XCHRX MARK STEVEN TOBOR v. DOMINIC YIU WING HONG

HCA 9295/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9295 OF 2000

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D E C I S I O N

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1. This is the Plaintiff's expedited appeal against the Master's decision dated 27 October 2000 whereby he discharged the prohibition order dated 30 September 2000. The learned Master also refused to grant a new prohibition order on that day.

2. The Plaintiff brings this action against the Defendant based on a partnership agreement made orally between them in April 2000. The fact that there was a partnership between them is undisputed by the Defendant. It is also undisputed that a joint-name account No. 018-6-615456 was opened with HSBC. Either one of the Plaintiff or the Defendant can operate this account. The partnership's initial business was the manufacture of 1.5 million watches for its buyer.

3. The Plaintiff's claim herein is related to 2 types of alleged wrongful acts on the Defendant's part: -

(a) he wrongfully misappropriated approximately US$300,000 from the joint-name account: see paragraphs 3, 5 and 10, Statement of Claim; paragraph 11 of the Plaintiff's affidavit dated 29 September 2000;

(b) he wrongfully breached the partnership agreement by failing to ensure the partnership's order was manufactured in accordance with the order and/or the partnership agreement: see paragraphs 6, 8 and 9, Statement of Claim.

The Plaintiff alleges that as a result of the Defendant's breach at (b) above, he had suffered loss of US$225,768. It is to be noted that despite the Plaintiff's complaint at (a) above, there is no claim for the repayment of that sum although there is a claim for the provision of the full account regarding US$300,000 (see paragraph 10, Statement of Claim. US$525,768 is also referred to in that paragraph but that sum appears to be the total of the Plaintiff's claim for the sum allegedly misappropriated and the loss he allegedly suffered).

4. There is no need to go into the details of the evidence respectively filed by the parties relating to the application before the Master on 27 October 2000 and this appeal save to say this. The parties have made cross-allegations against each other and denied the other side's case. A proper determination of these issues would involve a finding of fact which cannot be undertaken at this stage.

5. The allegation against the Defendant has been summarized above. The Defendant's allegations against the Plaintiff are set out in his affirmation dated 24 October 2000 and include: -

(1) false allegations of the Defendant's misappropriation of funds;

(2) failure to disclose that more than 1.5 million watches (being goods needed to fulfil the partnership's order) have been shipped;

(3) this action is actuated by the Plaintiff's ulterior motive to take over the control of the partnership's factory in Mainland China.

6. The prohibition order was sought (and granted on 30 September 2000) pursuant to Section 21B(1)(C) and 21B(3) the High Court Ordinance, Cap. 4.

7. Having heard Mr Boyton for the Plaintiff and perused the materials before me, I consider that the following matters are important to the determination of this appeal. First, the allegation that the Defendant is about to leave Hong Kong permanently is not supported by any undisputed documentary evidence. Further, it is denied by the Defendant who claims that he was born and brought up in Hong Kong and that his family, business and other ties are here. Secondly, I have also considered the following: -

(1) even according to the Plaintiff's case all the alleged wrongful acts of Defendant must have been known to him since at least August 2000 and latest by 23 August 2000: see paragraph 15 Plaintiff's affidavit and exhibit "MST-6";

(2) the Plaintiff's complaint that the Defendant has misappropriated US$300,000 is, to say the least, difficult to understand from the evidence adduced. The sale price of the partnership order was US$495,000 for 1.5 million watches. The unit price was therefore US$3.03 for each watch. Accordingly to the Plaintiff (and this is accepted by the Defendant) the schedule of expenditure was agreed between the parties in about June 1999: see exhibit "MST-4", paragraph 9 of the Plaintiff's affidavit and paragraph 14 of the Defendant's affirmation. The total amount of expenditure was agreed to be approximately US$370,000. The unit cost was stated therein to be US$0.24 per watch. The Defendant said in his affirmation that the unit cost was US$0.28 but I am prepared to approach this matter on the basis it was US$0.24;

