FONG YIN CHEUNG v. HO KWAN CHU AND OTHERS

HCA436/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 436 OF 2005

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BETWEEN

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J U D G M E N T

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1.  This is an appeal by the plaintiff from the order of Master de Souza given on 2 March2009 dismissing the plaintiff’s application to strike out the Defence and Counterclaim of the 1^st and 2^nd defendants as well as that of the 3^rd defendant.

2.  The plaintiff’s application for striking out was made on the grounds that the defendants have failed or refused to comply with the Unless Order of Master de Souza given on 8 July 2008.

BACKGROUND

3.  The Writ of Summons was filed on 11 March 2005.

4.  The plaintiff is a practising solicitor in Hong Kong.

5.  The 1^st and 2^nd defendants are also practising solicitors in Hong Kong and were the former partners of the plaintiff, all of them practising under the style or firm name of the 3^rd defendant.

6.  The plaintiff alleged that she was kicked out of the partnership by the 1^st and 2^nd defendants some time around April 2003, but thereafter the 1^st and 2^nd defendants had continued practising under the firm name of the 3^rd defendant.

7.  The claim brought by the plaintiff is a partnership dispute between them and the reliefs sought by the plaintiff includes (inter alia) an injunction to stop the 1^st and 2^nd defendants from using her name which appears as part of the name of the 3^rd defendant. The plaintiff also seeks for the defendants to account moneys and properties relating to the partnership.

8.  The defendants filed their Defence and Counterclaim on 8 June 2005. Although the 1^st and 2^nd defendants had filed separate Defence and Counterclaim from the Defence and Counterclaim filed by the 3^rd defendant, practically speaking, those two pleadings of the defendants were identical in wording. Therefore for present purposes, there is no need to draw any distinction between the defendants insofar as their pleadings in their respective Defence and Counterclaim goes.

9.  On 22 July 2005 the Reply and Defence to Counterclaim was filed by the plaintiff.

10.  On 22 January 2008, a Request for Further and Better Particulars of the Defence and Counterclaim was filed by the plaintiff. A Summons dated 13 February 2008 was issued seeking the further and better particulars sought from the defendants.

11.  On 2 June 2008, by an order of Master Lung, the defendants were ordered to “file with the Court and serve on the plaintiff the further and better particulars of the 1^st and 2^nd Defendants’ Defence and Counterclaim and the 3^rd Defendant’s Defence and Counterclaim both filed on 8 June 2005 as per the request set out below within 28 days from the date hereof” (“Master Lung’s Order”).

12.  That order was not complied with by the defendants in that no such particulars were given by the defendants within the time ordered.

13.  By an order of 8 July2008, Master de Souza ordered that “Unless the 1^st, 2^nd and 3^rd Defendants do file in Court and serve on the Plaintiff Further and Better Particulars of the 1^st and 2^nd Defendants’ Defence and Counterclaim and the 3^rd Defendant’s Defence and Counterclaim pursuant to the Order of Master Lung dated 2^nd June 2008 by 4 p.m. on 22^nd July 2008, the Defendants’ Defence and Counterclaim be struck out and the plaintiff be at liberty to enter judgment against the Defendants with costs to be taxed, if not agreed;” (“the Unless Order”).

14.  By the deadline imposed, the 1^st and 2^nd defendants had filed a document entitled “Answers to Request for further and better particulars of the 1^st and 2^nd defendants’ Defence and Counterclaim” which was also served on the plaintiff’s solicitors. The 3^rd defendant filed a similar answer to the request for particulars on 6 September 2008 which was identical in wording to that filed by the 1^st and 2^nd defendants. No point has been taken by the plaintiff that the answer filed by the 3^rd defendant was out of time. For ease of reference, I will refer in this judgment to both these documents as “the Answer” which will relate to all the defendants.

15.  Thereafter correspondence followed between the parties’ solicitors relating to the further and better particulars given by the defendants. By letters dated 26 August and 21 November2008, the plaintiff’s solicitors sought clarification of the particulars provided by the defendants.

16.  On 6 September 2008, the defendants filed and served a Supplemental Answer which supplements the particulars already given (“the Supplemental Answer”). By letters dated 8 and 9 December 2008, the defendants gave further explanation and clarification of all the particulars given in the Answer and the Supplemental Answers.

17.  On 25 February 2009, the plaintiff took out the Summons relating to the present application seeking to strike out the Defence and Counterclaim on the grounds of failing or refusing to comply with the orders of Master Lung and the Unless Order.

