WONG KAM WING v. CHENG PUI LUN AND ANOTHER

DCCJ 3878/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3878 OF 2002

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J U D G M E N T

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1.  This is the taking of accounts between the Plaintiff (“P”) and the Defendants pursuant to the order of the Court of Appeal dated 11^th July 2003 made in CACV 21/2003 [Bundle A43-46] and the directions given by His Honour Judge Muttrie on 9^th June 2004 [Bundle A47-50] and Deputy Judge Chan on 23^rd June 2005 [Bundle A51-53] respectively in this action.

Background

2.  Sometime in 1997, P and the 1^st Defendant (“D1”) agreed to enter into a joint venture to purchase and sell land properties and to share any profit or loss therefrom in equal proportion.

3.  Seven properties were purchased under the joint venture arrangement.  Each property was purchased in the name of either P or D1.

Property	Date of purchase	Name of purchaser
Goodrich Garden, Tower 1, Flat 32D (“GOODRICH-1”)	March 1997	D1
Goodrich Garden, Tower 2, Flat 31D (“GOODRICH-2”)	March 1997	D1
Avon Park, Block 2, Flat 20B (“AVON PARK”)	April 1997	D1
Tai Hing Gardens, Tower 4, Flat 6D (“TAI HING-4”)	June 1997	P
Tai Hing Gardens, Tower 3, Flat 30D (“TAI HING-3”)	June 1997	P
Venice Gardens, Block 1, Flat 18H (“VENICE GARDENS”)	June 1997	D1
Tai Hing Gardens, Tower 11, Flat 2B (“TAI HING-11”)	June 1997	P

4.  By March 1998, three out of the seven properties purchased had been sold.  The remaining properties were AVON PARK, TAI HING-4, TAI HING-3 and VENICE GARDENS.

5.  P and D1 then decided to terminate their joint venture.  The accounts that they took at the time and their agreement on the future ownership of the remaining properties were set out in three documents at [Core Bundle 21, 23 and 25] (collectively called “AGREEMENT”). 

6.  In order to properly appreciate the accounts and the terms contained in the AGREEMENT, one must begin with the individual account for each property.

The account for GOODRICH-1

7.  The account for GOODRICH-1 is set out at [Core Bundle 5].  It was written by P’s wife in May 1997 and signed by both P and D1.  The authenticity of the document is not disputed.  The property was already sold by the time of [Core Bundle 5] and so the document recorded both expenditure and receipt items as follows:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit	–	$80,000
Initial instalment	–	$150,000
Stamp duty	–	$34,500
Sub-total	–	$264,500

Receipt items	Amount received by P	Amount received by D1
Deposit	$50,000	–
Initial instalment	–	$209,500
Balance	–	$252,590
Sub-total	$50,000	$462,090

8.  Therefore, the account for GOODRICH-1 shows the following undisputed result:

(a)     a sum of $132,250 [i.e. $264,500 ÷ 2] should be due from P to D1; and

(b)    a sum of $206,045 [i.e. ($462,090 – $50,000) ÷ 2] should be due from D1 to P.

9.  It is noted that the commission paid to the estate agent in relation to GOODRICH-1 is taken into account in the account for GOODRICH-2, which we shall now turn to.

The account for GOOODRICH-2

10.  The account for GOODRICH-2 is set out at [Core Bundle 7].  It was written by P’s wife and signed by both P and D1 in July 1997.  The authenticity of the document is not disputed.  The property had already been sold by the time of [Core Bundle 7] and it recorded the following expenditure and receipt items:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit	–	$80,000
Initial instalment	–	$148,000
Stamp duty	–	$34,200
Sub-total	–	$262,200

Receipt items	Amount received by P	Amount received by D1
Deposit	$50,000	–
Initial instalment	–	$217,000
Balance	$338,140	–
Sub-total	$388,140	$217,000

11.  Parties also took into account at [Core Bundle 7]:

(a)     the sum of $28,825 being each party’s share of the total commission paid to the estate agent for GOODRICH-1 and GOODRICH-2 and the compensation paid to the tenant(s); and

(b)    the personal loan of $195,000 made by D1 to P.

