XCHRX AVID TECHNOLOGY, INC. v. CHEUNG KI WING GEORGE

HCA9956/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. A9956 OF 1996

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

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

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

D E C I S I O N

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

The appeal and the agreed orders

1. Master Chung on 15th September 1998 ordered the Defendant to pay to the Plaintiff HK$1,801,041 as an interim payment ("the Order"). The Defendant appeals against that decision. The parties now agree that the Order should be set aside and an order for an account should be made and directions for the taking of the account are agreed between the parties. Mr Natali, Solicitors for the Plaintiff, had earlier applied for the account to be taken immediately by me. I refused the application.

Costs

2. As to costs, the parties agreed that the costs before Master Chung should be costs in the cause of the taking of the account. I will further order that the costs of the affidavit evidence filed in relation to the O.43 summons should be dealt with by the Master taking the account and also that the costs reserved by Findlay, J. should be dealt with by the Master as well (the last matter was agreed between the parties). As for the costs of the appeal, I will order the costs be to the Defendant in any event.

Reasons for decision

3. I will now give the reasons for my decisions. The Plaintiff had, pursuant to Order 43, applied by summons for an account to be taken of the sums paid to the Defendant and/or Avid Greater China Company by the Plaintiff or the Plaintiff's customers in respect of the Plaintiff's business expenses and the amount of such sums utilised by the Defendant for the Plaintiff's legitimate business expenses. Three days before the hearing by the Master of this summons, the Plaintiff's Solicitors filed an affidavit asking, among other things, for an interim account in the sum of HK$1,801,041 be certified and paid by the Defendant to the Plaintiff forthwith. On the date of the hearing, the Master made an Order for interim payment of HK$1,801,041.

Ambit of Order 43

4. Mr Natali submitted that despite the wording of the Order, the Master was actually simply ordering an interim account. However, in my view one could only proceed on the terms of the Order as approved by the Court. Order 43 provides for a summary order for an account where the claim involves the taking of an account. All it means is that instead of waiting until trial to obtain an order for an account, such an order can be obtained at an interlocutory stage. This does not mean that it is a summary procedure for taking an account by submission of Counsel and by reference to affidavit evidence. Order 43 is not intended to operate on the basis that an account is to be taken there and then on the hearing of an application by a party for an account. The order for payment of money is intended to operate after the account had been taken. Even if the Order intended by the Master was one of interim account, I still have doubts whether the taking of the account should be conducted by the Master at that stage.

5. On an application for an account to be taken under Order 43, the Court has no jurisdiction to order an interim payment. Interim payment applications have to be made pursuant to O.29, r.10. The condition for making an interim payment order is O.29, r.12, namely, there must first be an order for an account to be taken and an order that the amount certified due on taking of the account is to be paid, before the Court could consider an application for interim payment.

6. As no order for an account had yet been made (as a matter of fact it had never been made by the Master) the Plaintiff was wrong to pursue the claim for interim payment on a summons which was only seeking the order of an account to be taken. The Order imposed by the Master is now set aside and in my view, the Defendant is entitled to the costs of the appeal.

Appeal by way of rehearing

7. An appeal from the decision of the Master to Judge in Chambers operates as a rehearing. The rehearing before me, however, is still based on the original application by the Plaintiff as framed by the summons under Order 43, namely, an order for an account to be taken. However, the Plaintiff pursued what in effect is an account taking exercise. It is now conceded that the sum of HK$1,801,041 should not be ordered against the Defendant but rather the sum of HK$456,235.68 should be ordered. The affidavit evidence filed by the Plaintiff seeks to show why this sum is due from the Defendant to the Plaintiff. I repeat that this is not the time or place to deal with this issue. This is not an application for summary judgment or interim payment. The rules provide for procedures that a party have to observe. It simply cannot ask for some form of relief that is not provided by the rules. I understand the Plaintiff's concern that the outstanding matter should be dealt with as soon as possible but in my view the procedural requirements have to be recognised as well.