18.  That application was heard and dismissed by Master de Souza on 2 March 2009, leading to this appeal.

PLAINTIFF’S COMPLAINT AS TO NON-COMPLIANCE OF PARTICULARS SOUGHT

19.  Since the plaintiff’s application to strike out the Defence and Counterclaim is premised on the failure or refusal of the defendants to comply with Master Lung’s order for further and better particulars and the Unless Order, it is necessary to go into slightly more detail of the particulars sought by the plaintiff.

20.  Originally further and better particulars were sought by the plaintiff relating to paragraphs 5, 11, 13, 14, 20and 21of the Defence and Counterclaim. Master Lung ordered all the particulars sought by the plaintiff relating to those paragraphs of the Defence and Counterclaim above. Likewise the Unless Order related to those same paragraphs.

21.  In this present application, the complaint by the plaintiff as to the non-compliance by the defendants of the particulars sought only relate to some of the particulars sought under paragraphs 5, 11 and 14 of the Defence and Counterclaim.

22.  The plaintiff makes no complaint as to the particulars supplied by the defendants relating to paragraphs 13, 20 and 21 given in the Answer, the Supplemental Answer or by the clarification contained in the subsequent correspondence from the defendants’ solicitors.

23.  I turn now to deal with those particulars complained of by the plaintiff in respect of paragraphs 5, 11 and 14 of the Defence and Counterclaim and the answers given by the defendants.

PARAGRAPH 5 OF DEFENCE AND COUNTERCLAIM

24.  In paragraph 5 of the Defence and Counterclaim, it was pleaded by the defendants that the “plaintiff well knew and was fully aware of the aforesaid intention of the 1^st and 2^nd defendants”.

25.  The “aforesaid intention of the 1^st and 2^nd defendants” stated in paragraph 5 referred to “the clear intention of the 1^st and 2^nd defendants to set up their own law firm to look after their family investment in due course” which was what was pleaded in paragraph 2 of the Defence and Counterclaim.

26.  In respect of the allegation of knowledge of the plaintiff pleaded in paragraph 5 of the Defence and Counterclaim, the plaintiff sought further and better particulars (inter alia) as to all facts and matters relied on in support of the allegation that the “plaintiff well knew and was fully aware of the aforesaid intention”.

27.  In answering the particulars sought by the plaintiff, the defendants stated that the facts and matters relied on by the defendants are as stated in the context of paragraphs 2, 3 and 4 of the Defence and Counterclaim and those matters stated as follows in Answer 1.

28.  The plaintiff’s present complaint as to the particulars given by the defendants is that paragraphs 2, 3 and 4 of the Defence and Counterclaim and also what is stated in Answer 1 by the defendants do not state how the plaintiff knew of the “aforesaid intention of the 1^st and 2^nd defendants” and therefore it is impossible for the plaintiff to know the precise case of the defendants insofar as the plaintiff may have to meet and deal with this allegation by the defendants.

29.  It should be noted that in this context, the plaintiff had also complained as to the inclusion of a bracket in Answer 4 as well as the use of the word “etc.” in both Answer 4 and Answer 5 thereto. However, the defendants have clarified that the bracket was a typographical error and the use of the words “etc.” should be deleted from the particulars given.

PARAGRAPH 11 OF DEFENCE AND COUNTERCLAIM

Request (C)

30.  It is alleged by the defendants in paragraph 11 of the Defence and Counterclaim that the partnership set up various investment companies for the purpose of carrying on investments for the partnership and that collective decision was however and invariably made before using any retained profits of the partnership for the investment.

31.  By Request (C) the plaintiff requested (inter alia) the defendants :

(a) to identify the documents in respect of each investment if the collective decision was in writing;

(b) to give the dates when the alleged collective decisions were made;

(c) to state whether the alleged collective decisions were minuted; and

(d) if so, to identify the minutes.

32.  In the initial Answer to the Request for Particulars, the defendants purported to have given an answer to only (a), (b), and (c) above, but no answer was given to (d).

33.  However, in the Supplemental Answer the defendants had given their answers to the requests as follows :

(a) “The minutes of the Partnership meetings and the board minutes of the investment companies such as Profit Head Limited as mentioned in Answer 1 in reply to the Request (A) under paragraph 11 of the Defence hereinabove”;

(b) “The collective decisions were made prior to the dates of making the investment by the Partnership and/or the investment companies set up for the purpose of carrying on investments for the Partnership including those recorded in minutes of the Partnership meeting dated 5 July 1996 and in the board minutes of Profit Head Limited dated 27 September 1996 for acquiring the landed properties of Bank of America Tower”;

(c) “Sometimes the oral collective decisions were minuted subsequently”; and

(d) “If the alleged oral collective decisions were minuted subsequently, they should be recorded in the minutes of partnership meetings and the minutes of the investment companies”.

