that company, but the defendant Chan Yuk Kwun was one of the partners, owning an interest equal to that of the plaintiff.

4. In September 1983, the plaintiff and the defendant purchased shop no. 108 of Golden Computer Centre in their joint names.  The purchase price of $180,000 was fully paid in one lump sum, and the two of them were registered as joint owners.

5. The partnership did not open any bank account.  Expenses were paid in cash or paid through the defendant’s personal account.   Incomes and expenditures were recorded in account books, and the defendant was solely responsible for making the records.  The plaintiff’s main responsibility was to go to Taiwan to purchase computer components from Lian Yi.

6. In March 1985, Lian Yi indicated that it was no longer able to supply goods to Hung To Company because the amount of money owed by Hung To Company in respect of unpaid goods was too large.  At that time, Hung To Company was indebted to Lian Yi for a total of approximately $400,000, including inventories with a value of $290,000 odd and unpaid price of goods at $100,000.  One Mr Chen Jin Nan (transliteration) (陳金男) of Lian Yi said that if Hung To could not settle the debt, the said inventories worth $290,000 odd could be transferred to others pursuant to Lian Yi’s instructions so as to reduce Hung To’s indebtedness to Lian Yi.

7. Subsequently, Lian Yi resumed selling computer components to Hung To, and Hung To did pay the purchase price which totalled over $800,000.  As at December 1985, Hung To owed a total of $420,000 to Lian Yi.  In mid July 1986, Mr Chen Jin Nan of Lian Yi came to Hong Kong to recover the debt from Hung To.  Hung To was only able to pay $20,000 and hence still indebted to Lian Yi for $400,000.

In early 1986, the defendant purchased shop no. 40 of Golden Computer Centre in his own name, paying the purchase price of $345,000 in cash.  Initially, the plaintiff did not know about the purchase.  Later, when he learnt of it, he was deeply concerned and suspected that the defendant lined his own pockets by appropriating the income of Hung To Company.

In mid 1987, the plaintiff complained to the defendant’s children about the defendant’s secret purchase of a shop in his own name.  The defendant and his wife considered that what the plaintiff did impaired the relationship between them and their children.  They took the plaintiff to task for that and said they could not continue to run Hung To in partnership with the plaintiff.  They wanted to dissolve the company.

The plaintiff insisted that if the partnership was to be dissolved, the accounts would have to be thoroughly checked and the business properly wound up.   However, the defendant said that the company was suffering a loss as its goods had been stolen, and hence there was no company asset available for apportionment between the partners.

8. There were repeated disputes between the parties regarding the dissolution of Hung To and the settlement of accounts.  On 7 July 1987 at Tin Tin Club (transliteration) (天天聯誼會), the parties reached an agreement after lengthy negotiations and arguments.  At that time, apart from the plaintiff and the defendant, the plaintiff’s cousin Wu Hing Yin (transliteration) (胡慶賢), the defendant’s younger brother Chan Yuk Pui (transliteration) (陳煜培) and the defendant’s wife Leung Kuk Hing (transliteration) (梁菊馨) were also present.

9. The terms of the agreement between the parties were as follows:

(1)     The defendant was to pay to the plaintiff $217,000;

(2)     The plaintiff was to transfer his interests in shop no. 108 of Golden Computer Centre to the defendant’s wife Leung Kuk Hing;

(3)     The plaintiff agreed to be personally responsible for Hung To’s indebtedness to Lian Yi;

(4)     Neither the plaintiff nor the defendant would seek redress against the other party in respect of the previous business accounts of the partnership.

The plaintiff wrote down the agreement in his own hand (plaintiff’s exhibit no. 7).  It reads as follows:

On 7 July 1987, after Chan Yuk Kwun and Leung Tong Fuk did calculations for the whole day, things are now clear.  Leung Tong Fuk is to receive $217,000 in respect of the period from the commencement of the partnership to 7 July.  As for all interests and all debts owed to the Taiwan company and other companies, even if there is any mistake in the calculations, Leung Tong Fuk is willing to shoulder all responsibilities.  In future, if Leung Tong Fuk mentions to Chan Yuk Kwun again anything about the benefits gained during the partnership in the past, it can be treated as extortion.  Leung Tong Fuk cannot go back on his promise.