12.  Therefore, the account for GOODRICH-2 shows the following undisputed result:

(a)     a sum of $131,100 [i.e. $262,200 ÷ 2] should be due from P to D1; and

(b)    a sum of $251,745 [i.e. ($388,140 – $217,000) ÷ 2 – $28,825 + 195,000] should be due from P to D1.

The account for AVON PARK

13.  The account for AVON PARK is only partially recorded in the document at [Core Bundle 9].   It was written by P’s wife and initialed by P and D1.  There is no dispute on the authenticity of this document.

14.  [Core Bundle 9] recorded the following miscellaneous expenditure items:

Expenditure items	Amount paid by P	Amount paid by D1
Apportionment account in respect of management deposit	$4,633	–
Water deposit	$250	–
Electricity deposit	$600	–
Rates	$1,620	–
Advertisement	$195	–
Electricity	$68	–
Management fee	–	$3,052
Sub-total	$7,366	$3,052

15.  Insofar as the amounts paid by P is concerned, the account at [Core Bundle 9] shows that a sum of $3,683 [i.e. $7,366 ÷ 2] should be due from D1 to P.

16.  Three points must be noted in relation to the account for AVON PARK:

(a)   As AVON PARK was not yet disposed of at the time of [Core Bundle 9], no receipt was taken into account.

(b)   The sum of $3,052 being the management fee paid by D1 has been taken into account in the AGREEMENT at [Core Bundle 21] (see paragraph 42 below).

(c)   P’s contribution towards the purchase of the property is not recorded in [Core Bundle 9].  However, it is common ground that P in fact paid $346,000 (see [Core Bundle 3]) and $624,440 (see [Bundle F113-118]) for the purchase.  Given the agreement to share profit or loss equally, $173,000 [i.e. $346,000 ÷ 2] and $312,220 [i.e. $624,440 ÷ 2] should therefore be due from D1 to P.

The account for TAI HING-4

17.  The account for TAI HING-4 is set out at [Core Bundle 17].  It was handwritten by P’s wife and initialed by P and D1.  There is no dispute on the authenticity of this document.

18.  [Core Bundle 17] first recorded the following items of expenditure for the purchase of the property:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit	$100,000	–
Initial instalment	$117,000	–
Stamp duty	$32,000	–
Balance on completion	$452,010	–
Sub-total	$701,010	–

19.  Given the agreement to share profit or loss equally and after taking into account the sum of $350,000 paid by D1 to P, a sum of $505 [i.e. ($701,010 ÷ 2) – $350,000] should be due from D1 to P.

20.  The document also recorded the following miscellaneous expenditure items:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit for water charges	$250	–
Deposit for electricity charges	$600	–
Management fees	$3,120	–
Rates	$2,016	–
Electricity charges	$83	–
Sub-total	$6,069	–

21.  Therefore, the account at [Core Bundle 17] shows the following undisputed result:

(a)     a sum of $505 should be due from D1 to P; and

(b)    a sum of $3,034.50 [i.e. $6,069 ÷ 2] should be due from D1 to P.

22.  Bearing in mind that TAI HING-4 was not yet disposed of at the time of [Core Bundle 17], no receipt item was recorded.

The account for TAI HING-3

23.  The account for TAI HING-3 is set out at [Core Bundle 11].  It was written by P’s wife and bore the initials of P and D1.  There is also no dispute as to the authenticity of this document.

24.  [Core Bundle 11] recorded the following items of expenditure for the purchase of the property:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit	$100,000	–
Further deposit	$10,000	–
Initial instalment	$178,000	–
Stamp duty	$43,200	–
Balance on completion	$613,560	–
Sub-total	$944,760	–

25.  The document also set out the following miscellaneous expenditure:

Expenditure item	Amount paid by P	Amount paid by D1
Deposit for water charges	$250.00	–
Deposit for electricity charges	$600.00	–
Administration fees	$3,000.00	–
Interest	$3,840.00	–
Bank	$5,000.00	–
Rates	$2,498.50	–
Management fees	$4,428.00	–
Waxing the toilet	$3,000.00	–
Electricity charges	$93.00	–
Sub-total	$22,709.50	–

26.  Therefore, the account for TAI HING-3 shows the following undisputed result:

(a)     a sum of $472,380 [i.e. $944,760 ÷ 2] should be due from D1 to P; and

(b)    a sum of $11,354.75 [i.e. $22,709.50 ÷ 2] should be due from D1 to P.

