FENN KAR BAK LILY v. CHRISTINE M KOO & IP AND ANOTHER

HCA 4082/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4082 OF 2002

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J U D G M E N T

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1. This is an appeal against an order of Master Lisa Wong dated 16 September 2003, whereby she ordered that the Plaintiff should provide to the 1st and 2nd Defendants certain further and better particulars of its Statement of Claim that had been ordered by Master S. Cheung on 12 May 2003 and awarded the costs of the application before her to the 1st and 2nd Defendants.

2. The Plaintiff's claim is brought against the 1st Defendant, a firm of solicitors, whose partners appear to be the 2nd Defendant, Mr Lai Kam Wah ("Mr Lai"), Mr Ip Shing Hing ("Mr Ip") and Mr Wong Chor Wan ("Mr Wong").

3. The background to the Plaintiff's claim can be briefly stated as follows. Between about 1 April 2000 and 28 March 2002, the Plaintiff and the 2nd Defendant were equity partners in a firm of solicitors in Hong Kong known as Christine M Koo & Co. The partnership between them was dissolved on 28 March 2002. The Plaintiff's claim relates to monies in two sets of bank accounts which were opened with the Hongkong & Shanghai Banking Corporation Ltd ("HSBC") in the name of the firm during the life of the partnership between herself and the 2nd Defendant. These are accounts numbers 004-007-262223-838 and 004-007-262223-001, opened with the Lai Chi Kok branch of HSBC ("the 007 Accounts"), and accounts numbers 004-485-318083-838 and 004-485-318083-001, opened with the Admiralty branch of HSBC ("the 485 Accounts"). The Plaintiff says that the funds in these accounts were not assets of the partnership. It is the Plaintiff's case that monies in the 007 Accounts consisted of the profit costs generated by a team of lawyers under her sole charge and belonged to her beneficially, and that monies in the 485 Accounts consisted of the profit costs generated by a team of lawyers under the charge of both herself and the 2nd Defendant and belonged to both of them beneficially in equal shares. It is further alleged by the Plaintiff that although the accounts were in the name of the partnership of which she and the 2nd Defendant were the sole equity partners, monies in these accounts were held by the partnership on trust for herself (in the case of the 007 Accounts) and herself and the 2nd Defendant in equal shares (in the case of the 485 Accounts).

4. The Plaintiff's case is that shortly before the dissolution of her partnership with the 2nd Defendant, she and the 2nd Defendant agreed that profit costs from work done prior to dissolution should, after dissolution, be paid into the 007 Accounts where such profit costs were generated by work done by her team of lawyers, and into the 485 Accounts where they were generated by work done by the common team of lawyers. She says that monies were paid into the accounts in accordance with this agreement for some time after the dissolution of her partnership with the 2nd Defendant.

5. The Plaintiff says that following the dissolution of her partnership with the 2nd Defendant, the 2nd Defendant formed a new partnership with three other partners, Mr Lai, Mr Ip and Mr Wong. This new partnership was formed on 1 April 2002, and initially, it continued to use the same firm name as had been used by the Plaintiff and the 2nd Defendant, "Christine M Koo & Co". It is said that it changed its name to "Christine M Koo & Ip" at a later date. The Plaintiff says that the new firm continued to maintain the 007 and 485 Accounts, but did so on trust for herself (in the case of the 007 Accounts) and on trust for herself and the 2nd Defendant (in the case of the 485 Accounts).

6. The Plaintiff claims that although initially, after the dissolution of her partnership with the 2nd Defendant, the 007 Accounts were operated on her instructions (as they should have been) and the 485 Accounts were operated on the instructions of herself and the 2nd Defendant jointly (also as they should have been), from about late October 2002, this ceased to happen, and that thereafter, the new partnership (the 1st Defendant) has, in breach of trust, converted the monies in both the 007 and 485 Accounts to its own use, and has misapplied some of the monies in such accounts.

7. The Plaintiff also alleges that the 2nd Defendant, in her personal capacity, is liable to her in respect of alleged breaches of a deed of dissolution between them, which was to regulate their rights and obligations upon the termination of the partnership between them. This aspect of the claim does not appear to be particularly relevant to this appeal.