On 8 July 1987, both parties went to Messrs. Leo K.W. Lok & Co. where they entered into a written agreement for the dissolution of the partnership.  The agreement reads as follows:

In the matter of the partnership between Chan Yuk Kwun and Leung Tong Fuk in the operation of Hung To Electronics Company, Kai Nin Trading Company and Sydney Computer Company from 1982 to 1987.

Both parties hereby agree to terminate all partnership regarding the abovementioned companies upon the following conditions:

(1) Mr Chan agrees to pay HK$217,000 to Mr Leung before 11 July 1987 as his obligation upon withdrawal from the said companies, and thereafter Mr Chan shall have nothing to do with any liabilities, taxes, payments for goods, profits or losses in connection with the business of the said companies.

(2) Mr Leung agrees to and assures Mr Chan of the following conditions:

(a) Mr Leung shall unconditionally execute the title deed of shop no. 108, Golden Computer Centre, Shamshuipo.  All expenses relating to this title deed shall be borne by Mr Chan.  The said transfer of title to Mr Chan must be executed before 11 July 1987.

(b) The title, deposits for water and electricity charges, interests in the tenancy agreement and rental deposit in respect of the said shop shall all be transferred to Mr Chan.

(c) Mr Chan shall have nothing to do with the payments for goods, government taxes, debts etc. in respect of the said companies.  In future, if any person claims against Mr Chan for any of the [said] sums, Mr Leung guarantees that Mr Chan shall be compensated for any loss [in respect thereof].

(d) In future, neither party shall take action against the other party for any matter relating to the business previously run by the parties in partnership.  The parties hereby make the declarations as per the above.

Thereafter, the two parties entered into another agreement in English for the dissolution of the partnership.  The English version did not differ significantly from the Chinese version; the only difference was that the English version also contained a statement that both parties had checked and agreed on all the receipts and invoices, books and other records relating to the partnership business.

10. Besides taking the above steps, the parties also went to Messrs. Gallant Y.T. Ho & Co. on the same day, i.e. 8 July 1987, to go through the formalities of transferring the plaintiff’s interests in shop no. 108, Golden Computer Centre to the defendant’s wife Leung Kuk Hing, so that the defendant and his wife became the sole owners of the property.

11. Despite the above agreements, the plaintiff and the defendant were unable to resolve all the disputes between them.  In January 1994 the plaintiff instituted proceedings in the District Court against the defendant (DCCJ 207 and 208/1994).

12. In DCCJ 207/1994, the plaintiff claimed that, of the $217,000 which both parties agreed on when they entered into the agreement for the dissolution of the partnership, the defendant had only paid $117,000, and $100,000 was still outstanding.

13. In DCCJ 208/1994, the plaintiff claimed that the defendant sold a batch of computer components of a value of $145,000, that those components had been entrusted to the plaintiff’s company by a Taiwan company for safe custody, and that the defendant failed to return the proceeds of the above sale to the plaintiff.

14. The nature of the reliefs sought in the above District Court actions is the same as that of items 3 and 4 of the plaintiff’s claims against the defendant in the present case.

15. Subsequently, following mediation by the plaintiff’s father, the two parties reached an agreement, whereby the defendant paid $30,000 to the plaintiff, who notified the Court in writing of the discontinuation of the above two District Court cases.