27.  TAI HING-3 was not disposed of at the time of [Core Bundle 11], hence no receipt was recorded.

The account for VENICE GARDENS

28.  The account for VENICE GARDENS is set out at [Core Bundle 19].  It was written by P’s wife and bore the initials of P and D1.  The authenticity of this document is not disputed.

29.  [Core Bundle 19] recorded the following items of expenditure for the purchase of the property:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit	–	$100,000
Initial instalment	–	$113,000
Stamp duty	–	$28,000
Further payment (commission)	$8,000	–
Payment on delay for 1 month	$200,000	–
Balance on completion	$243,810	–
Sub-total	$451,810	$241,000

30.  The document also set out the following miscellaneous expenditure:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit for water charges	$250	–
Deposit for electricity charges	$600	–
Deposit for management fees, set-off sum	$1,795	–
Bank	$5,000	–
Decoration	$21,500
Rates	$948	–
Electricity charges	$17	–
Advertisement	$210	–
Sub-total	$30,320	–

31.  A sum of $2,073 being paid management fee is also recorded in this document independent of the above account.  It is common ground that this was also paid by P (see [Core Bundle 21]).  The total miscellaneous expenditure paid by P is therefore $32,393 [i.e. $30,320 + $2,073].  

32.  Therefore, the account for VENICE GARDENS evidences the following undisputed result:

(a)     a sum of $105,405 [i.e. ($451,810 – $241,000) ÷ 2] should be due from D1 to P; and

(b)    a sum of $16,196.50 [i.e. $32,393 ÷ 2] should be due from D1 to P.

33.  Bearing in mind that VENICE GARDENS was not yet disposed of at the time of [Core Bundle 19], no receipt was recorded.

The account for TAI HING-11

34.  The account for TAI HING-11 is set out at [Core Bundle 13].  It was written by P’s wife and bore the signatures of P and D1.  The authenticity of this document is not disputed.

35.  The following items of expenditure for the purchase of the property were recorded:

Expenditure items	Amount paid by P	Amount paid by D1
Deposit	$100,000	–
Initial instalment	–	$350,000
Stamp duty	–	$33,750
Balance on completion	$299,510	–
Decoration	$22,000	–
Payment to Kwok Wah	$5,000	–
Sub-total	$426,510	$383,750

36.  [Core Bundle 13] further set out the following items of miscellaneous expenditure:

Expenditure items	Amount paid by P	Amount paid by D1
Management fees	$2,038.00	–
Rates	$980.00	–
Payment to Dao Heng	$500.00	–
Insurance	$2,278.50	–
Payment to China Light & Power Co	$30.00	–
Commission	$23,800.00	–
Sub-total	$29,626.50	–

37.  On the receipt side, the following items were recorded:

Receipt items	Amount received by P	Amount received by D1
Deposit	$50,000	–
Initial instalment	$188,000	–
Balance	$561,589	–
Sub-total	$799,589	–

38.  Therefore, the account for TAI HING-11 evidences the following undisputed result:

(a)     a sum of $21,380 [i.e. ($426,510 – $383,750) ÷ 2] should be due from D1 to P; and

(b)    a sum of $384,981.25 [i.e. ($799,589 – $29,626.50) ÷ 2] should be due from P to D1.

Summary of the accounts

39.  To recapitulate, the above accounts is summarized in the following table:

	Amounts due from P to D1	Amounts due from D1 to P
GOODRICH-1	$132,250	$206,045
GOODRICH-2	$131,100	–
	$251,745
AVON PARK	–	$173,000
		$312,220
		$3,683 *
TAI HING-4	–	$505 #
		$3,034.50 *
TAI HING-3	–	$472,380 #
		$11,354.75 *
VENICE GARDENS	–	$105,405 #
		$16,196.50 *
TAI HING-11	$384,981.25 #	$21,380 #

40.  The meaning of the markings of “*” and “#” will become apparent shortly.  With the above in mind, we can now turn to consider the AGREEMENT.

The AGREEMENT

41.  The AGREEMENT, composing accounts and agreed terms, were set out in three documents [Core Bundle 21, 23 and 25].  They all bear the respective signature of P and D1 and their authenticity is not disputed.

