LEUNG TONG FUK v. CHAN YUK KWAN

FACV No. 4 of 1998

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 4 OF 1998 (CIVIL)

(ON APPEAL FROM CACV No. 231 OF 1996)

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J U D G M E N T

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Chief Justice Li:

1. I have read the judgment of Mr Justice Bokhary PJ and agree

with it. For the reasons he gives, I would dismiss this appeal with no order as to costs.

Mr Justice Litton PJ:

2. I agree with Mr Justice Bokhary PJ's judgment.

Mr Justice Ching PJ:

3. I also agree with Mr Justice Bokhary PJ's judgment.

Mr Justice Bokhary PJ:

Introduction

4. The appellant and respondent are former partners. Their partnership was formed in 1982, and dissolved in 1987. In 1994 the appellant commenced an action in the High Court against the respondent. The action was heard by Yeung J. By a judgment given on 12 November 1996 the judge dismissed the appellant's claim. The appellant appealed to the Court of Appeal. By a judgment given on 20 June 1997 the Court of Appeal (Liu JA and Leong and Yam JJ) dismissed that appeal. The appellant now appeals to this Court, having obtained leave to do so from the Court of Appeal.

5. Both parties appeared in person at the trial, in the Court of Appeal and in this Court.

Background

6. This is an unfortunate case: first because it is between parties who are related (the appellant's younger sister is the respondent's wife) and secondly because, whatever the rights or wrongs of this dispute, the appellant does seem to have fallen on very hard times. Shortly stated the background to the case is as follows. The partnership between the appellant and respondent, which lasted from 1982 to 1987, was one carried on at a number of shops. At first the partnership's business was one of retailing computer components and of assembling computers for customers. Those components were imported from Taiwan. The main supplier was a Taiwanese concern by the name of Lien Yig Corporation ("Lien Yig").

7. In the middle of 1985 the partnership fell out with Lien Yig over payment for goods supplied by Lien Yig to the partnership. Lien Yig refused to supply the partnership with any more goods. As a result the partnership switched its business to one of repairing computers. That remained the partnership's business until it was dissolved in 1987.

8. The terms on which the partnership was dissolved are set out in an agreement dated 8 July 1987 ("the Dissolution Agreement") prepared by a firm of solicitors acting for both parties.

The total claim

9. The appellant's total claim is for $1,365,000 plus interest thereon and costs. This sum of $1,365,000 is made up of the following heads of claim:

(i) $750,000 representing 50 percent of the value which the appellant put on certain shop premises known as Shop No. 108, First Floor, Golden Shopping Centre, Yen Chow Street, Kowloon ("Shop No. 108");

(ii) $400,000 being a sum which the appellant seeks to recover on behalf of Lien Yig;

(iii) $145,000 representing the value of goods which the appellant says belonged to him but had been sold by the respondent without accounting to him for the price; and

(iv) $70,000 which the appellant says is due to him because the respondent has paid him $70,000 less than the full $217,000 payable to him by the respondent under the Dissolution Agreement.

I will now deal with the bases on which these four heads of claim were advanced by the appellant and - leaving aside limitation for the moment - rejected by the courts below.

First head of claim: $750,000 claimed as 50 percent of Shop No. 108's value

10. Shop No. 108 was purchased in 1983. It was assigned to the appellant and respondent as joint owners. And they were registered as such. By clause 2 of the Dissolution Agreement the appellant agreed to assign his share of Shop No. 108 to the respondent. On the same day as the one on which the Dissolution Agreement was executed, through a firm of solicitors other than the one which had prepared that agreement, the appellant assigned his share of that shop to the respondent and the respondent's wife.

11. In claiming 50 percent of the value of Shop No. 108 in the face of such assignment, the appellant contended that he had executed it under a mistaken belief induced by the respondent.

12. The facts relevant to that contention are as follows. Lien Yig had supplied the partnership with a batch of goods the price of which came to $400,000. Then, upon Lien Yig's instructions, $145,000 worth of goods were delivered by the partnership to a Mrs Chow. The goods delivered to Mrs Chow had not come from the $400,000 batch.

13. But it was the appellant's evidence that he believed that they had. He believed that, he said, because the respondent had told him so during the negotiations which culminated in the Dissolution Agreement and then the assignment by him of his half share of Shop No. 108 to the respondent and the respondent's wife. Thus, he said, he entered into such agreement and executed such assignment in that mistaken belief, induced by the respondent. The mistaken belief was, he said, that the partnership's $400,000 indebtedness to Lien Yig had been reduced by $145,000 (through the delivery at Lien Yig's instructions of $145,000 worth of goods out of the goods for which the partnership owed Lien Yig $400,000).

14. The respondent denied that he had told the appellant that the goods delivered to Mrs Chow had come from the $400,000 batch.

15. After seeing and hearing both of them, the judge believed the respondent and disbelieved the appellant. He rejected the appellant's evidence that the respondent had told him that the goods delivered to Mrs Chow had come from the $400,000 batch. And he further found, upon the whole of the evidence as he assessed it, that the goods in question had been stored at the appellant's residence, so that the appellant knew that the goods delivered to Mrs Chow had not come from the $400,000 batch.

16. Thus the judge rejected the allegations of fact upon which the appellant sought to recover in respect of Shop No. 108. The Court of Appeal supported all of the judge's findings of fact: under this head of claim and all the other ones too.

Second head of claim: $400,000 claimed on behalf of Lien Yig

17. The second head of claim is one purportedly made on behalf of Lien Yig. It is for $400,000 said to be owing as the price of goods which it had supplied to the partnership. This head of claim was dismissed by the judge on the basis that, if it is to be pursued, it would be for Lien Yig itself rather than the appellant to pursue it. The Court of Appeal agreed with that view.