The plaintiff’s causes of action and evidence

(1) The plaintiff alleges that the agreement for the dissolution of the partnership made in July 1987 was void because he had been misled by the defendant into executing the agreement.   When the plaintiff inquired of the defendant about a batch of computer components of a value of $145,000, the defendant replied that the components had been delivered to one Mrs Chow (transliteration) (周太太) upon instructions by Lian Yi.  The plaintiff was therefore under the wrong impression that the debt owed to Lian Yi was reduced from $400,000 to $260,000.  If the agreement for the dissolution of the partnership was void, the plaintiff would still own 50% interest in shop no. 108 of Golden Computer Centre and would also have the right to require the accounts of the former partnership business to be settled afresh.  He claims damages against the defendant for alleged appropriation by the defendant of the business profits during the subsistence of the partnership.

(2) The plaintiff also claims that even if the agreement for the dissolution of the partnership was valid, the defendant has paid only $140,000 odd and still owes him $70,000.  The plaintiff’s evidence is that on 8 July 1987 when the agreement for the dissolution of the partnership was signed, the defendant only paid $82,740 by cheque.  The plaintiff concedes that he signed on the photocopy of the cheque as proof of receipt, but claims that when he signed there was no other writing on the photocopy and that the characters on defence exhibit no. 1, namely “Received from Mr Chan Yuk Kwun the above cheque as [payment of] the remaining sum for all interests upon termination of the partnership business by the two parties” were added after he signed.  Apart from the $80,000 odd, the defendant gave the plaintiff a cheque, post-dated for three months, for a sum of $30,000 on 17 July 1987 when the English version of the agreement for the dissolution of the partnership was signed, and also paid another $30,000 to the plaintiff in 1994 when the plaintiff discontinued DCCJ 207 and 208/1994.  The defendant has therefore paid to the plaintiff a total of $140,000 odd, and $70,000 is still outstanding.

16. In his testimony, apart from making the above allegations, the plaintiff also pointed out that he discontinued DCCJ 207 and 208/1994 because the defendant had promised to continue to discuss with him about repayment of the other debts.

17. The plaintiff has conceded that he has no evidence to verify his suspicion that the defendant lined his pockets with earnings of the partnership business.

18. He produced to the Court exhibits no. 12 and 13 to prove that Hung To Company is still indebted Lian Yi for $400,000 and that he has been authorized to seek recovery of the $400,000 from those concerned.

19. The plaintiff called Mr Chen Jin Nan, the boss of Lian Yi to give evidence that Hung To has been indebted to Lian Yi for $400,000 since 1986 and that to date the debt is still unpaid.

(3)     The plaintiff also claims that he has been authorized by Lian Yi to recover from the defendant a sum of $400,000 being the unpaid price of the goods delivered by Lian Yi to Hung To in 1986.

(4)     Finally, the plaintiff alleges that the defendant sold, without permission, the plaintiff’s computer components which had a total value of $145,000, and he claims compensation against the defendant.

The defendant’s defence and evidence

The defendant firmly denies the plaintiff’s accusations.  He says that during the term of the partnership business, the plaintiff was responsible for purchasing goods, while he was responsible for marketing, managing finance and keeping company accounts.  Initially, when the volume of the transactions was small, the net proceeds (sale price less expenses) of every sale of the goods purchased were shared equally between the two of them following the sale.  Subsequently, the business volume increased and Lian Yi allowed them credit period, but the sale proceeds were still settled between them on a transaction-by-transaction basis.  With a number of shops but a shortage of manpower, the company accounts were incomplete.  The defendant also says that due to improper management and the frequent occurrence of theft, by the late stage of the partnership as much as 15% to 20% of the goods were lost, the value of which was $100,000 odd.

20. Subsequently, although most of the shops closed down and only Hung To remained, business on the whole was poor, and Hung To was no exception.  By October 1985, the main business of Hung To was confined to computer repairs.  The defendant says that although he owned shop no. 108 jointly with the plaintiff, the purchase price of the shop was solely paid by him.