(I)      [Core Bundle 21]

42.  It is common ground that the document at [Core Bundle 21] contains arithmetical errors.  After such errors are rectified, the document should read:

“[AVON PARK]	$7,366.00	(Paid by [P])
[VENICE GARDENS]	$32,393.00	(Paid by [P])
[TAI HING-3]	$22,709.50	(Paid by [P])
[TAI HING-4]	$6,069.00	(Paid by [P])
	$68,537.50	(Paid by [P])

[D1] paid the management fee of AVON PARK $3,052

$68,537.50 – $3,052

= $65,485.50 ÷ 2

= $32,742.75

To be reimbursed after the sale of the property.”           

43.  [Core Bundle 21] therefore shows that a sum of $32,742.75 should be due from D1 to P.

44.  It can be observed that the account set out in [Core Bundle 21] took into account the items marked “*” in the table at paragraph 39 above.

(II)     [Core Bundle 23]

45.  [Core Bundle 23] is in the following terms:

“[TAI HING-3]	$472,380
[TAI HING-4]	$505
[VENICE GARDENS]	$105,405
[TAI HING-11]	$21,380
	$599,670

$599,670 – $384,981.25 = $214,688.75 (owed by [D1])

The balance has to be settled after the sale of the properties.  If any mistake is found in relation to the account of the above properties, either party is entitled to pursue the other party and calculate accordingly.

[AVON PARK]           [VENICE GARDENS]

[TAI HING-3]             [TAI HING-4]

Miscellaneous expenses incurred before February 1998, each party shall bear 50%.  Miscellaneous expenses thereafter should not concern either party.  There being no proof if agreed orally, this is the evidence.”

46.  [Core Bundle 23] therefore shows that a sum of $214,688.75 should be due from D1 to P.

47.  Again, it is apparent that the parties have taken into account the items marked by “#” in the table at paragraph 39 above at [Core Bundle 23].

(III)   [Core Bundle 25]

48.  [Core Bundle 25] is in the following terms:

“[AVON PARK]

[VENICE GARDENS]

[TAI HING-3]

[TAI HING-4]

[D1] and [P] each owns 50% shares of the above four properties.  Since 11^th March 1998, [AVON PARK] and [VENICE GARDENS] will be owned by [D1] whilst [TAI HING-4] and [TAI HING-3] will be owned by [P].  From now on, either party letting or selling the said properties would not concern the other.  There being no proof if agreed orally, this is the evidence.”

49.  Therefore, [Core Bundle 25] only set out the agreement on the future ownership of the four remaining properties.

(IV)  Summary

50.  To sum up, the AGREEMENT took into account most but not all of the items in the table at paragraph 39 above.  The following items have not been specifically taken into account and they form the battleground at the hearing for the taking of accounts.

	Amounts due from P to D1	Amounts due from D1 to P
GOODRICH-1	$132,250	$206,045
GOODRICH-2	$131,100	–
	$251,745
AVON PARK	–	$173,000
		$312,220

The taking of accounts

(I)  Plaintiff’s case

51.  The Plaintiff’s case can be divided into 2 parts.

52.  First, P is claiming against both Defendants for the sum of $203,157.51 being the principal and interest paid by P under a guarantee in relation to AVON PARK.

53.  When parties bought AVON PARK under the joint venture arrangement, the purchase was financed by a mortgage took out jointly by D1 and D2 upon a personal guarantee signed by P [Bundle F123-128].  By the AGREEMENT at [Core Bundle 25], AVON PARK was allocated to D1.  D1, however, was unable to keep up with mortgage repayment after the AGREEMENT and P was obliged to honour his personal guarantee by paying a total sum of $203,157.51 [Bundle F139-140] to the mortgagee.  P is now asking for reimbursement.

54.  Secondly, P alleges that D1 has still failed to pay him some of the sums of money found to be due to him in the AGREEMENT.

55.  P is the accounting party under the order of His Honour Judge Muttrie dated 9^th June 2004.  According to P’s accounts verified by his 3^rd affirmation (at [Bundle D7-11]), the accounts for GOODRICH-1 and GOODRICH-2 have been taken and settled in the following manner:

(a)  The sum of $132,250 due from P to D1 for GOODRICH-1 and the sum of $131,100 due from P to D1 for GOODRICH-2 have been set-off against the sum of $173,000 due from D1 to P for AVON PARK in the account at [Core Bundle 3], producing a net balance of $90,350 due from P to D1.  According to the oral testimony of P and his wife, this sum has already been settled by P.

