DAVID NORMAN BRETTELL v. CHRISTOPHER PAUL ERVING

HCA 1195/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1195 OF 2015

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D E C I S I O N

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THE APPLICATION

1. This application by the plaintiff for summary judgment against the defendant is made pursuant to Order 14(1) RHC for the amount as claimed in the Statement of Claim being HK$5,455,697 (the “debt”).  The defendant has given notice of intention to defend the claim.

2. The defendant opposes this application.  The plaintiff is legally represented.  The defendant acts in person himself, a solicitor.^[1]

THE FACTUAL BACKGROUND

3. In the Statement of Claim, the plaintiff claimed that he and the defendant were running a solicitors’ firm as partners.  The partnership was dissolved upon the plaintiff’s retirement from the firm on 30 November 2005.  Accountants were appointed by agreement to work out the account, which amounts to HK$5,605,697 owed to the plaintiff by the defendant.

4. The plaintiff admitted that the defendant had settled the tax payment and professional indemnity insurance on his behalf, which the plaintiff worked out to be not more than $150,000, an amount he agreed to be taken into account for his claim. The ultimate figure is $5,455,697.

5. Despite requests from the plaintiff, the defendant had not made the payment.  Hence this action.

6. The plaintiff says that the defendant has no defence to his claim.

THE DEFENCE

7. Since the defendant has not filed his Defence to the action, the evidence in his affidavit opposing this action is the only source for this Court’s consideration.

8. The defendant has filed an affidavit opposing this application on 24 July 2015, in which he had raised the following defences:

a.  The Statement of Claim does not plead how the alleged indebtedness arose, how the amount of the alleged indebtedness is calculated or on what date the indebtedness arose;^[2]

b.  The payment in early 2002 as a compromise settlement of a High Court action to Messrs Hampton Winter & Glynn for the amount of $1.2 million by the plaintiff from his own funds and the defendant was technically responsible for 50% of the sum paid; but the plaintiff alleged that the defendant should be 100% responsible, in which event, this sum is a loan, which should be statute barred by 2008;^[3]

c.  The plaintiff’s payment of the defendant’s income tax was a loan before 30 November 2005, which again, is statute barred under the Limitation Ordinance, Cap. 347;

d.  The defendant has no knowledge of the accounts in pages 78-80 of exhibit DNB-1, which show the drawings of the partners of the firm.^[4]

THE APPLICABLE LEGAL PRINCIPLES

9. The plaintiff relies upon those trite legal principles as set out in Polykote Coatings Manufacturing Co Ltd v Grace Rehabilitation Centre Ltd (HCA 1477/2013, 24 August 2015): see paras 12-20 per To J.

10. The defendant has no dispute over the above legal principles.

11. The burden lies upon the defendant to show triable issues in this action.

DISCUSSION

How the amount of indebtedness was made out

12. To say that the Statement of Claim does not plead how the alleged indebtedness arose, how the amount of the alleged indebtedness is calculated or on what date the indebtedness arose is incorrect as the Statement of Claim has pleaded that the debt arose as a result of dissolution of the partnership between the plaintiff and the defendant. In paragraph 3 of the Statement of Claim, it was pleaded that by agreement between the plaintiff and the defendant, accountants were instructed on behalf of the firm to prepare a statement of the current account position between them as at 30 November 2005, which showed an indebtedness from the defendant to the plaintiff of HK$5,605,697.  In paragraph 4, the plaintiff pleaded that adjustments had been made for the tax payments and professional indemnity insurance contributions made by the defendant on the plaintiff’s behalf.  Making a provision of $150,000, the plaintiff had come to a figure of $5,455,697, which he now claims against the defendant.^[5]

13. The defendant has never, in his affidavit, denied the employment of Messrs Cheng & Cheng Ltd as the accountants for the accounts of the firm.  Nor had the defendant denied having received the letter dated 8 December 2006 sent by the plaintiff enclosed with an extract of the accountants’ report showing his indebtedness to the plaintiff. See page 18 of the bundle of documents.

14. The defendant argues today that he had never accepted his accountant’s report.  When asked where he had said in his affidavit opposing the application, he says that he did not put it expressly.  But he says that this can be implied from his letters with the plaintiff.  Having been referred to the letter dated 8 December 2006 [18]^[6], I am not convinced that the contents of the letter challenge the accountant’s report.

15. Had the defendant been in doubt about his liability or the amount as shown in the accountant’s report, he should have rectified with his accountant long time ago.  But he had not done so.  I do not accept the defendant’s argument on this issue.

16. The accounts were made on 4 December 2006, in which the defendant’s liability, as according to the plaintiff, had been established.  That is to say, the cause of action had accrued from that date, subject to set-off of the tax and insurance fees for the plaintiff.

