YANG TAT SHING v. EKPAC ENGINEERING LTD

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REASONS

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1. This is an appeal by the Defendants from the Order of the Master dismissing the Defendants' application for an Unless Order in respect of Particulars of the Statement of Claim. At the conclusion of the hearing of the appeal, save for four Requests I refused to vary the Order of the Master and I said I would give my Reasons later. I now hand down my Reasons.

2. The 1st and 2nd Defendants were formerly employed by the 3rd Plaintiff, which is part of the Ekpac Group. While so employed it is alleged that firstly they obtained secret commission and secondly that they formed a competing company, the 3rd Defendant to take away business from the Plaintiffs. The income of the Plaintiffs was derived from selling for European manufacturers, Kone and Svetruck, their products in China. The 1st and 2nd Defendants were the senior officers doing such work. It is alleged that instead of faithfully serving their employer, the 1st and 2nd Defendants took such action as to divert business from the Plaintiffs to themselves or companies they controlled and that they conspired to cause Kone and Svetruck to leave the Plaintiffs and joined up with the Defendants. If true, it is the familiar Hong Kong story of servants who took advantage of their positions and took away the business from their employers. By the time the employer found out what happened, the damage had been done and as was usually the situation in such cases, the employer was left trying to piece things together from what little records were left behind by the ex-employees. It is against this background that I am informed the Plaintiffs commenced this Action and that I must judge the adequacy of the Plaintiffs' pleadings with that commercial reality in mind.

3. The present appeal involves only the second aspect of the Plaintiffs' claim in the Action, namely the wrongful receipt of three sums of money by the 4th and 5th Defendants, companies said to be owned and controlled by the 1st Defendant. Dalian Crane is a company in China which was subcontracted to do work for Kone and the Plaintiffs and therefore I presume was paid large sums. There is some uncertainty as to whether it was Kone or the Plaintiffs who actually subcontracted the work to Dalian. But what is not in dispute is that Dalian Crane a Chinese company paid three large sums of money to the 4th and 5th Defendants at their Hong Kong Bank accounts. The case of the Plaintiffs is that the 4th and 5th Defendants were creatures of the 1st Defendant who had no business receiving these three large sums from Dalian Crane and that they were received either as secret commissions or if for actual work done by the 4th and 5th Defendants for Dalian Crane, then the work ought to have been properly channelled to the Plaintiffs and therefore the money so received by the 4th and 5th Defendants should be accounted to the Plaintiffs.

4. Four Groups of Further and Better Particulars of the Statement of Claim were sought by the Defendants from the Plaintiffs. On 19th July 1996, Master Jones made an Unless Order for the furnishing of Further and Better Particulars to these four Groups of Requests. The Plaintiffs served their Further and Better Particulars. The Defendants were however not satisfied with them. But instead of enforcing the Unless Order by seeking to enter Judgment for non-compliance with the Unless Order of Master Jones, the Defendants in September 1996 took out another Unless Order Summons which was dismissed by Master Cannon apparently based on a technicality. There was, no appeal from that dismissal. The Defendants then took out in December 1996 another Unless Order Summons in relation to the same 4 Groups of Requests. After a somewhat complicated series of hearings in January, March and April 1997, that December 1996 Unless Order Summons of the Defendants was dismissed by Master Cannon with costs. The Defendants appealed from this Order.

5. At the hearing before me, the parties agreed that a fair resolution of the Appeal is to assess the adequacy of the Answers of the Plaintiffs to the 4 Groups of Requests. In making my assessments, it seems to me that in the exercise of my discretion I must have regard to the overall pleaded case of the Plaintiffs, the commercial reality of what happened and bear in mind that it is not the function of the Court to order a party to furnish particulars which a party is obviously unable to supply.

6. The First Group of Requests (Requests 1, 2 and 3) relate to the allegation of the Plaintiffs that the 3rd Defendant was creature of the 1st and 2nd Defendants and that the 4th and 5th Defendants were creatures of the 1st Defendant. At the hearing, Mr. Carolan for the Plaintiffs accepted the Court's suggestion that the allegations contained in Requests 2(b) and 3(b) are not necessary and agreed to their deletion from the Statement of Claim. On the basis of such allegations being deleted, I took the view that the Answers to Requests 1 and 2 are adequate and that the Answer to Request 3 was inadequate.