21. Sometime in June or July 1986, the plaintiff, having learnt that the defendant had purchased shop no. 40 of Golden Computer Centre, suspected that the defendant was lining his pockets with the earnings of the partnership business.  Disputes arose between the plaintiff and the defendant, following which they decided to dissolve the partnership.

22. On the night of 7 July 1987, the two of them negotiated in Tin Tin Club about winding up the partnership business, in the presence of some other people.  The plaintiff made calculations according to the accounting records provided by the defendant.  He first worked out that upon dissolution of the partnership business the defendant should pay him $132,000, and defence exhibit no.5 was written out.  Then he found that there were mistakes in the calculations and, after re-doing the calculations, confirmed that the defendant should pay him $217,000.  The defendant double-checked and agreed with the result of the plaintiff’s calculations.  After a while, at the defendant’s suggestion, the plaintiff personally wrote out plaintiff’s exhibit no. 7.

23. On the following day, i.e. 8 July 1987, the defendant went to the plaintiff’s home in the morning and, in the presence of his parents, wife and elder brother, handed $50,000 in cash to the plaintiff.  Then they went to Messrs. Gallant Y.T. Ho & Co. and Messrs. Leo K.W. Lok & Co. respectively to go through the formalities of transferring the plaintiff’s interests in shop no. 108 of Golden Computer Centre to the defendant’s wife and signing the formal agreement for the dissolution of the partnership (plaintiff’s exhibit no. 8).

24. The defendant handed to the plaintiff another $70,000 odd in cash when they were at Messrs. Gallant Y.T. Ho & Co.  The balance $82,400 was paid by cheque at Messrs. Leo K.W. Lok & Co.  The plaintiff signed on the photocopy of the cheque as proof of receipt.  On that photocopy (defence exhibit no. 1), the following statement appears above the plaintiff’s signature:

Received from Mr. Chan Yuk Kwun the above cheque as [payment of] the remaining sum for all interests upon termination of the partnership business by the two parties.

25. The defendant believes that he has already performed his obligations under the agreement between the parties and that, as he is no longer liable to the plaintiff, the plaintiff is not entitled to make any claim against him.

26. Furthermore, the relevant events took place in July 1987, but the plaintiff did not institute legal proceedings until 1 July 1994.  As there was a time lapse of more than 6 years, the plaintiff’s claim against the defendant should be time-barred under section 4 of the Limitation Ordinance, Cap. 347 of the Laws of Hong Kong.

27. The defendant testified at the hearing that from 1987 to 1993, the plaintiff never took legal action against the defendant in respect of the agreement by reason of failure to perform his contractual obligation to fully pay the sum of $217,000.  He said that in 1988 the plaintiff instituted proceedings in the Small Claims Tribunal against the defendant for the return of the deposit relating to shop no. 40 of Golden Computer Centre.  The plaintiff was originally the tenant of that shop, but towards the end of 1985 he transferred his interests under the tenancy as well as his interests under the tenancy of a warehouse to the defendant, as a result of which he obtained $25,000 from the defendant.  The Small Claims Tribunal ruled against the plaintiff for the reason that the two parties had entered into a contract at the time of the transfer of the tenancies, which stipulated that the plaintiff could not make any claim against the defendant.

The plaintiff sent a letter to the defendant on 30 March 1992 (defence exhibit no. 9).  The letter stated that the plaintiff was in dire financial shape and unable to pay the rent of the shop he rented and was therefore being sued by the landlord for arrears of rent.  He therefore requested the defendant to lend him $15,000 to tide him over the difficulty.  The letter, however, made no mention of the defendant still owing him any sum of money.

The plaintiff sent another letter to the defendant on 14 December 1993 (defence exhibit no.10).  The letter mentioned, vaguely and for the first time, that the defendant should account to him for a sum of $145,000 being price of goods and that, after deducting loans of $80,000 odd, the defendant still owed him $60,000 odd.  The plaintiff requested the defendant to pay another $50,000.  The letter, however, was also silent on the defendant’s failure to perform his obligation under the agreement for the dissolution of the partnership by paying $217,000 in full.

