GIAN ANDREA PESCI AND ANOTHER v. PETER MIU AND ANOTHER

HCA2075/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

ACTION NO. 2075 OF 2006

---------------------

----------------------

-----------------------

 J U D G M E N T

-----------------------

1. This is an appeal by the defendants against the order of Registrar Au Yeung given on 13 September this year refusing to order the plaintiffs to provide particulars sought by the defendants in their Request for Further and Better Particulars of the Statement of Claim filed on 21 August.  

BACKGROUND

2. The plaintiffs bring this claim against the defendants for breach of agreement.  The plaintiffs’ case as pleaded is based wholly on a Memorandum of Agreement in writing dated 18 September 2000.  That Memorandum of Agreement was not drafted by qualified lawyers.  It appears to have been drafted by layman.  The gist of that agreement was that all of the business of the 2^nd plaintiff would be transferred to the 2^nd defendant for a purchase consideration of US$200,000.  However the Memorandum of Agreement was signed only by the 1^st plaintiff and the 1^st defendant.  It is not disputed that the 1^st plaintiff is the majority shareholder and director of the 2^nd plaintiff and it is also not disputed that the 1^st defendant is the majority shareholder and director of the 2^nd defendant. 

3. On the Memorandum of Agreement there is no express indication that the 1^st plaintiff signed on behalf of the 2^nd plaintiff nor that the 1^st defendant signed on behalf of the 2^nd defendant albeit that the terms contained therein made provisions for the 2^nd plaintiff’s business to be transferred to the 2^nd defendant and that the consideration of the US$200,000 would be paid by the 2^nd defendant to the 2^nd plaintiff, thereby imposing obligation on both the 2^nd plaintiff and the 2^nd defendant.  

4. The parties have recognised that there are uncertainties with the Memorandum of Agreement.  It is undoubtedly because of such uncertainties the plaintiffs have pleaded in the alternative, namely that the parties to the Memorandum of Agreement was the 1^st plaintiff and/or the 2^nd plaintiff on the one hand, with the 1^st defendant and/or the 2^nd defendant on the other hand being the other contracting parties. 

The particulars sought by the defendants

5. Particulars sought can be divided into several categories.  These categories are as follows :

(1)	the parties to the agreement — contained in Request No. 1(a) to (e);
(2)	the transfer of the business — contained in Request No. 1(f);
(3)	the consideration — contained in Request Nos. 2 and 4;
(4)	relating to the invoice — contained in Request No. 3; and
(5)	loss and damage — contained in Request No. 5.

I shall deal with each of these categories in turn.  

(1) The parties to the agreement

6. Any uncertainty or ambiguity arising from this comes from the Memorandum of Agreement itself in the way that it has been drafted and worded.  It is not the uncertainty or ambiguity in the pleadings.  The resolution of those uncertainties would depend on the ultimate construction to be put on the Memorandum of Agreement by the court after hearing evidence.  That being the case, this is not a matter for further and better particulars, rather being a matter of construction of the agreement at trial.  If the purpose of the further and better particulars sought by the defendants is an attempt to restrict or limit the plaintiffs from pleading in the alternative, that cannot be right since the Rules of the High Court allows for pleading one’s case in the alternative so long as the facts relied on in the alternative case is not inconsistent with the facts relied on in the primary case.  Here there is no inconsistency in the alternative plea by the plaintiffs since the whole of the plaintiffs’ case is founded on the Memorandum of Agreement and which will be produced in due course to the court by way of evidence. 

(2) The transfer of business

7. That is dealt with in clause 1 of the Memorandum of Agreement which reads :

“

Effective 18 September, 2000 ‘LEATHER TREND’ will cease trading independently under its own name and shall transfer its business activities, including files and office records, trade samples, computer equipment and software, together with some office furniture to the premises of ‘FOCUS MATE’ located at Unit 1804-08, 18/F Nan Fung Commercial Centre, 19 Lam Lok Street, Kowloon Bay, Kowloon, Hong Kong.”

8. Clause 4 of the same Memorandum of Agreement also touches on the transferring of business in that it makes provision for the purchase consideration of US$200,000 and the relevant part of that clause reads :

“

In consideration of ‘LEATHER TREND’ transferring its business activities and customer/supplier relationships to ‘FOCUS MATE’, ‘Mr. Miu’ agrees that ‘FOCUS MATE’ shall make payments to ‘LEATHER TREND’ a total amount of US$200,000 (TWO HUNDRED THOUSAND UNITED STATES DOLLARS) hereinafter referred as to the ‘Purchase Consideration’. …”

Although the transfer of business, being the plaintiffs’ part of the bargain, ought to have been pleaded in the Statement of Claim but was not, it has, to some extent, been remedied having been pleaded in paragraph 6 of the Reply, which reads :

“

Paragraph 4 is denied.  The Plaintiffs aver that the 2nd Plaintiff has transferred all its business including, inter alia, four existing clients and seven prospective clients, to the 2nd Defendant.  The 1st and/or 2nd Defendants had not previously had any business dealings with those eleven clients.”

9. The plaintiffs’ case is simply that it has transferred all its business to the 2^nd defendant as per the Memorandum of Agreement.  The fact of what has been transferred has now been pleaded in paragraph 6 of the Reply, anything more would be evidence.  

(3) The consideration

10. That is stated in clause 4 of the Memorandum of Agreement which I have already cited.  What is sought by way of particulars in Request No. 2 is whether the 1^st or the 2^nd defendant has agreed to pay that consideration and where in the Memorandum of Agreement is that stated.  What is sought by Request No. 4 is whether the 1^st defendant was under an obligation to pay and whether the 1^st plaintiff was entitled to the purchase consideration and where that is stated in the Memorandum of Agreement. 

11. These requests are no more than a repetition of the earlier request relating to the parties to the agreement framed differently.  For the same reasons given for the requests relating to the parties to the agreement, that is ultimately a matter to be resolved by construction of the agreement at trial, not a matter for further and better particulars. 

(4) Invoice — Request No.3

12. The invoice as relied on by the plaintiffs has been identified in paragraph 18 of the Reply as being the invoice dated 12 October 2005.  Accordingly the particulars sought of the invoice has already been given albeit in the Reply and Defence to Counterclaim. 

(5) Loss and damage

13. The plaintiffs’ claim is simply for US$200,000, being the purchase consideration.  No other claim has been made by the plaintiffs for damages of breach or for special damages.  Even in paragraph 10 of the Statement of Claim where it makes a reference to loss and damage, that loss and damage is expressly stated to be “in the sum of US$200,000”.  The request for particulars of loss and damage is therefore wholly unnecessary and unmeritorious. 

14. Accordingly, on the substantive merits of this case, this appeal must be dismissed. 

15. Having dismissed the appeal on its substantive merits it is quite unnecessary for me to go into the procedural points as well as the abuse of process submitted by the plaintiffs which is aimed at the same direction, namely for this appeal to be dismissed.  The order therefore will be that this appeal is dismissed. 

[Submissions on Costs]

Costs

16. Costs of this appeal to be paid by the defendants to the plaintiffs in any event.