(b)  The sum of $251,745 due from P to D1 for GOODRICH-2 has been set-off against the sum of $312,220 due from D1 to P for AVON PARK, producing a net balance of $60,475 due from D1 to P.  The set-off was, according to P’s testimony, orally agreed between P and D1.

56.  P alleges at the hearing that the following sums due to him are still unpaid:

(a)     the sum of $32,742.75 recorded in [Core Bundle 21];

(b)    the sum of $214,688.75 recorded in [Core Bundle 23];

(c)     the sum of $206,045, recorded in [Core Bundle 5]; and

(d)    the sum of $60,475, after the set-off in paragraph 55(b) above.

(II)   Defendants’ case

57.  Both Defendants concede their liability on P’s claim of $203,157.51 founded on P’s guarantee.

58.  On P’s claim against D1, there is no dispute that the remaining properties have now been sold and the $214,688.75 found due upon the account at [Core Bundle 23] has not been paid.

59.  The Defendants, however, contend that P’s account in relation to GOODRICH-1, GOODRICH-2 and AVON PARK is erroneous.  According to their notice of objections [Bundle A23-26] as supplemented by the submission of their counsel at the hearing:

(a)  The account at [Core Bundle 3] should be disregarded as it has been overtaken by the subsequent accounts at [Core Bundle 5] and [Core Bundle 7].

(b)  P has failed to account for the following in his calculation:

(i)  the sum of $73,795 [i.e. $206,045 – $132,250] due from D1 to P for GOODRICH-1 at [Core Bundle 5]; and

(ii)  the sum of $382,845 [i.e. $131,100 + $251,745] due from P to D1 for GOODRICH-2 at [Core Bundle 7].

(c)  Under terms of the AGREEMENT, P and D1 would waive their rights to claim against each other in respect of their contributions made before 11^th March 1998 in relation to AVON PARK.  Hence, D1 is not responsible for his share of P’s contribution towards the purchase of AVON PARK (i.e. the sums of $173,000 and $312,220) after the AGREEMENT.

60.  Consequently, it is the Defendants’ case that:

(a)     a sum of $203,157.51 should be due from both Defendants to P; and

(b)    a sum of $94,361.25 [i.e. $382,845 – $73,795 – $214,688.75] should be due from P to D1.

61.  On 29^th November 2002, the Defendants paid a sum of $103,347.90 to P purporting to settle all their liabilities.  The calculation was then based on very different considerations, which the Defendants now accept to be wrong.

62.  Given their latest calculation, the Defendants should still owe P $5,448.36 [i.e. $203,157.51 – $94,361.25 – $103,347.90].  Defence counsel has submitted at the hearing that the Defendants are happy to pay what is due to P with interest.

Discussion

63.  At the hearing, the main focus of the parties is on the accounts for GOODRICH-1, GOODRICH-2 and AVON PARK.  On the face of it, this involves the following issues:

(a)  Whether [Core Bundle 3] should be disregarded in this taking of accounts?

(b)  Whether there was any oral agreement to set-off the sum of $251,745 due from P to D1 for GOODRICH-2 against the sum of $312,220 due from D1 to P for AVON PARK?

(c)  Whether D1 should still be responsible for his share of P’s contribution towards the purchase of AVON PARK?

64.  Defence counsel submits that P’s case must be rejected because:

(a)  [Core Bundle 3] was signed in April 1997, whereas [Core Bundle 5] and [Core Bundle 7] were signed subsequently in May and July 1997 respectively.  Given that the $90,350 said to be due under [Core Bundle 3] had clearly not been paid and the accounts at [Core Bundle 5 and 7] still recorded the contribution made by D1 for the purchase of GOODRICH-1 and GOODRICH-2, it is plain that [Core Bundle 5 and 7] were intended and did supersede [Core Bundle 3].

(b)  If there had been a set-off in terms of [Core Bundle 3], a net sum of $90,350 would be due from P to D1 and should have been paid a long time ago.  However, there is nothing in terms of evidence to show that this sum has been paid.