Shortly afterwards, in early January 1994, the plaintiff instituted two separate actions in the District Court, claiming against the defendant for repayment of a debt of $70,000 and payment of a sum of $140,000 being the price of goods, respectively.  Thereafter, the plaintiff’s father intervened and mediated in the dispute, asking the defendant to deal with the matter as a dispute between relatives and to pay to the plaintiff another sum of tens of thousands so as to help him get over his financial difficulty.  In the end, the defendant agreed to pay another $30,000 to the plaintiff, and the plaintiff discontinued the abovementioned two District Court actions.

The defendant also called the plaintiff’s elder brother Leung Hau Ki (transliteration) (梁厚基) to give evidence that the defendant has performed his obligations under the agreement for the dissolution of the partnership by paying to the plaintiff $217,000 in full.

Legal and factual analyses

As the plaintiff had previously took recovery actions against the defendant in the District Court and the nature of those claims was by and large the same as that of the plaintiff’s claims in the present case, the question arises as to whether the plaintiff, having discontinued the previous District Court actions, can now commence fresh legal proceedings against the defendant in respect of the same claims.

At law, where the court has, at the request of the parties to legal proceedings, made a final adjudication on an issue in dispute, none of the parties is allowed to submit the same issue to the court for re-adjudication.  This legal principle is known as “issue estoppel”.

This principle, which applies not only to issues already adjudicated by the court but also to issues which ought to have been raised but have not been raised by the parties, aims to deal with all disputes between the parties once and for all and ensure finality to litigation, so as to prevent the parties from endlessly and repeatedly submitting the same disputes to the court for adjudication.

“Court adjudication” encompasses not only judgments pronounced by the court after hearing evidence and submissions by the parties, but also judgments given and recorded by the court pursuant to consent or agreement between the parties.

In South American and Mexican Company, ex parte Bank of England [1985] 1 Ch 37 Lord Herschell L.C. made the following observation at p.50:

The truth is a judgment of consent is intended to put a stop to litigation between the parties just as much as a judgment which results from the decision of the Court after the matter has been fought out to the end.  And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in a subsequent action.  I think, therefore, the judgment should be affirmed, and the appeal dismissed with costs.

As far as the legal actions commenced by the plaintiff against the defendant in the District Court, i.e. DCCJ 207 and 208/1994, are concerned, they came to an end not because the Court had heard the cases and then delivered judgment or because the Court had delivered and recorded a judgment pursuant to agreement between the parties, but because the plaintiff applied ex parte to the Court to discontinue the actions.  And the Court did not impose any condition when it allowed the application.

The principle of “issue estoppel” does not apply in the present case, and the plaintiff is entitled to commence recovery proceedings against the defendant afresh.

Of the various items of the plaintiff’s claims against the defendant, the claim for $400,000 is made on behalf of Lian Yi.  On the undisputed facts, the debt was owed not by the defendant as an individual, but by the partnership company.  As the plaintiff was one of the shareholders of the company, he should also be liable for the debt.  It is therefore unwise for the plaintiff to act on behalf of Lian Yi, which puts him in a position of conflict of interest.  Furthermore, a creditor who institutes court proceedings for recovery of a debt must do so in his own name instead of having someone do so in his own name and on behalf of the creditor.  Only then will the court’s decision be binding on the creditor and the debtor.  In the present case, the plaintiff has no right to make the claim in his personal capacity on behalf of Lian Yi.  If Lian Yi wishes to recover the $400,000, it must institute the claim in its own name so that the court can deal with the claim.  In the present case, I will not deal with the issue concerning the alleged debt of $400,000 owed to Lian Yi.

