XCHRX YAU SIU HIN GEORGE t/a GEORGE YAU & HO v. HO MAN KIT AND ANOTHER

HCA406/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.406 OF 1998

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REASONS FOR DECISION

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1. This is an appeal by the 1st Defendant Ho Man Kit by way of rehearing against Master Muttrie's order dated 15 May 1998 giving summary judgment against both Defendants in this action for the sum of $75,250. There is no appeal by the 2nd Defendant, Manivest Secretarial Services Limited.

2. On the pleadings the Plaintiff is claiming against the 1st Defendant for the judgment sum pursuant to an Agreement dated 18 October 1997. Clause 3 therein provides :

" Mr Horace Ho Man kit, Certified Public Accountant, (the 1st Defendant) is entitled to take back all clients previously assigned/introduced to GEORGE YAU & CO./GEORGE YAU & HO/GEORGE YAU SIU HIN, Certified Public Accountant and Mr Horace Ho Man Kit, Certified Public Accountant, will be held responsible for all outstanding billings/charges to clients for services rendered since 1st January 1997 previously issued for which Mr Horace Ho Man Kit, Certified Public Accountant, has confirmed/ signed by post-dated cheques issued herewith of not later than 30th November 1997."

Pursuant to the Agreement, the 1st Defendant caused the 2nd Defendant to issue four cheques in favour of the Plaintiff totalling $75,250. The cheques were dishonoured when presented for payment and the Writ in the present action was issued on 9 January 1998. The claim against the 2nd Defendant was on the four cheques.

Regularity of the judgment obtained

3. Two points are taken by the 1st Defendant in this hearing on the regularity of the judgment. The first is that the judgment obtained is irregular as the claim against each Defendant should have been in the alternative as the liability of each Defendant is several and not joint. In granting judgment against both Defendants, it was said, the Plaintiff would be recovering twice in respect of the same amount.

4. The 1st Defendant made the following admissions in his affirmations of 17 March 1998. In para. 3 he stated :

" In settlement of the outstanding disputes and conflicts with the Plaintiff following the dissolution of the Partnership, I agreed with the Plaintiff on 18 October 1997, inter alia, that conditional upon my taking back of all clients including all their related files and accounts previously assigned/introduced by me to George Yau & Co./George Yau & Ho/George Yau Siu Hin, I would be responsible for the then outstanding billings/charges to four clients for services rendered by the Plaintiff since January. The total sum of these outstanding billings/charges amounts to a total of HK$75,350."

Later in para. 4, Mr Ho further admitted that :

" Since the Plaintiff had agreed that all clients and their related files and accounts shall be returned to me on or before 30 November 1997, I therefore agreed to issue four posted-dated cheques (all dated 30 November 1997) totaling HK$75,250 payable to the Plaintiff for settling the said four debit notes respectively."

5. It is clear from the above admissions that he is liable to the Plaintiff under the Agreement and the Plaintiff's cause of action against him is for his breach of Clause 3 therein. The 2nd Defendant is liable to the Plaintiff as the drawer of the four cheques and it was the 1st Defendant who procured the 2nd Defendant to issue the cheques. Both Defendants are therefore jointly and severally liable to the Plaintiff. The present case is one which s.5 of the Civil Liability (Contribution) Ordinance, Cap 377. The section provides that judgment obtained against any person liable in respect of any debt or damage shall not be a bar to an action, or to the continuance of an action, against any other person who is jointly liable with him in respect of the same debt or damage. I do not see any substance in the argument advanced by Mr Hung for the Appellant on point of several liability.

6. The second point taken is that the claim against the 1st Defendant is misconceived as there is no provision in the Agreement for liquidated damages. Mr Hung submitted that the claim for the sum of $75,250 is a claim for liquidated damages which is not a cause of action open to the Plaintiff. In my view, in so far as it is provided in the Agreement that the 1st Defendant has agreed to be responsible for all outstanding bills and/or charges to the partnership and that he had procured the 2nd Defendant to issue the four cheques, there must be a cause of action available to the Plaintiff against the 1st Defendant for his failure to settle the amount outstanding. The second point of the Appellant on the propriety of the judgment must therefore also fail.

Defence

7. By way of defence to the action, the Appellant alleges that the settlement or issuance of the four cheques was subject to a condition that the Plaintiff was under a duty to return various files and accounting records to the Defendants. This can be found in para. 4 of Mr Ho's affirmation quoted above.

8. In so far as the contention of a condition precedent which contradicts the terms of the cheques, such evidence is inadmissible (Chui Hon Kay v. Chow Tak Yan [1995] 2 HKLR 171). As to the alleged pre-condition for payment itself, there is nothing in the Agreement which remotely suggests the existence of such arrangements. Indeed in the correspondence between the Plaintiff and the 1st Defendant, there is no reference to any such arrangements either. It was only in the letter dated 23 December 1997 from Messrs Tang & Lee, Solicitors to Messrs Gallant Y.T. Ho & Co. that the purported conditions were raised for the first time. Based on the affirmation, at the time of the Agreement, the total outstanding charges amounted to $218,980. The 1st Defendant made partial payments by three post-dated cheques for a total of $143,730. Having made such payments, I find it inherently incredible that the 1st Defendant would now turn around and say that the Plaintiff had not delivered the account documents. I am of the view that there is no merit in this purported defence.

9. It was also raised by way of defence to the claim of $35,000 that the debt owed by a partner to his firm cannot normally be recovered otherwise than by means of a partnership account. The partnership Yau & Ho cannot maintain, in law, an action against the 1st Defendant who was at the material time one of its partners (Meyer & Co. v. Faber (No. 2) [1923] 2 Ch. 421).

10. I note that the partnership was dissolved on 7 July 1997 when the 1st Defendant gave notice of retirement as a partner and thereafter the Plaintiff carried on the business as sole proprietor. This has never been disputed by the Defendant. The debit note was issued on 13 August 1997 which was after the 1st Defendant had retired from the partnership. In this respect the case of Meyer does not assist the 1st Defendant in any way as the 1st Defendant's obligation to pay would have been covered by the provisions of the Agreement.

11. I am of the view that the 1st Defendant has failed to show that he has an arguable defence to the Plaintiff's action and his appeal is dismissed with costs.

(K.K. Pang)

Judge of the Court of First Instance
High Court