8. Against this background, the Plaintiff commenced these proceedings on 28 October 2002, serving her Statement of Claim on 2 January 2003. By these proceedings, she claims, as against the 1st Defendant, declarations as to the beneficial ownership of the monies in the 007 and 485 Accounts, orders for payment to her to be made out of the funds in both sets of accounts, injunctions to restrain dealings with such accounts, and various enquiries and other orders. She also claims, against the 2nd Defendant, damages for breach of contract and other related relief.

9. The position of the Defendants is that the Plaintiff's claim is misconceived, as the 007 and 485 Accounts (along with other bank accounts held by the partnership in which she and the 2nd Defendant were partners) were assets of the partnership, and were not held in trust for the partners, having been opened simply with a view to administrative convenience, so as to enable the partnership to monitor the contributions made by the various teams of lawyers operating under the partnership, and so as to assist in the working out of accounts between the Plaintiff and the 2nd Defendant in connection with their respective shares of profit and liability. The Defendants say that, on dissolution, it was agreed by the Deed of Dissolution that the run off of receipts and payments of liabilities in respect of their partnership should continue through the operation of these Accounts, and that for a period of two years after the dissolution, monthly statements in respect of the Accounts would be prepared for inspection by the Plaintiff, with a final accounting at the end of the two years. The Defendants say that the Accounts have been operated in accordance with this agreement, and that they have throughout been operated by the 2nd Defendant alone, and that the 1st Defendant (the new partnership) has had nothing to do with the operation of the Accounts.

10. The 1st and 2nd Defendants considered that the Plaintiff's Statement of Claim was insufficiently particularised, and on 25 February 2003, they took out a summons seeking an order that the Plaintiff should provide further and better particulars of parts of its pleading. Some particulars were voluntarily provided. Following a contested hearing before Master S. Cheung on 12 May 2003, the Plaintiffs were ordered to provide the rest of the particulars sought. The Plaintiffs did not appeal from this order, and provided answers to the requests on 26 May 2003.

11. However, the Defendants considered that in a number of cases, the answers provided by the Plaintiff were so deficient as to amount to a failure by the Plaintiff to provide the particulars which they had been ordered by Master S. Cheung to provide. In these circumstances, the Defendants took out a further summons dated 5 August 2003, seeking an order that unless proper particulars were provided in response to those requests (which were identified), the Plaintiff's claim should be struck out. It was this summons which came before Master Lisa Wong, and after a short contested hearing, she ordered that the particulars sought should be provided by the Plaintiff within 14 days, but did not make the unless order which the 1st and 2nd Defendants had asked for. She also ordered the Plaintiff to pay the 1st and 2nd Defendants the costs of their application.

12. At the hearing before me, Mr Ng, who appeared for the Plaintiff, submitted that if they were dissatisfied with the answers provided, the Defendants should have applied for an order seeking further and better particulars of the particulars provided, and should not have sought an order which in effect reiterated the order made by Master S. Cheung. With respect, I do not agree. If the particulars provided were so deficient as not to amount to answers at all, it seems to me that it would be open to the requesting party to proceed on the basis that there had been no answer given, and thus a failure to comply with the order that had been made. On the hearing of such an application, the court would have to examine the answers provided, and come to a view as to whether or not they amounted in substance to particulars of the allegation of which particulars had been ordered to be given.

13. Mr Ng also submitted that the requests were not in fact proper requests for particulars, in that one of them, at least, did not serve any of the functions of a request for particulars identified by Bokhary JA (as he then was) in ADS v Wheelock Marden [1994] HKC 264 at 269G to 270A, and that others sought particulars that did not arise out of the pleaded allegations. However, it seems to me that Mr Chong, who appeared for the Defendants, was right in submitting that this argument is not open to Mr Ng in the context of the present application. If such an argument were to be made, it could and should have been made to Master S. Cheung, when the particulars ordered were first applied for. If the Plaintiff had been dissatisfied with her decision, it was open to the Plaintiff to appeal against it. This was not done, and it is, I think, now too late for objection to be taken to the particulars having been ordered to be provided. To allow the Plaintiff now to take this point (whatever its merits) would in effect be to allow an appeal to be made against the order of Master S. Cheung well out of time, with no grounds being shown as to why such an appeal should be entertained.