65.  On the other hand, P’s counsel observes that the joint venture arrangement was essentially a business arrangement.  He submits that it was extremely unlikely that P would have agreed to waive all his entitlement in the joint venture including P’s contribution towards the purchase of AVON PARK.

66.  In my view, the main issues highlighted above are intertwined and must be considered together in the overall context of the AGREEMENT.  At the end of the day, all the items in the above accounts (including those enumerated in the table at paragraph 50 above) must be accounted for.

67.  I note that parties have in fact taken their respective contribution towards the purchase of TAI HING-4, TAI HING-3, VENICE GARDENS and TAI HING-11 into account in the AGREEMENT.

(a)  P’s contribution towards the purchase of TAI HING-4 in the total sum of $701,010 is recorded in the account at [Core Bundle 17].  After taking into account the sum of $350,000 paid by D1 to P, the sum of $505 should be due from D1 to P (see paragraphs 18-19 and 21(a) above).  This sum has been taken into account in the AGREEMENT at [Core Bundle 23] (see paragraph 45 above).  In other words, P’s contribution towards the purchase of TAI HING-4 has been accounted for in the AGREEMENT.

(b)  P’s contribution towards the purchase of TAI HING-3 in the total sum of $944,760 is recorded in the account at [Core Bundle 11].  According to their joint venture arrangement, P and D1 should each be responsible for $472,380 (see paragraphs 24 and 26(a) above).  This sum has been taken into account in the AGREEMENT at [Core Bundle 23] (see paragraph 45 above).  In other words, P’s contribution towards the purchase of TAI HING-3 has been accounted for in the AGREEMENT.

(c)  P’s and D1’s contribution towards the purchase of VENICE GARDENS in the total sum of $451,810 and $241,000 respectively is recorded in the account at [Core Bundle 19].  A net sum of $105,405 should be due from D1 to P according to their joint venture arrangement (see paragraphs 29 and 32(a) above).  This sum has been taken into account in the AGREEMENT at [Core Bundle 23] (see paragraph 45 above).  In other words, P’s and D1’s respective contribution towards the purchase of VENICE GARDENS has been accounted for in the AGREEMENT.

(d)  P’s and D1’s contribution towards the purchase of TAI HING-11 in the total sum of $426,510 and $383,750 respectively is recorded in the account at [Core Bundle 13].  A net sum of $21,380 should be due from D1 to P according to their joint venture arrangement (see paragraphs 35 and 38(a) above).  This sum has been taken into account in the AGREEMENT at [Core Bundle 23] (see paragraph 45 above).  In other words, P’s and D1’s respective contribution towards the purchase of TAI HING-11 has been accounted for in the AGREEMENT.

68.  However, parties have apparently not specifically dealt with their respective contribution towards the purchase of GOODRICH-1, GOODRICH-2 and AVON PARK in the AGREEMENT.

69.  The gist of P’s case is that the contribution towards the purchase of GOODRICH-1, GOODRICH-2 and AVON PARK have been dealt with by means of:

(a)  the set-off set out in [Core Bundle 3], producing a net balance of $90,350 due from P to D1; and

(b)  the oral agreement to set-off, producing a net balance of $60,475 due from D1 to P.

70.  At first glance, P may be criticized for omitting to take into account his contribution of $206,045 towards the purchase of GOODRICH-1 in his case.  A closer look at his 3^rd affirmation will reveal that P has in fact included that sum in his account (see Bundle D8, paragraph 4).  What P has failed to specify in his affirmation, however, is whether that sum has been paid or not.  Be that as it may, P has taken all items into consideration in his accounts.

71.  On the other hand, it is absolutely vital to the Defendants’ case that there was an agreement in terms of paragraph 59(c) above.  The ingenuity of the Defendants’ case is in excluding P’s contribution towards the purchase of AVON PARK from the final calculation.  The effect of the exclusion is to enable the respective contribution of P and D1 for GOODRICH-1 and GOODRICH-2 to be set-off against each other, thus producing a net balance in favour of the Defendants to be used to set-off against other sums due to P.