The issue of limitation

17. According to section 45 of the Partnership Ordinance, Cap.38, the debt should be due at the date of dissolution of the partnership, which should be in November 2005.  The plaintiff submits that the debt should be due in December 2006, the date of the accountant’s report on the liability.  I accept.  But this date is more than six years from the date of the writ, which is on 29 May 2015.

18. The plaintiff then argues that there was an agreement between the plaintiff and the defendant that the debt was not due until the amount of indebtedness had been consolidated by the defendant supplying the amount of the tax and indemnity contributions to set off the amount of liability as found by the accountant.  However, I do not find any such agreement in the correspondence between the plaintiff and the defendant.  Up till now, the defendant has not given the information for the set-off.

19. The plaintiff further argues that the agreement for deferment of the liability to pay was terminated by the plaintiff’s solicitor’s letter dated 2 June 2010, from which the period of limitation should count.  Since I reject that there has been an agreement to defer the defendant’s liability to pay, I reject this argument too.

20. The plaintiff then submits that he can rely upon s.23(3) of the Limitation Ordinance that because of the defendant’s acknowledgement of the debt, the period of limitation should run from the date or dates of the defendant’s acknowledgment of the debt.

21. The plaintiff relies upon the letter dated 11 September 2010 written by the defendant to the plaintiff, in which he had acknowledged that he was indebted to the plaintiff, subject to set-off of the tax and insurance payments.

22. Having considered the contents of this letter and other related correspondence, I accept that the defendant had acknowledged his debt, though he had not admitted the exact amount of the debt.  Relying upon the authority of New World Development Co Ltd & Another v Sun Hung Kai Securities Ltd (2006) 9 HKCFAR 403 at paragraphs 90-93, I am satisfied that though the exact amount was not acknowledged, the defendant had admitted the debt.

23. The defendant argues that the signatures in the letters were not hand-written.  I accept that those electronic signatures can be regarded as his signatures under the Electronic Transactions Ordinance, Cap. 553, sections 2, 5 and 6(1) respectively.

24. Counting from 11 September 2010, the writ issued on 29 May 2015 was within time. The defendant’s argument on limitation fails.

The payment to Hampton Winter & Glynn

25. The issue of a loan made by the plaintiff to the defendant for the settlement of the claim by Messrs Hampton Winter & Glynn is a non-issue because as shown by the accountants’ report, the payment of $1.2 million was a liability of the defendant. There has never been a question of a loan from the plaintiff to the defendant. The defendant has not been able to show evidence in support of his allegation of a loan in his affidavit.  This is part of the partnership account that showed the indebtedness of the defendant to the plaintiff.

Other matters

26. The fact that the defendant has no knowledge of the accounts in pages 78-80 of exhibit DNB-1, which show the drawings of the partners of the firm does not assist the defendant in his defence.  The fact of the appointment of the accountants to make the accounts for dissolution is not disputed.  Also, there are many letters exhibited to the plaintiff’s affidavit showing that the defendant was all along aware of the amount that the plaintiff alleged he had owed to the plaintiff.  Yet, the defendant had made no denial to the liability or its accuracy.  With such strong evidence, it is really difficult for the defendant to put up such excuse to say that he was not aware of the accounts here.

27. I have dealt with the defendant’s defences as disclosed in his affidavit.  They do not support the defendant’s case.  There is really no triable issue in this matter.  It will be wasting costs and time to drag on with the proceedings.

28. Although the defendant may argue that the amount is not accurate as the plaintiff has admitted that there should be provision for the income tax and the professional insurance contributions, the defendant has been aware of such provision, yet has not made any suggestion that it is insufficient for the contributions, I shall treat the provision as sufficient to set off the contributions in order to save time and costs for pursuing the accuracy, which is disproportionate to the costs that may incur.

29. Order 14 rule 1 provides that the court can enter summary judgment for the amount claimed or a part thereof where the defendant has no defence.

30. I grant summary judgment to the plaintiff as claimed.  The defendant can seek to set-off the amount by the amount of the income tax and the insurance fees that he had paid for the plaintiff upon production of evidence of the same.

COSTS AND ORDER

31. As to the costs of this application, including any costs reserved and for today’s hearing, which are in fact part of the costs for this action, the defendant does not dispute that he has to pay the costs.  However, the plaintiff only claims the disbursements in the sum of $1,700 for the whole action, which the defendant has raised no objection.  I shall, accordingly order that the defendant shall pay the sum of $1,700 to the plaintiff within 14 days from the date hereof.

32. The Court shall now make an order in terms as follows:

a.  Summary judgment be entered against the defendant in favour of the plaintiff as per paragraph 30 supra.

b.  Costs of this action be as per paragraph 31 supra.