14. Mr Ng also submitted that in respect of most of the particulars ordered, it would not be possible for the Plaintiff to provide particulars (or at least meaningful particulars) until after discovery. Thus, it was said, a number of the requests sought information which would only be available to the Plaintiff after it has had discovery of the documentation relating to the operation of the 007 and 485 Accounts. It seems to me that this, too, is an argument that should have been put to Master S. Cheung on the hearing of the first summons on 12 May 2003. That said, however, I would accept that it may be sufficient for a party to give the best particulars which he is able to give, pending discovery or other interrogatories, without being at risk of being struck out. This follows from Marshall v The Inter-Oceanic Steam Yachting Co. (1885) 1 TLR 394, and Higgins v Weekes (1889) 5 TLR 238. However, in both those cases, some, albeit general, particulars were given. The question in this case is whether any particulars have, in substance, been given at all.

15. I therefore turn now to consider whether or not the particulars which the Plaintiff gave on 26 May 2003 can, read fairly, be regarded as having answered (at least to such extent as the Plaintiff is presently able to) the requests which they were ordered by Master S. Cheung to answer.

16. Request 2: In paragraph 21 of the Statement of Claim, the Plaintiff alleges that:-

"Notwithstanding the change of name of the Firm and the incoming of 3 new partners, Mr Lai, Mr Ip and Mr Wong, the 1st Defendant continued to trade an practise as a firm of solicitors in Hong Kong under the same Business Registration number as state (sic) in Paragraph 15 above."

The Defendants asked the Plaintiff to state whether it was her case that her partnership with the 1st (sic) Defendant under the name or style of "Christine M Koo & Co." was the same partnership comprised with the 2nd Defendant, Mr Lai, Mr Ip and Mr Wong.

17. One would have thought that such a request would admit of only a "Yes" or "No" answer. In the course of submissions, Mr Ng suggested that there could only be one answer to that question, given that partnerships consisting of different individuals, even if operating under the same firm name, could not be the same partnership. That being so, it is surprising that instead of giving the simple answer, "No", the Plaintiff instead chose to obfuscate and avoid the issue by stating:-

"It is the Plaintiff's case that the 1st Defendant continued to trade and practise as a firm of solicitors in Hong Kong under the same Business Registration number of 16199675-000 but the composition of the partnership changes from time to time."

In my view, that was not an answer to the request made, and the Defendant is not to be blamed if it were to be left none the wiser as to what the Plaintiff's position was. I therefore consider that Master Lisa Wong was fully entitled to order that the Plaintiff provide an answer to this request. I can see no reason why the straightforward answer suggested by Mr Ng in the course of argument could not have been given in the first place, but whatever the reasons for that, an answer should now be provided.

18. Request 3: In paragraph 22 of the Statement of Claim, the Plaintiff alleged that:-

"The 1st Defendant continued to operate, maintain and keep all monies in the 007 Accounts and the 485 Accounts ... after the 28 March 2002 and have, in or around July 2002, changed the name of the account holder of the 007 Accounts and the 485 Accounts from Christine M Koo & Co. to Christine M Koo & Ip and continued to hold and keep the monies therein on trust for the benefit of the Plaintiff in the manner aforesaid."

This drew a number of requests for particulars. Particulars were sought of all facts and matters supporting the allegations that each of the partners in the 1st Defendant (i.e. the 2nd Defendant, Mr Lai, Mr Ip and Mr Wong) had operated, maintained and kept monies in the Accounts, that each of them was responsible for the change of name of the account holder of the Accounts, that each of them continued to hold and keep the monies in the Accounts on trust for the Plaintiff, and that there was a relationship of trustee and beneficiary between each of Mr Lai, Mr Ip and Mr Wong on the one hand, and the Plaintiff on the other in respect of such monies.

19. Again, Mr Ng for the Plaintiff said that the position was tolerably clear - at this stage, the Plaintiff was only able to rely on the fact that (as she had already alleged) she was the beneficial owner of the monies in the 007 Accounts and (half) of the monies in the 485 Account, but that the legal owner of such Accounts was, after 1 April 2002, the 1st Defendant, so that the 1st Defendant should be regarded as a trustee for the Plaintiff, and that, in consequence each of the individual partners in the 1st Defendant was also a trustee, and that the acts of one partner were to be regarded as the acts of each of them.

