Lai Lin Yau v. Chan Kwai
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CACV000012/1969 IN THE SUPREME COURT OF HONG KONG APPELLATE JURISDICTION CIVIL APPEAL NO. 12 OF 1969 -----------------
Coram: Hogan, C.J. & Williams, J. Date of Judgment: 10 October 1969 ----------------- JUDGMENT ----------------- 1. The appellant who is a married Chinese female sued one Chan Kwai for the return of $10,000 which she alleged she had loaned to him. In the title of her writ she describes the defendant as "Chan Kwai (proprietor of the Kam Tao Restaurant.)". 2. In the course of the trial she produced an I.O.U. for $10,000 admittedly signed by Chan Kwai in the following manner:-
On the face of it the I.O.U. could be construed as a personal acknowledgment of indebtedness on the part of Chan Kwai. However nothing rests upon the construction to be placed upon the mode of signing that I.O.U. in the circumstances of this case. 3. The plaintiff called her husband Yuen Cho Tak who stated that he had handed the $10,000 to Chan Kwai. 4. Chan Kwai, the defendant, did not deny receiving the $10,000 from the plaintiff nor did he deny signing the I.O.U. His defence was that he was merely a paid manager of the Kam Tao Restaurant and that he signed the I.O.U. on behalf of the restaurant in his capacity as manager. He denied being proprietor of the restaurant and alleged that the plaintiff's husband and witness, Yuen Cho Tak, was a partner in the restaurant. 5. At the time of the action the restaurant was no longer in business having failed rather miserably. There were pending against it a considerable number of wages claims in which employees were suing Chan Kwai, Yuen Cho Tak, and others as partners in the restaurant. The learned judge consolidated the wages claims with the plaintiff's claim in order to ascertain the true position of the parties in relation to the ownership and management of the restaurant. 6. After hearing the evidence of numerous employees and the persons sued by them as partners, the learned judge came to the conclusion that Chan Kwai, defendant in the plaintiff's action, and Yuen Cho Tak (plaintiff's husband) were both partners in the Kam Tao Restaurant along with other persons. He also found that the $10,000 was not a loan to Chan Kwai personally, but that it had been a loan to the restaurant made with the approval of the partners. He then stated that since the loan had been made to a partnership the plaintiff should have sued the firm, or should have sued Chan Kwai as a partner. 7. In dismissing the plaintiff's claim the learned judge observed that the rule at Common Law was that the judgment must follow the writ. By that statement the learned judge probably meant that since the writ had not issued against the firm, judgment could not be entered against the firm although the evidence plainly showed that the firm had received the $10,000 loan. 8. When he made that observation he may have had in mind the case of Jackson v. Litchfield(1) where an action which had been brought against a firm. The writ was served upon one of the partners and all the partners entered appearances except James Litchfield. An application to enter judgment against James Litchfield personally in default of appearance was refused. The plaintiff appealed against that refusal. 9. In the course of his judgment on the appeal Brett L.J. at p.477 remarked:
10. At the foot of the same page his judgment reads:
11. It was held that judgment could be entered against the firm only, and could not be entered against a partner personally. 12. Does it follow from this that where, as in the instant case, a partner is sued personally that judgment cannot be recorded against him personally if the evidence shows that it is the debt of the firm? It may happen that the plaintiff is not aware that the defendant is not a sole proprietor but simply one of a number of partners. In such circumstances must the plaintiff fail because he did not sue the remaining partners or the firm? 13. The Partnership Ordinance, Cap.38, s.11 reads:-
14. The effect of that section in regard to a partner's joint liability is illustrated by the following cases. 15. In Munster v. Cox(2), an action had been instituted against "R. & Co.", but the appearance was entered for "R. trading as R. & Co.". There upon in filing his statement of claim the plaintiff entitled it as against "R. trading as R. & Co." and the proceedings continued under that title. The defendant consented to judgment which was entered against "R" but the judgment remained unsatisfied. The plaintiff later sought to amend the judgment to read as a judgment against "R. & Co." to enable him to proceed to execution against a solvent partner called Cox. The House of Lords, in supporting a refusal of that application, pointed out that once a plaintiff has proceeded to judgment against a partner personally for a debt of the firm that is the end of the matter. No other proceedings for the same debt can be brought against any other member of the firm, and execution can only issue against the particular partner who has been sued to judgment. Lord Blackburn at p.688 illustrated the position by likening the case to an action against an agent who has been acting for an undisclosed principal saying:-
16. In Kendall v. Hamilton(3), two partners who had been sued to judgment became bankrupt and the judgment remained unsatisfied. The plaintiff later learned of a third partner and sought to sue him. The House of Lords held that he could not do so, although the plaintiff at all material times had been unaware of the existence of the 3rd partner. The analogy between the unknown partner and the undisclosed principal was referred to again by the Lord Chancellor who said in his judgment at p.514:-
17. In the same case Lord Hatherly intimated that it was the fault of the plaintiff in the first place in that he had not taken the necessary steps to ascertain who were the partners. 18. The foregoing cases show that a creditor may, as in the instant case, sue any one or more of the partners personally for the firm's debt and recover judgment against the partner or partners sued. However, once judgment has been recovered against a partner personally it bars any subsequent action for the same debt against any other partner, although the plaintiff may have been unaware of the latter's existence. 19. In the instant case the appellant was at liberty to sue Chan Kwai personally for the restaurant's debt of $10,000 and in effect that is what she has done. Once she had satisfied the court that the restaurant owed her $10,000 and that Chan Kwai was a partner at the material time she was entitled to judgment against him personally for that sum although the judgment may well be a bar to further proceedings by the plaintiff for the same debt against the restaurant or any other partner. In endeavouring to satisfy that judgment she is limited to levying execution against Chan Kwai. 20. She is entitled to recover against Chan Kwai not as the proprietor but as one of the proprietors in the restaurant but we do not think the case should fail because of this error in the writ. Subject to the amendment of the writ to read Chan Kwai (one of the proprietors of Kam Tao Restaurant)", the appeal succeeds and the judgment in the court below is set aside and in its stead is substituted a judgment for the plaintiff in the sum of $10,000 as claimed but it seems proper to order that the parties each bear their own costs of this appeal and in the court below. The plaintiff was willing to lend the money to the partnership and it may be that Chan Kwai will feel that in seeking to recover against him alone the plaintiff is acting oppressively but he may well have a claim for contribution from his co-partners towards payment of the judgment debt. We order that the writ of summons and subsequent pleadings be amended accordingly. Representation: ...(illegible) (1) (1881-82) 8 Q.B.D. 474, 477. (2) (1884-5) 10 A.C. 680, 688. (3) (1878-79) 4 A.C. 504, 514. |