MAN ON SUM v. MAN PING HEI

HCA 352/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 352 OF 2015

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D E C I S I O N

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INTRODUCTION

1.  I have before me a summons taken out by the plaintiff dated 4 October 2016 seeking leave to appeal against an earlier decision of this court given on 21 September 2016 (“the Decision”) allowing the defendant’s appeal against an order made by Master Chow dated 18 May 2016 with costs to the defendant.

2.  The applicable principles for leave to appeal against an interlocutory judgment or order made by the Court of First Instance to the Court of Appeal are well established.  Leave to appeal shall not be granted unless the proposed appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal shall be heard.  For this purpose, a “reasonable prospect of success” means a prospect which must be “reasonable”, ie more than “fanciful” but does not have to be “probable”.

PROPOSED GROUNDS OF APPEAL

3.  The basic facts giving rise to the plaintiff’s application for an account, and the eventual order made by the Master, are set out in the Decision and will not be repeated here.   The court’s reasons for setting aside the Master’s order requiring the defendant to effectively give discovery of the passbook of the bank account of Dun Yue Tong (惇裕堂) (“the tong”) with HSBC and to give explanations for the entries in the passbook (other than those relating to the updating of bank balances or interest) are set out in paragraphs 21 to 24 of the Decision.  For ease of reference, they are set out below:-

“21.  In my view, the order made by the Master cannot be justified, for the following reasons.

22.  First, the plaintiff’s application was for an order that the defendant should provide a true and proper account of the moneys, assets and properties belonging to the tong for the past ten years from 2003 to 2014, and verify the same by affidavit. If the Master considered that the plaintiff wasentitled to such an account, she should order the defendant to provide the account as sought. Instead, she ordered the defendant to provide a copy of the passbook of the tong’s bank account at HSBC and give explanations for various entries in that passbook. Effectively, she has turned the present application under Order 43 into one for specific discovery and/or interrogatories. As mentioned above, this is contrary to principle.

23.  Second, there is clearly here a dispute on whether the defendant has already rendered a full and proper account of the tong’s assets, income and expenditures over the years. Whether the defendant has in fact done so is a “preliminary question” which ought to be resolved first at trial before he could be ordered to provide a “complete and proper account” which the plaintiff says the defendant has failed to provide.

24.   At the hearing of the appeal this morning, Mr Cheung argued that the Master’s decision could be supported on the narrow basis that (i) there were missing pages in the bank passbook as exhibited to the affirmations filed for the purpose of the plaintiff’s application, and (ii) some of the entries in the passbook did not have side notes or explanations.  In respect of (i), as mentioned above, the defendant’s evidence (which has not been disputed in the plaintiff’s affirmations) is that the bank passbook, or the relevant pages thereof, have already been displayed orposted up at the ancestral hall of the tong and other public places.  In any event, if what the plaintiff truly wishes to have is a complete copy of the passbook, the plaintiff ought to have applied for specific discovery, instead of for an account.  In respect of (ii), as earlier stated, Order 43 is not the appropriate avenue for seeking answers to interrogatories, or clarification of accounts already rendered.”

4.  In the draft Notice of Appeal, the plaintiff has raised a total of 7 substantive grounds of appeal, with Ground 7 relating to costs.

5.  Ground 1 seeks to distinguish a number of authorities referred to in the Decision on their facts. While obviously the facts of those cases are different from the present one, I consider the principles set out in paragraphs 11 to 15 of the Decision to be correct as a matter of law.

6.  Ground 2 contends that the court ought to have considered in the instant case that (i) the defendant was a manager-trustee, and the plaintiff (with 30 or more members in support) was a member-beneficiary, of a Chinese traditional tong, and (ii) it was beyond reasonable doubt that the plaintiff was entitled as of right to have true and proper accounts of all moneys, assets and properties belonging to the tong.  These matters were, however, not in dispute at the hearing on 21 September 2016. What was in dispute at that hearing was whether the defendant had already rendered an adequate or sufficient account to the members of the tong.  That is a preliminary question which ought to be resolved first before the court should make a summary order for account.  There were other factual issues raised by the plaintiff, including whether there were discrepancies between the figures shown on the publicly displayed ledgers and those appearing on the bank passbook, whether there was a donation of HK$100,000 made by a tso called “文佛常祖” to the tong in or abort 2003 which had gone missing, and whether the defendant misappropriated the tong’s money to speculate in securities, trust funds and foreign currencies.  None of those issues can be resolved on affidavit evidence alone.

7.  Grounds 3 to 4 complain about the court’s finding that there is a “preliminary question” which ought to be resolved first at trial before the defendant could be ordered to provide a complete and proper account which the plaintiff says the defendant has failed to provide.  On behalf of the plaintiff, Mr Cheung argues that “a preliminary question to be tried” in the context of the instant case is confined to disputes as to whether the defendant is an accounting party and whether he should be made or ordered to render an account.  For this submission, Mr Cheung relies upon the decision of Suffiad J in Ironwood Capital Limited v KTH Capital Management Limited, HCA 2836/2004 (20 November 2007), at paragraph 32.  In my view, a dispute as to whether the defendant, undoubtedly an accounting party, has already provided an adequate or sufficient account is a proper preliminary question to be determined at the trial before the court should make a summary order for account.  It is a matter of judgment and degree whether the ledgers coupled with the bank passbook publicly displayed or posted up by the defendant amount to an adequate or sufficient account in the circumstances of this case, bearing in mind the nature of the business of the tong.  The question of whether the defendant has already provided an adequate or sufficient account in this case is, I believe, a preliminary question to be tried for the purpose of Order 43.

8.  Ground 5 alleges that the court erred in making a conjecture on the reasoning of the Master, which it is said was not relevant because the appeal was a hearing de novo. The so called conjecture is a reference to the court’s observation, at paragraph 19 of the Decision, that the Master apparently accepted the legal principles stated in paragraphs 11 to 15 of the Decision.  Those principles were, I understand, relied upon by the defendant at the hearing before the Master and were well supported by authorities.  What the Master went wrong, in my view, was her failure to apply those principles to the factual situation before her.  In any event, if the Master did not accept what I regard to be the correct legal principles, that could hardly give rise to any reasonable ground of appeal against the Decision.

9.  Ground 6 alleges that the court ought to have considered that the plaintiff’s application was for an account and not for specific discovery or interrogatories.  That may be so.  However, the Master, instead of ordering any account to be given by the defendant, made an order requiring the defendant to give discovery of the passbook of the tong’s bank account with HSBC and to give explanations for the entries in the passbook.  At the hearing, the plaintiff supported the order made by the Master and did not ask the court to make any order requiring the defendant to give an account.  It is, in my view, clear that the order made by the Master cannot be supported as a matter of principle, and thus the order made by the Master should be set aside in any event.

10.  Ground 7 relates to the costs order made by the court, namely, that the plaintiff shall bear the costs of the appeal as well as the costs of the application before the Master. The plaintiff maintains that he was entitled and justified to make the original application by summons dated 20 August 2015.  Costs are, generally, in the court’s discretion.  The usual starting point is that costs should follow the event, although the court may depart from that starting point on good grounds being shown.  In the present case, I can see no good reason why costs should not follow the event.

11.  In all, I do not consider that the plaintiff’s proposed appeal has any reasonable prospect of success, or there is any other reason in the interests of justice why the appeal shall be heard.  I therefore dismiss the plaintiff’s summons dated 4 October 2016 with costs to the defendant.