20. Unfortunately, however, no answer along these lines, supplemented by such particulars as the Plaintiff could presently give as to the operation, maintenance and keeping of monies in the account, and as to the change of name of the account holder, was provided. Instead, the Plaintiff simply repeated part of its allegation, and asserted that it could not give further particulars until after discovery, and in relation to the allegation of trust, simply asserted the fact that the 1st Defendant was the account holder. While I would accept that the Plaintiff may not be able, until after discovery to give precise details of each act in relation to the Accounts which are relied upon, including details of the acts done by particular individuals, it seems to me that having been ordered to provide particulars, it is incumbent on the Plaintiff to at least provide as precise a statement of the nature of her case as possible, and that this has not been done. It therefore seems to me that this request too, must be answered, as Master Lisa Wong has ordered.

21. Requests 6 and 7: These requests sought particulars of the allegations in paragraphs 27 and 28 of the Statement of Claim that the 1st Defendant issued cheques and effected payment drawn on the 007 and 485 Accounts respectively pursuant to the instruction and orders of the Plaintiff, and the joint instructions and orders of the Plaintiff and the 2nd Defendant. The request does not seek particulars of the transactions relied upon, but only enquires which of the individual partners issued cheques and effected payments (paragraphs (a) and (b) of the requests), and asks what is relied upon in support of the Plaintiff's contention that such issue of cheques and effecting of payment was the collective act of the 1st Defendant firm and of its partners (paragraphs (c) and (d) of the requests).

22. The Plaintiff's answer was that it was not able to provide these particulars before discovery, when it will be able to see what (if any acts) were done by the individual partners of the 1st Defendant, but that in relation to the second part of the request, the Plaintiff relies on the principles of agency applicable to partnership, whereby each partner is the agent of all other partners, so as to render all of them responsible for the acts of each. It seems to me that having regard to the particulars sought, this probably is the best answer to the request that can be given pending discovery, and that in these circumstances, the Plaintiff should not have been ordered to give any further answer to this request at this stage.

23. Requests 11 and 15: These requests seek particulars of the basis on which it is alleged that the relationship of trustee and beneficiary, and a fiduciary relationship, existed between the Plaintiff and each of Mr Lai, Mr Ip and Mr Wong in relation to the monies in the 007 Accounts and 485 Accounts. These requests are similar to those made under Request 3(c) and (d). The answers given are also broadly similar, and for the same reasons which I have given in relation to Request 3, it seems to me that there is no proper answer to these requests, in that the answers given provide no link to the Plaintiff, and I accordingly consider that the Plaintiff must provide, at the very least, a statement of the nature of her case in answer to these requests also.

24. Requests 12 and 13: These requests seek particulars of the allegations that there have been conversions and misappropriations by the 1st Defendant of monies in the 007 and 485 Accounts to their own use. What is sought are details of the facts and matters relied upon to support the allegations against each of the individual partners. The only answer given is that trial balances in respect of the Accounts show that there have been unauthorised withdrawals from time to time. However, this answer does not provide the particulars sought, but refers only to the evidence on the basis of which the unparticularised allegation is to be proven. Even accepting (as I am inclined to do) that the Plaintiff is not in a position to ascribe specific acts to particular individuals, it seems to me that the Plaintiff would be in a position to specify the withdrawals relied upon from the trial balances which she has in her possession and to state the nature of her case as to why such withdrawals are to be treated as the acts of each of the partners in the 1st Defendant, on lines perhaps similar to those which should be given in respect of Request 3, which I have dealt with above.

25. I therefore conclude that with the exception of Requests 6 and 7, the Plaintiff has not, by its answers served on 26 May 2003, provided any of the particulars which it was ordered to provide by Master S. Cheung and which the 1st and 2nd Defendants had to pursue before Master Lisa Wong. In those circumstances, I uphold the order made by Master Lisa Wong save in respect of Requests 6 and 7, and order that the Plaintiff shall, within 14 days of today, provide the 1st and 2nd Defendants with further and better particulars in answer to Requests 2, 3(a), (b), (c) and (d), 11(a) and (b), 12(a), (b) and (e), 13(a), (b) and (e) and 15(f) and (g).

26. So far as the costs of this application are considered, it seems to me that overall, although the appeal will be allowed in part, the 1st and 2nd Defendants have been substantially successful in the result of this appeal. Having regard to the course of the hearing and the arguments which were put forward, I make an order nisi that the Plaintiff should pay 75% of the 1st and 2nd Defendants costs of the appeal, to be taxed on the party and party basis if not agreed.