In the agreement written out by the plaintiff (plaintiff’s exhibit no.7) and in the agreement for the dissolution of the partnership signed by both parties subsequently in Messrs. Leo K.W. Lok & Co., it is expressly stated that, upon receiving $217,000 from the defendant, the plaintiff is prepared not only to transfer his interests in shop no. 108 of Golden Computer Centre, but also to take up all liabilities relating to the partnership business.  The plaintiff approved the contents of the agreement which he wrote out as well as the agreement for the dissolution of the partnership.

However, the plaintiff now argues that he was misled by the defendant into executing the agreement, in that he was made to believe that some of the stocks had been delivered to others upon Lian Yi’s instructions and the debt owed by the partnership to Lian Yi was thereby reduced.  I have carefully considered this allegation and closely examined the evidence from both parties.  The defendant does concede that in the course of negotiation mention was made of a batch of goods having been delivered to someone pursuant to Lian Yi’s instructions, but that batch of goods were not the goods referred to by the plaintiff.  On the evidence, at that time all the stocks were kept in the residence of the plaintiff himself.  He would certainly have had a clear idea about the nature and quantity of the goods in question and could not possibly have been misled by the defendant.  The plaintiff’s evidence in this respect is simply incredible.  Furthermore, had the plaintiff indeed been misled by the defendant, he would certainly have talked to the defendant about that as soon as possible; but the evidence shows that it was not until 14 December 1993 that he vaguely indicated to the defendant that the defendant should be accountable for that batch of goods.

In my view, the plaintiff, who was in straitened circumstances because he had incurred gambling debts and was indebted to finance companies, invented excuses in order to obtain money from the defendant, whose business was running smoothly.  I reject the plaintiff’s allegation that he had been misled by the defendant.

The two parties are relatives and their partnership business was of a special nature.  They had been sued by computer companies for matters concerning copyright, and they conducted business dealings by using a number of companies with different names.  In addition, given inadequate manpower and accounts that were not clearly worked out, there were difficulties in winding up the partnership.  That being the case, on 7 July 1987 after the parties completed the calculations, it was both reasonable and understandable for them to enter into the abovementioned agreement as they did, in final settlement of matters concerning their partnership.  The plaintiff could not subsequently change his mind and purport to repudiate the agreement; still less could he repudiate the agreement for the dissolution of the partnership signed by both parties the following day at Messrs. Leo K.W. Lok & Co.  The agreements between the parties in respect of the dissolution of the partnership are clearly valid, and the plaintiff cannot make any claim against the defendant in connection with the partnership business.

As to whether the defendant had paid the $217,000 to the plaintiff in full, I have again thoroughly considered the evidence from the parties and the relevant documents.  The defendant’s evidence is not very clear.  He answered many of the questions by saying that he could not remember clearly what happened as it was 10 years ago.  There are also discrepancies between his evidence and that of the defence witness Leung Hau Ki.  Having said that, the documentary evidence plainly shows that the defendant had in fact handed the full amount of $217,000 to the plaintiff.  It is expressly stated on the photocopy of the cheque (defence exhibit no. 1), which the plaintiff had signed, that the $80,000 odd was the remaining sum for all interests upon termination of the partnership business.  The plaintiff alleges that there was no other writing on the photocopy when he put his signature on it.  However, judging from the positions of the characters and the plaintiff’s signature, the allegation is hardly credible.

From 1987 to 1994, the plaintiff never complained that the defendant had not fully paid the $210,000 odd to him.  In my observation, the plaintiff is not a timid person, still less someone who does not care about his own rights and interests.  He instituted proceedings in the Small Claims Tribunal back in 1988 claiming rental deposit from the defendant, although the claim failed.  Had the plaintiff not received in full the $217,000 payable to him under the agreement for the dissolution of the partnership, he would certainly have sued the defendant long ago.

In his letter to the defendant on 30 March 1992 (defence exhibit no. 9), the plaintiff merely stated he hoped that the defendant would, on the basis of their being relatives and former business partners, lend $15,000 to him.  He made no mention whatsoever of the defendant owing him any sum of money.  Had the defendant been, as alleged by the plaintiff, still indebted to him for $100,000, in his letter he would certainly have pressed the defendant for repayment instead of earnestly requested the defendant to lend him money.