Third head of claim: $145,000 claimed as the value of the appellant's goods sold by the respondent without accounting to the appellant for the price

18. The third head of claim is one for $145,000 claimed as the value of goods which the appellant said were his but had been sold by the respondent without accounting to him for the price.

19. This claim was, the judge said, mentioned "for the first time" and even then only "vaguely" when the appellant wrote to the respondent on 14 December 1993. It does not seem to have become any clearer later on. If anything, it became less clear. For in the Court of Appeal Liu JA observed that during the appeal before that court, the appellant seemed to have "confused" the $145,000 under this head of claim "with the $400,000 owed to [Lien Yig]". Presumably what Liu JA really meant was the $145,000 worth of goods delivered to Mrs Chow.

20. In any event, the judge, who formed an unfavourable impression of the appellant's reliability, did not find that the respondent had sold any goods belonging to the appellant without accounting to him for the price. So the third head of claimed failed first of all on the facts.

21. As I mentioned in connection with the first head of claim, the Court of Appeal supported all of the judge's findings of fact.

Fourth head of claim: the alleged $70,000 shortfall

22. Clause 1 of the Dissolution Agreement provides for the payment by the respondent to the appellant of $217,000. The fourth head of claim, which is for $70,000, is made on the basis of the appellant's allegation that the respondent had paid him $70,000 less than the full $217,000.

23. This allegation of a shortfall was rejected by the judge. As to how the judge went about doing so, I begin by quoting this passage from his judgment:

"As for whether Defendant had fully paid the $217,000 to Plaintiff, I have carefully examined the parties' evidence and relevant documents. Defendant's own evidence is not clear. On many aspects, he indicated that since the matter happened nearly ten years ago, he could not remember clearly. His evidence is also inconsistent with that of his witness Leung Hau Kee. Yet it was obviously shown in a document that Defendant had indeed paid the full amount of $217,000 to Plaintiff. Plaintiff had signed on the photocopy of a cheque (Exhibit D1) and clearly stated the eighty thousand odd dollars was the balance of payment for all the benefits and interests arisen from the cancelling of their partnership business. Despite Plaintiff's allegation that when he signed the photocopy there was nothing else in writing, the positions of the written words and Plaintiff's signature certainly discredit his words."

24. Then the judge noted that from 1987 (when the partnership was dissolved) to 1994 (when the appellant started an action against the respondent in the District Court which he then withdrew before starting the High Court action which the judge was trying) the appellant never alleged that he had not received the full $217,000. Moreover, the judge observed, there had been a number of occasions during that period of silence when one would have expected the appellant to complain of a shortfall if there had indeed been one.

25. These occasions were: (i) when in 1988 the appellant unsuccessfully sued the respondent in the Small Claims Tribunal for the return of a rental deposit; (ii) when the appellant wrote a letter dated 30 March 1992 to the respondent asking him for a loan of $15,000 for the sake of their family connection and the friendship which they had formed while business partners; and (iii) when the appellant wrote a letter dated 14 December 1993 to the respondent making a vague hint of what later became the third head of claim.

26. As I mentioned in connection with the first and third heads of claim, the Court of Appeal supported all of the judge's findings of fact.

Limitation

27. I turn now to the view taken in the courts below in regard to limitation.

28. The judge cited two provisions of the Limitation Ordinance, Cap. 347. The first was s.4(1)(a) which provides that actions founded on simple contract or on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued. And the second was s.4(2) which provides that an action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.

29. On the strength of those two provisions, the judge held that since more than six years had passed from the time when the Dissolution Agreement was signed to the time when the appellant started his action in the High Court, that action was time-barred whether it lay in contract or account.

30. It appears that the appellant told the judge that his failure to start his High Court action sooner was due to ignorance of the law and a lack of funds for legal costs. None of those matters deflected the judge from his conclusion that the action was time-barred.

31. The Court of Appeal did not deal with limitation specifically, but did make a general statement to the effect that the judge's judgment was correct.

What the appellant has to do before he can succeed in the present appeal

32. This brings me to what the appellant has to do before he can succeed in the present appeal.

33. In regard to the action as a whole, he has to overcome the judge's conclusion, undisturbed by the Court of Appeal, that his action is time-barred.

34. Then in regard to each of the first, third and fourth claims in particular, he has to show that the concurrent findings of primary fact made against him by the courts below cannot be sustained and ought to be reversed.

35. And then in regard to the second head of claim in particular, he has to do two things. First, he has to show, as a proposition of law, that a former partner can bring a claim in his own name against another former partner in order to recover on behalf of a seller the price of goods sold and delivered to the partnership while he himself was a partner so that he too is personally liable on that very claim. Secondly, he has to show that the judge had no choice but to find that the seller here, Lien Yig, was indeed entitled to the sum claimed, or some other identified claim, as the price of the goods in question.

Analysis

36. In my judgment, the appellant has not succeeded in doing any of those things. Essentially the appellant's submissions, both written and oral, are directed to challenging the concurrent findings of fact in the courts below. Those submissions either repeat evidence which was within the province of the trial judge to accept or reject, and which he rejected without any misapprehension of the material before him. Or they depend on matters which have not been adduced in evidence at the trial, which was the proper occasion for adducing evidence.

Conclusion

37. For the reasons which I have given, I would dismiss this appeal. In all the circumstances, I would make no order as to costs.

Lord Cooke of Thorndon NPJ:

38. I also have had the advantage of reading the judgment of Mr Justice Bokhary PJ and agree with his reasons and the dismissal of this appeal with no order as to costs.

Chief Justice Li:

39. The Court being unanimous, this appeal is dismissed with no order as to costs.

Representation: