HONGER MUSIC VENTURE LTD v. WOLFMAN JACK ENTERTAINMENT (H.K.) LTD

HCA 1503/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1503 OF 2010

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J U D G M E N T

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1. In this action, the plaintiff claims against the defendant for accounts of the plaintiff’s investment relating to two agreements made between them, namely, the agreement dated 19 December 2009 in respect of the concert by the Platters (“the Platters Agreement”) and the agreement dated 26 January 2010 in respect of the concert by the Peter, Paul and Mary (“the PPM Agreement”).

2. Despite the proper service of the notice of hearing, the defendant does not appear in the trial of this action. 

3. The plaintiff and the defendant were, and the plaintiff still is, companies carrying on entertainment business including organising concerts.

4. Around the end of 2009, Ms Winsome Tang of the plaintiff contacted Mr Roks Lam of the defendant to explore the opportunity of investment in concerts for international artists that the defendant organised.

5. On 19 December 2009, the plaintiff and the defendant signed the Platters Agreement for the plaintiff’s investment in the Platters concert (“the Platters Concert”) to be organised by the defendant which was scheduled to be held on 12 March 2010.

6. On 26 January 2010, the plaintiff and the defendant signed the PPM Agreement for the plaintiff’s investment in the Peter, Paul and Mary concert (“the PPH Concert”) to be organized by the defendant which was scheduled to be held on 8 May 2010.

7. Under Clause 2.6 of both Agreements, the defendant shall prepare a financial account of the concert setting out details of the revenue received, costs and expenses and relevant financial figures.  Such financial account shall be forwarded to the plaintiff within 30 working days of the completion of the relevant concert.  Under Clause 4.2 of both Agreements, 30% for the Platters Agreement and 20% for the PPM Agreement of the net revenue of the respective concert shall be paid to the plaintiff within 30 days after the audited account is completed and produced.

8. Both Agreements did not provide when the defendant would have to produce the audited accounts to the plaintiff, and so it is the plaintiff’s case that such audited accounts shall be submitted to the plaintiff within reasonable time after the completion of the relevant concert. In order to give business efficacy to both Agreements, I agree to incorporate such implied terms in both Agreements.

9. As early as 18 December 2009, the plaintiff performed its obligation under the Platters Agreement.  The plaintiff paid total investment sum of HK$557,394.30 to the defendant which represented 30% of the projected production cost of the Platters Concert.  This was admitted by the defendant.

10. On about 5 February 2010, the plaintiff performed its obligation under the PPM Agreement.  The plaintiff paid total investment sum of HK$539,171.60 to the defendant which represented 20% of the projected production cost of the PPM Concert.  This was also admitted by the defendant.

11. The Platters Concert and the PPM Concert took place on 12 March 2010 and 8 May 2010 respectively.  It is the plaintiff’s case that the defendant, in breach of the two Agreements, failed to produce the final accounts or the audited accounts to the plaintiff. The plaintiff therefore brought the present action against the defendant asking the latter to produce the final accounts and the audited accounts of the two Concerts to the plaintiff and to pay all sums found to be due and payable to the plaintiff after the taking of these accounts.

12. At the trial, Ms Tang Wai Sze Winsome, director and founding shareholder of the plaintiff, and Mr Ko Kin Hang, Peter, younger brother of the director and shareholder of the plaintiff Ko Yan Hang, testify in support of the plaintiff’s case.  In the absence of any rebuttal evidence, I find both Ms Tang and Mr Ko to be honest and truthful witnesses and I accept their evidence as the truth.

13. According to the Defence filed by the defendant and the witness statements of Mr Roks Lam, the director and shareholder of the defendant, the defendant seemed to agree that it had failed to provide the accounts to the plaintiff.  However, the defendant asserted that the cooperation between the plaintiff and the defendant was a partnership business pursuant to an oral agreement between Mr Peter Ko of the plaintiff and Mr Roks Lam of the defendant, which terms included, inter alia,that the plaintiff and defendant would negotiate on the extent of the plaintiff’s investment on a concert-by-concert basis.  The defendant also counterclaims against the plaintiff for breach of fiduciary duty under the partnership relationship, because the plaintiff commenced winding-up proceedings against the defendant claiming for the refund of the plaintiff’s investment in another concert.

14. The plaintiff denies the defendant’s allegation about the partnership relationship.  As the defendant does not appear at the trial and adduce evidence to support its allegation, I find that there was no partnership relationship between the parties as alleged by the defendant.  Further, the defendant was responsible for organising the Concerts including collecting the revenue from the sales of the tickets and paying the expenses of the Concerts. In such case, even if there was a partnership relationship between the parties, the defendant still has to produce the final and auditor accounts to the plaintiff in respect of the two Concerts, so that the plaintiff would be able to get its profit, if any, from investing in these Concerts.

15. There is also no merit in the defendant’s counterclaim. Firstly, I find that there was no partnership relationship between the parties.  Secondly, even if there was such relationship, I cannot see how the taking out of the proper winding-up proceedings to recover the amount due from the defendant would amount to a breach of fiduciary duty under the partnership relationship.

16. By reason of the aforesaid, I grant judgment in favour of the plaintiff on the following terms:

(a)  order in terms of paragraphs 1 and 2 of the prayer for relief in the Statement of Claim;

(b)  there be an inquiry before Master of all sums found to be due from and payable by the defendant to the plaintiff on the taking of the final accounts and the audited accounts of the Platters Concert and the PPM Concert, or alternatively, an inquiry as to damages for breach of the Platters Agreement and the PPM Agreement by the defendant;

(c)  the defendant do pay to the plaintiff the amount found due after the making of the said inquiry; and

(d)  the defendant’s counterclaim be dismissed.

17. I provide for the alternative remedy of inquiry as to damages in case that the defendant does not produce to the plaintiff the final or audited accounts of the two Concerts.

18. I now listen to the plaintiff’s submission on the issue of costs.