7. The Answer to Request 1 was fairly extensive and provide sufficient particulars for the allegation that the 1st and 2nd Defendants beneficially owned and controlled the 3rd Defendant through their respective relatives. The Answer to Request 2 is also adequate because in my view it sufficiently linked the 4th Defendant to the 1st Defendant. The Answer to Request 3 however is a different matter, because all that was pleaded was that the current registered office of the corporate directors and shareholders of the 5th Defendant is the same as the current registered office of the 3rd Defendant. This Answer would support more a case of the 5th Defendant being owned by the 3rd Defendant rather than by the 1st Defendant. The Answer to Request 3 does not sufficiently provide the link between the 5th Defendant's alleged ownership and control with the 1st Defendant. Accordingly it seems to me that it should be ordered that further particulars be given in support of Request 3(a) and that failing such particulars being given within 14 days by the Plaintiffs, the allegation contained in Request 3(a) should be struck out.

8. The second Group of Requests (Request 4, 7 and 10) relate to the 1st Defendant's alleged instigation and request for Dalian Crane payment to the 4th and 5th Defendants. It is true that the Plaintiffs had given in their Answers to the Requests not only their pleaded case on this (1st Defendant made the request and provided to Dalian Crane, the Hong Kong Bank Accounts of the 4th and 5th Defendants to which the money was to be sent) but also how they found out about the instigation of payments, namely from what Mr. Kang of the Plaintiffs was told by the accountant of Dalian Crane. The Plaintiffs had pleaded evidence which they were not obliged to do and were not supposed to do but this does not mean that the Answers given are so inadequate under this Group that the Plaintiffs must be forced to give more, which they are unable to give at present. In my judgment, the Plaintiffs had given all the particulars they could on this aspect and no doubt after discovery and/or interrogatories and/or further investigation, when they are able to supply more detailed particulars they would do so. The Master's Order on this Group of Requests was rightly made.

9. The third Group of Request (Request 5, 8 and 11) relate to the allegation that the payments by Dalian Crane were secret commissions paid by Dalian Crane which were disguised as "service agreement" fees. As I understand it, the 1st Defendant was responsible for giving the installation work to Dalian Crane, with the consequence that Dalian Crane would be paid substantial sums for doing such work. It is in that context that the 3 large payments in relation to the same project by the Dalian Crane to the 4th and 5th Defendants (alleged to be really 1st Defendant) had to be scrutinised. The remittance were pleaded to be requested by the 1st Defendant to be made by Dalian Crane to the Hong Kong Bank Accounts of the 4th and 5th Defendants. The Plaintiffs had given sufficient particulars under this Group. But even if there might be some inadequacy, I would not exercise my discretion to force the Plaintiffs to give further particulars which they are unable to do so at present. I therefore affirm the Master's Order in relation to this Group of Requests.

10. The fourth and last Group of Requests (Request 6, 9 and 12) relate to the services alleged to be provided to Dalian Crane which could and should have been provided by the Plaintiffs. During the hearing at the Court's prompting, Mr. Carolan agreed that the Answers to this Group of Requests would be more clear if the words "by the purported service agreement" were added to the end of each Answer. This would make it clear that whatever services might have been provided to Dalian Centre under any "service agreement", the Plaintiffs could and should have provided such services and thereby earned the three large sums which were paid by Dalian Centre. With the Answers so amended, the Defendants could be in no doubt as to what case they had to meet under this allegation. In the circumstances with the amendments to the Answers, I see no basis for varying the Order of Master Cannon.

11. The final matter raised by Mr. Chan for the Defendants is that the Master ought not to award all the costs of the December 1996 Summons to the Plaintiffs. This matter of some special order of costs was raised by the parties before the Master and she did not accede to the request for some special order. I accept of course that the material now put before me (which was of course well known to the Master) might give rise to a different and special order of costs such as specially providing for costs of the January 1997 hearing to be given to the Defendants. But that is not the point. The point is whether it could be demonstrated that the Master was wrong in not making a special order of costs. I am not convinced that the Master was wrong in her decision. Very often in the course of dealing with an application, a point was taken which was not successful but it does not necessarily imply that a special order for costs should be made in relation to each and every unsuccessful point. A tribunal is normally in the best position of deciding what is the fair order of costs to be made in all the circumstances. It would be unusual for a court on appeal (even on a rehearing) to disturb an order of costs made within the power of the lower court. I am not persuaded that a wrong order below had been made nor that the facts disclosed that a different order of costs ought to be made. Accordingly I also do not accede to Mr. Chan's request to vary the costs order made below.