34.  In a further letter dated 9 December 2008, the defendants’ solicitors further indicated to the plaintiff that the words “etc.,” and “such as” should be deleted from the particulars given by the defendants.

35.  The plaintiff now complains that the answers given by the defendants is still wanting and falls far short of what has been requested and in that sense the defendants have not complied with Master Lung’s order.

Request (D)

36.  Request (D) relates to the allegation by the defendants that “As a matter of fact, the plaintiff knew full well that both the 1^st and 2^nd defendants were to have their family business investments to attend to which would from time to time be in common with the investment policy of the Partnership.”

37.  In respect of this allegation, the defendants were requested (inter alia) to :

(a) state all facts and matters relied on in support of that allegation; and

(b) if the plaintiff was told orally, to state the words used.

38.  In respect of these two requests, the defendants’ answer as contained in the Supplemental Answer was that :

(a) “Please refer to the Supplemental Answer 1 in reply to the Request (A) made under paragraph 5 of the Defence hereinabove”; and

(b) “the words to the effect as stated in the Request (D) under paragraph 11 of the Defence and also those stated in the Supplemental Answer 1 to the Request (A) under paragraph 5 of the Defence hereinabove”.

39.  The plaintiff’s complaint as to the answers given by the defendants is that the defendants have simply not answered the request for these particulars and have thereby not complied with Master Lung’s Order.

UNDER PARAGRAPH 14 OF THE DEFENCE AND COUNTERCLAIM

Request (A)

40.  Initially the plaintiff had complained that what purported to be an answer by the defendants to Request (A) given in the Answer to Request for Further and Better Particulars was in fact an answer to Request (B).

41.  However, that mistake or error was put right by the defendants in the Supplemental Answer and no further complaint is made by the plaintiff as to Request (A).

Request (C)

42.  This request relates to the allegation “… that the Plaintiff has all along been retaining a sum of HK$10,114,257.86 being the sale proceeds of certain investment item of the Partnership since September 1997 (the ‘Trust Money”). The Plaintiff accepted that she was and still is holding the Trust Money as trustee for the Partnership and is subject to account for the present position of the same.”

43.  By the request the defendants were asked to :

(a) state how it is alleged that the plaintiff “accepted that she was and still is holding the Trust Money as trustee for the Partnership and is subject to account for the present position of the same”;

(b) if it is alleged that the plaintiff “accepted that she was and still is holding the Trust Money as trustee for the Partnership and is subject to account for the present position of the same” was in writing identify the document; and

(c) if it is alleged that the plaintiff “accepted that she was and still is holding the Trust Money as trustee for the Partnership and is subject to account for the present position of the same” orally, to identify the person to whom, the date when and place where she said that.

44.  The answer given by the defendants as contained in the Supplemental Answer was :

(a) by operation of law;

(b) non-applicable; and

(c) non-applicable.

45.  In a letter dated 9 December 2008 from the defendants’ solicitors, the particulars given above by the defendants were further elaborated on in paragraph 8 of that letter as follows :

“The plaintiff, being a partner of the 3^rd defendant at all the material times, and attended the Partnership meetings as well as participated in the running of the Partnership business owes towards her co-partners, namely the 1^st and/or 2^nd defendants, the fiduciary duties and equitable obligations in all her dealings and transactions relating to the Partnership and to display and render in utmost good faith true accounts and full information of all things affecting the Partnership to her co-partners, as well as other duties at common law and under the Partnership Ordinance, like those pleaded in Paragraph 16 of the Statement of Claim filed herein on 11 March 2005. The plaintiff is also subject to those terms implied by the operation of law as pleaded in Paragraph 6 of the Amended Reply to Defence of 1^st, 2^nd and 3^rd defendants filed herein on 22 July 2005, including the fiduciary duty owed to the 1^st and/or the 2^nd defendants to render true accounts and full disclosure of the information in relation to the investments placed by the plaintiff in using the trust monies of the Partnership”.

46.  It was further stated in the same letter dated 9 December 2008 by the solicitors for the defendants that the words cited above are the answer to what has been requested by the plaintiff in (b) and (c) above.