72.  I have already observed that the parties have in fact taken their respective contribution towards the purchase of TAI HING-4, TAI HING-3, VENICE GARDENS and TAI HING-11 into account in the AGREEMENT.  The Defendants’ case also means that the contributions towards the purchase of GOODRICH-1 and GOODRICH-2 have been taken into account. 

73.  There is no mention of any agreement to waive their respective contribution towards the purchase of the properties after the AGREEMENT in the AGREEMENT.  Quite to the contrary, the AGREEMENT at [Core Bundle 23] provided that:

“If any mistake is found in relation to the account of the above properties either party is entitled to pursue the other party and calculate accordingly.”

74.  It is not the Defendants’ case that parties had agreed to treat the contribution towards the purchase of AVON PARK differently.  There is also nothing in the evidence that may explain such disparity.

75.  It is true that P and his wife may have agreed to Defence’s counsel’s suggestion during cross-examination that the parties would not have to further account to each other for the contributions already made after the AGREEMENT.  However, they have only been cross-examined generally.  In particular, the apparent disparity in terms of how the contribution for the properties are taking into account have not been put to them.  In my view, their equivocal answer is not sufficient to displace undisputed evidence in this case in terms of the AGREEMENT.

76.  I therefore reject the Defendants’ contention that P and D1 have agreed to waive their rights to claim against each other in respect of their contributions made before 11^th March 1998 in relation to AVON PARK.

77.  Given my above ruling, the Defendants’ case cannot stand.  The effect of my ruling is that I must take P’s contribution towards the purchase of  AVON PARK into account in the calculation.  This has already been included in the accounts put forward by P.

78.  I therefore accept that:

(a)     D1’s contribution towards the purchase of GOODRICH-1 and GOODRICH-2 in the sums of $132,250 and $131,100 have been set-off against part of P’s contribution towards the purchase of AVON PARK in the sum of $173,000 at [Core Bundle 3], producing a net balance of $90,350 due from P to D1.

(b)    D1’s contribution towards the purchase of GOODRICH-2 in the sum of $251,745 has been set-off against part of P’s contribution towards the purchase of AVON PARK in the sum of $312,220 in accordance with their oral agreement, producing a net balance of $60,475 due from D1 to P.

True accounts between the parties

79.  By reason of the foregoing analysis, the position after the taking of accounts between the parties should be as follows:

(a)  a sum of $90,350, which is evidenced by [Core Bundle 3], should be due from P to D1;

(b)  a sum of $60,475 should be due from D1 to P;

(c)  a sum of $206,045, which is evidenced by [Core Bundle 5],  should be due from D1 to P;

(d)  a sum of $214,688.75, which is evidenced by the AGREEMENT at [Core Bundle 23], is admittedly due from D1 to P; and

(e)  a sum of $32,742.75, which is evidenced by the AGREEMENT at [Core Bundle 21], should be due from D1 to P.

80.  In his written closing submission, Defence counsel objects to P’s claim for $60,475 and $32,745.75 because they are not issues joined in the account taking.  He submits that P as the accounting party has never alleged in his affirmation verifying the accounts that such sums are due to be paid by D1 and it can hardly be right for such claims to be slipped in after the close of evidence and by means of closing submission.

81.  The same can be said of the sum of $206,045 due from D1 to P as evidenced by [Core Bundle 5].  As I have noted above, it has not been alleged in P’s affirmation that the sum is unpaid.

82.  When Plaintiff’s counsel is confronted with the above at his oral closing submission, he confirms that P is only claiming for $214,688.75 from D1 and $203,157.51 from the Defendants upon this account taking.  Specifically, he agrees that P is not asking the court to award the sums of $60,475, $32,745.75 and $206,045 or any part thereof to P.

83.  On the other hand, the sum of $90,350 under [Core Bundle 3] should be viewed differently.  Given the above analysis, this sum should be due from P to D1.  P and his wife both insist that it has been paid whereas D1 says that it has not been paid. 

84.  Although this sum of $90,350 should be quite apparent from P’s case, there is nothing in the evidence to confirm that the sum has been settled.  P agrees under cross-examination that he would not pay such a large sum of money by cash.  He further accepts that there ought to be some documentary record of such payment had it been made.  I accept on the balance of probabilities that the sum of $90,350 has not been paid. 

