WANG MAI LEE v. LAU PIT CHUEN AND ANOTHER

HCA 915/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 915 OF 2005

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J U D G M E N T

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1.  This is an application by the plaintiff for an interlocutory injunction against the defendants to restrain the defendants from soliciting or attempting to entice existing customers away from a partnership business in the name of Lord Grace Shung Tak Home ("the Partnership").

2.  The plaintiff and the defendants are the current partners of the Partnership.  The Partnership was first founded in about July 1987 between the plaintiff and the 1st defendant and another partner who has since retired.  It has been carrying on the business of a senior citizen residence in Kam Tin, Yuen Long.  The 2nd defendant, who is the wife of the 1st defendant, joined the partnership later.

3.  Problems and disputes have arisen between the plaintiff and the defendants over the affairs of the Partnership.  From the evidence before me, those problems and disputes started some time in 1998.  Allegations are being made by the plaintiff against the defendants whilst counter allegations are made by the defendants against the plaintiff.  The plaintiff commenced the present proceedings by writ issued on 19 May 2005, claiming an order that the Partnership be dissolved, that the affairs of the Partnership be wound up, for all necessary accounts and inquiries and the appointment of a Receiver.

4.  The parties have filed various affirmations setting out their allegations and cross-allegations.  It is neither necessary nor indeed appropriate for me to go into them other than what I set out below.  It suffices for me to say that I am satisfied that the plaintiff's claim cannot be regarded as frivolous.  Counsel for the defendants does not dispute that there are triable issues on the claim for dissolution.

5.  The question which arises in the summons before me is whether the plaintiff has shown that there is a real risk of the defendant attempting to solicit or entice away customers of the Partnership pending the trial of the action.

6.  On this question, it is not in dispute that the 1st defendant is a shareholder of another establishment for aged persons called South Centre for the Aged ("SCA").  The evidence is that he is a 15% shareholder of SCA, and that SCA is in Sheung Shui and has been established since 1998.  He is also an executive director.  The plaintiff originally relied on the transfer of one Yip Pan (see paragraph 10 of her 2nd affirmation) from the Partnership to SCA some time in 1998.  Mr. Ho, who appears for the plaintiff, informed me that the plaintiff is no longer relying on this incident as evidence of solicitation.  The plaintiff does not dispute that that transfer was arranged at the initiative of the Social Welfare Department.

7.  The plaintiff relies on the judgment of Godfrey J (as he then was) in Honsaico Trading Ltd. v. Hong Yiah Seng Co. [1990] 1 HKLR 235.  That was a case where the learned judge found the defendant to have exhibited an unacceptably low standard of commercial morality in its dealing with the plaintiff and reasoned that the plaintiff needed the protection of a Mareva injunction as the defendant is unlikely to shrink from attempting to defeat the interests of the plaintiff.  In Honsaico, Godfrey J was able, on the affidavit evidence alone, to come to the view that the defendant's conduct in its dealing had been "devious".

8.  In the present case, Mr. Ho for the plaintiff submits that the evidence before the Court shows a strong case of dishonesty on the part of the defendants.  The plaintiff says that the defendants were in charge of the accounts.  Although the affirmation of the plaintiff as to her allegation is far from clear, Mr Ho was able to explain to me what it is that the plaintiff complains.  The matters complained of happened between July and December of 1997.  The manuscript records kept by the defendants showed that various sums were received from customers.  When those items were added up, they exceed the amount recorded in the same document as having been deposited in the bank account of the Partnership or retained as petty cash.  Mr. Ho told me that there are nine instances of discovered irregularities.  Six of those were set out in a letter dated 31 May 2002 from the plaintiff's solicitors to the defendants' solicitors.  Mr. Ho says that the defendants have wholly failed to explain these irregularities.

9.  Mr. Lui for the defendants point out that the plaintiff has not pleaded any case of dishonesty.  Indeed, the case as currently pleaded is accounting irregularities and a failure or refusal to render true acounts and full information.  In the further and better particulars dated 13 July 2005, the defendants specifically asked the plaintiff whether it was the plaintiff's case that the alleged accounting irregularities were made intentionally.  The answer was that the plaintiff has no knowledge and means of verifying the 1st defendant's state of mind at the material time.  Mr. Lui accepted that there may be mis-calculations or carelessness on the part of the defendants, but he says that the income was well documented and could be checked.  He also points out that the defendants' solicitors have offered inspection vide a letter dated 24 December 2004.

10.  With the plaintiff's abandonment of reliance on the single incident mentioned above, there is no evidence that throughout these years the defendants have done anything to solicit or entice customers away from the Partnership.  Mr Ho says that the plaintiff is concerned that pending dissolution of the Partnership, the defendants would divert away the customers of the Partnership.  I fail to see any rational basis for that concern merely because of the alleged accounting irregularities said to have happened in 1997.

11.  In the circumstances, I am not satisfied that the plaintiff has shown that there is a reasonable apprehension that the defendants would act in breach of their fiduciary duties in attempting to solicit or entice customers of the Partnership such as to require the Court's protection by way of an interlocutory injunction.  I dismiss this application.

12.  (After hearing counsel) Costs of this application be borne by the plaintiff, to be taxed forthwith.