In his letter to the defendant on 14 December 1993 (defence exhibit no. 10), the plaintiff just vaguely mentioned that the defendant should be responsible for the $140,000 being price of the goods.  No complaint was made about the defendant’s alleged failure to perform his obligation under the agreement for the dissolution of the partnership by paying to him $217,000 in full.

It is clear from all the above that the plaintiff’s allegation that the defendant still owes him $70,000 is not true.

Furthermore, the agreement for the dissolution of the partnership was signed on 8 July 1987, which was more than 9 years ago and almost 7 years before the plaintiff filed his claim with this Court.

Section 4 of the Limitation Ordinance, Cap. 347 of the Laws of Hong Kong, expressly provides as follows:

28. (1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say –

(a) actions founded on simple contract or on tort;

(b) …

29. (2) An action for an account shall not be brought in respect of any matter which arose more than 6 years before the commencement of the action.

Be it founded on contract or an action for an account, the plaintiff’s claim against the defendant is time-barred and therefore liable to be dismissed.

The plaintiff explains that the delay in bringing the action was caused by his ignorance of the law and his financial difficulty and hence inability to instruct a lawyer to act for him.  These, however, are not reasons for extending the limitation period.

I understand what is in the plaintiff’s mind.  He and the defendant are relatives and have been business partners.  The defendant has been successful in his business and rather well-off; on the other hand, the plaintiff has been impecunious and indebted to finance companies which have from time to time chased after him for repayment, and his financial condition has even led to a breakdown of his marriage.  In addition, he suspected that the defendant embezzled funds of the partnership business.  It is therefore not surprising that the plaintiff shows much animosity against the defendant.

The information provided by the defendant shows that all along he has been in a better financial position and, with his perceptive eyes on investment opportunities, he has bought shop premises to preserve the value of his assets.  By contrast, the plaintiff has indulged himself in gambling.  The situations in which the two of them now find themselves are the consequences of what they did in the past.  The plaintiff should understand this and strive to improve himself in the hope that he can change his fortune.  He should not stir up trouble with a view to gaining benefit therefrom.

The plaintiff’s claims against the defendant are unsustainable in fact and in law and are dismissed accordingly.

I order that all items of the plaintiff’s claims against the defendant be dismissed.

HCA006389/1994

Dissolution of partnership company — “issue estoppel” — claim by shareholder on behalf of creditor against another shareholder for payment of price for goods — Limitation Ordinance.

“Issue estoppel” — where the court has, at the request of the parties to legal proceedings, made a final adjudication on an issue in dispute, none of the parties is allowed to submit the same issue to the court for re-adjudication. The principle of “issue estoppel”, which applies not only to issues already adjudicated by the court but also to issues which ought to have been raised but have not been raised by the parties, aims to deal with all disputes between the parties once and for all and ensure finality to litigation, so as to prevent the parties from endlessly and repeatedly submitting the same disputes to the court for adjudication.

“Court adjudication” encompasses not only judgments pronounced by the court after hearing evidence and submissions by the parties, but also judgments given and recorded by the court pursuant to consent or agreement between the parties .

A creditor who institutes court proceedings for recovery of a debt must do so in his own name instead of having someone do so in his own name and on behalf of the creditor.  Only then will the court’s decision be binding on the creditor and the debtor.

Limitation Ordinance: An action founded on simple contract or on tort shall not be brought after the expiration of 6 years from the date on which the cause of action accrued; an action for an account shall not be brought in respect of any matter which arose more than 6 years before the commencement of the action.

Neither ignorance of the law nor financial difficulty and inability to instruct a lawyer constitutes a reason for extending the limitation period.

Translated by the Judgment Translation Unit of the Judiciary and approved by Mr. Edmund Cham, Solicitor.