(3) despite (2) above, the Plaintiff stated in his affidavit in support of the ex parte application for the prohibition order that the total expenditure was US$20,670 (RMB161,215);

(4) the total amount of credit into the partnership's joint name account was US$301,452.73; see exhibit "YWH-5". The production work relating to the partnership's order must have commenced from about May 2000 or June 2000. Leaving aside the schedule of expenditure, it is to be expected that various expenses were needed for manufacturing the goods in question. As stated earlier, the Defendant said more than 1.5 million watches had been shipped and they had not been paid for: paragraphs 17 and 18 of the Defendant's affirmation. This was not mentioned in the Plaintiff's affidavit although the Plaintiff now accepts that about 1.4 million watches had been shipped: paragraph 6(d) of McKellar's affidavit dated 27 October 2000.

8. Mr Boyton for the Plaintiff fairly accepts at the appeal hearing that a number of matters had not been correctly stated in the Plaintiff's evidence, for example: -

(a) the reference to the misappropriation of US$45,000 is not supported by documents;

(b) the reference to "MST-4" at paragraph 9 of the Plaintiff's affidavit should have been a reference to "MST-5".

9. This is an appeal involving an application for a prohibition order. Bearing in mind the potentially grave effect of such an order on a person's freedom, I do not think it is right for me to decide the appeal based on things not appearing by way of evidence. While I do not doubt Mr Boyton's integrity when he puts forward explanations about the Plaintiff's evidence, I must base my decision solely on the evidence now placed before me.

10. It is trite law that in ex parte applications, there is a duty on the applicants' part to make full and frank disclosure to the court. Having considered the totality of the evidence, I conclude that the Plaintiff has not only failed in his duty of full and frank disclosure, he has "over-inflated" his case at least regarding the alleged misappropriation of US$300,000 and therefore has misled the learned Master at the ex parte hearing in September 2000.

11. Further, as stated above, the Plaintiff must have known of the alleged wrong-doings of the Defendant by the end of August 2000. The prohibition order was only sought on 30 September 2000. Despite the allegation that the Defendant would leave for Australia, it is now accepted that he has not done so. Looking at the matter "in the round", I am not satisfied that there is proper evidence before me that the Defendant will leave Hong Kong permanently.

12. In coming to this conclusion, I have taken into consideration the affidavit of Mr McKellar dated 27 October 2000 and the affirmation of Mr Leung dated the same date. Mr McKellar deposed at paragraph 4 of his affirmation: -

"I have since spoken with our clerk [referring to Mr Leung] and he has confirmed that the Defendant did state that he intended to get to the KCR immediately to Lo Wu to try to escape from Hong Kong and the Plaintiff's claim."

13. This, however, is not supported by Mr Leung when he deposed at paragraph 3 of his affirmation:

"At the time I served the said Dominic Yiu Wing Hong he was with the Plaintiff herein. I recall that the said Dominic Yiu Wing Hong then stated to the Plaintiff and myself that he intended to try to leave Hong Kong that afternoon. I warned the said Dominic Yiu Wing Hong that he should not disobey the Court Order and informed him he could apply to Court to discharge the Order. Nevertheless the Defendant repeated that he would try to escape from Hong Kong that same day and he rushed off."

It is regrettable that inaccurate evidence should have come from a solicitor.

14. There is no reply affidavit from the defence. However, Mr Chu for the Defendant informs me that the allegations made by the Plaintiff recently are not accepted by the defence. The appeal was brought on for hearing in an expedited manner. For this reason, I would accept Mr Chu's stance even though there is no evidence to such effect. As to the Defendant's response as stated in Mr Leung's affirmation, I consider that that could have been the natural response of someone in anxiety when he was served with court documents which in effect prohibit him from leaving Hong Kong; no sinister inference should be drawn from such matter.

15. For the above reasons, I do not consider it necessary to deal with the other matters raised in Mr Chu's skeleton submissions. The learned Master was correct in his decision on 27 October 2000. The appeal is therefore dismissed.