47.  The plaintiff’s complaint is that all the answers given by the defendants including paragraph 8 of the letter dated 9 December 2008 do not answer the requests of the plaintiff as stated above and therefore the defendants have not complied with the Master Lung’s Order and are in breach of the Unless Order.

DECISION

48.  It is clear to me that the Unless Order made by Master de Souza was a time order for two reasons. Firstly, it stipulated a date and time for compliance and secondly, in default thereof, the consequence being the striking out of the Defence and Counterclaim of all defendants.

49.  The Unless Order also employs the phrase “file in Court and serve on the plaintiff”. In that regard, the plaintiff has complied with the Unless Order by filing in the Court and serving on the plaintiff’s solicitors the Answer within the time stipulated in the Unless Order.

50.  Therefore the present complaint of the plaintiff can only be as to the sufficiency or insufficiency of the particulars supplied by the defendants in the Answer, the Supplemental Answer as well as the clarification and elaboration contained in the subsequent correspondences between the solicitors.

51.  However, it should immediately be noted that none of the wording used in either Master Lung’s Order or in the Unless Order are directed to the sufficiency of the particulars that the defendants were ordered to supply.

52.  Thus applying the principle stated in Reiss v Woolf [1952] 2 QB 557, that would be sufficient to dismiss this appeal since there would be no ‘default’ of the Unless Order by the defendants.

53.  There is however a further reason why this appeal ought to be dismissed.

54.  In the case of Re Jokai Tea Holdings Ltd [1993] 1 All ER 630 it was held that what consequence should follow from the non-compliance with an unless order, the relevant question is whether the failure to comply with the unless order is intentional and contumacious and that if it can be shown by the non-complying party that there was no intention to ignore or flout the order, then he should not be disentitled to rights which he would otherwise have enjoyed.

55.  In the present case, I have taken pains to set out the requests and the answers given at some length from which it can be seen that the defendants did not have the intention to ignore or to flout the order to serve particulars.

56.  It is an undeniable fact that some parts of the pleadings as well as parts of the particulars given (in particular those parts now complained of by the plaintiff) are quite woeful as a pleading or as particulars of pleadings.

57.  Many of the particulars given are far too general and imprecise and do not meet the particularity sought by the plaintiff. In that sense they are insufficient as particulars.

58.  However, having said that, I have little doubt that whoever may have been the author of the pleadings and the particulars of the defendants have probably done his best, even though it may be his incompetent best, in the circumstances.

59.  The remedy to this vexed question as to the insufficiency of the particulars given may be for the plaintiff to seek even further and better particulars, or if that cannot redress the problem, it may be a matter for a judge to take up by way of case management. But whatever may be the remedy, I have no doubt that justice will not be served in this case by striking out the Defence and Counterclaim and entering judgment for the plaintiff.

60.  Lastly, I should also add that Mr Remedios, counsel for the plaintiff, relies heavily on the judgment in the case Purcell v F.C. Trigell Ltd [1971] 1 QB 358 in his attempt to persuade me that the present case is a fit one for striking out due to the insufficiency of the particulars supplied by the defendants.

61.  Purcell’s case also dealt with an ‘unless order’ which was made by consent and which ordered the defendants to answer a number of interrogatories from the plaintiff. That ‘unless order’ made by consent was in the following terms :

“It is ordered that as agreed the defence of both defendants be struck out unless answers to the interrogatories ordered be delivered within ten days and unless a full disclosure as ordered be made within ten days.”

62.  Within the ten days stipulated, both defendants had delivered answers to the interrogatories, but they were not complete answers. One of the defendants failed to answer all of the interrogatories which he was ordered to answer. Thereafter, for the next four months or thereabouts, he was given further opportunity by the plaintiff to answer the unanswered interrogatories but still failed to do so. As a result the defence was struck out.

63.  In my view, Purcell’s case does not assist the plaintiff in our present case. The unless order in Purcell’s case contained the words “and unless a full disclosure as ordered be made within ten days”. Those words made it incumbent upon those defendants to give a full disclosure as ordered.

64.  In our present case, as already alluded to above, there are no similar wording in the Unless Order or even in Master Lung’s Order which were directed at the sufficiency of the particulars. In that sense it can be distinguished from Purcell’s case.

65.  For the above reasons, the appeal by the plaintiff is accordingly dismissed.

COSTS

66.  The parties are to lodge written submissions on costs within 14 days from this judgment being handed down whereupon I shall decide the issue of costs in a further Ruling to be handed down in due course.