85.  In the premises, I find that the following sums should be due:

(a)  a sum of $124,338.75 [i.e. $214,688.75 – $90,350] should be due from D1 to P; and

(b)  a sum of $203,157.51 should be due from both Defendants to P.

Payment of $103,347.90

86.  It is common ground that a sum of $103,347.90 was paid to P on 29^th November 2002.  There is, however, a dispute as to whether the sum was paid by D1 only or by both Defendants.

87.  P relies on paragraph 8 of the Defendants’ Amended Defence and Counterclaim [Bundle A13] in which it was pleaded that the sum of $103,347.90 was paid by D1 only and argues that the sum should only be used to satisfy D1’s liability but not the joint liability of the Defendants. 

88.  Pleadings had been filed by both parties in apparent disregard to the order of the Court of Appeal.  This necessitated the ruling and directions of His Honour Judge Muttrie on 9^th June 2004 to bring parties back on course for the taking of account.  In pursuance of the directions given, P then filed his 3^rd affirmation verifying his accounts and the Defendants filed their notice of objections contending P’s accounts to be erroneous.  In other words, parties have moved on since the filing of their respective pleadings, and the issues are now defined by P’s 3^rd affirmation and the Defendants’ notice of objections.  Significantly, Defence counsel has specifically disavowed the calculation set out in the Amended Defence and Counterclaim in his opening.  Paragraph 8 of the Amended Defence and Counterclaim was never put to D1 in cross-examination.  In the premises, I do not think the Defendants should be bound by what was once pleaded in the Amended Defence and Counterclaim.

89.  It is clearly stated in the covering letter accompanying the cheque for the said sum of $103,347.90 [Bundle F211] that the payment was made by both Defendants.  I therefore accept that the said sum of $103,347.90 should be used to satisfy the $203,157.51 due from both Defendants to P.  Hence, the Defendants should still be liable to P in the sum of $99,809.61 [i.e. $203,157.51 – $103,347.90].

Conclusion

90.  For the above reasons:

(a)  a sum of $99,809.61 is now due from both Defendants to P; and

(b)  a sum of $124,338.75 is now due from D1 to P.

91.  Pursuant to paragraph 1(f) of the order of His Honour Judge Muttrie dated 9^th June 2004:

(a)     the Defendants should jointly and severally pay P the sum of $99,809.61 together with interest thereon at judgment rate from the date of writ until the date of payment;

(b)    the Defendants should jointly and severally further pay P interest on the sum of $103,347.90 at judgment rate from the date of writ until 29^th November 2002; and

(c)     D1 should further pay P the sum of $124,338.75 together with interest thereon at judgment rate from the date of writ until the date of payment.

92.  Costs should generally follow the event.  I therefore make a costs order nisi that the costs of this action including the costs of this account taking and all reserved costs be paid by the Defendants to P to be taxed if not agreed with certificate for counsel.  Unless an application has been made to vary the order, the order shall become absolute 14 days after handing down of this judgment.

Postscript

93.  After the hearing on 15^th December 2005, the case was adjourned for closing submission.  Both counsel have diligently prepared and submitted their written closing submission.  In order to clarify certain outstanding matters, I directed parties to return for oral submission.

94.  The Defendants then applied for legal aid and the original return date for oral submission was vacated by reason of the statutory legal aid stay.  The Defendants’ application for legal aid was refused and their solicitors then obtained an order to cease to act for them under Order 67, rule 6 of the Rules of the District Court.  The return date was further postponed twice to accommodate Plaintiff’s counsel’s diary. 

95.  When the case came back for oral submission on 15^th August 2006, the Defendants were unrepresented and absent.  I proceeded to hear oral submission from Plaintiff’s counsel as I was satisfied that the Plaintiff had duly notified the Defendants of the return date at their last known address in pursuance of Order 67, rule 7, notwithstanding the fact that notices of hearing sent by the court to the Defendants had been returned.

96.  I therefore direct that a copy of this judgment be sent:

(a)  to each Defendant at their respective last known address in the court file by ordinary post pursuant of Order 67, rule 7; and

(b)  to the Defendants’ former solicitors.

97.  Since this judgment is written in English and the Defendants are now unrepresented, they may apply to the court in writing within 7 days from the handing down of this judgment for an appointment with the court interpreterto have this judgment interpreted to them if they so wish.