CHAN CHIU CHIK, EDDY AND ANOTHER v. FONG MAN KAM

CACV 42/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 42 OF 2001

(ON APPEAL FROM HCA 14389 OF 1998)

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J U D G M E N T

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Hon Mayo VP (giving the judgment of the Court):

1. This is an appeal from a judgment of Deputy High Court Judge Poon who in turn was hearing an appeal from a master. The Judge allowed the appeal in part.

2. In this litigation the 1st plaintiff who is suing as the personal representative of his father's estate is together with the 2nd plaintiff making a claim against the estate of the defendant ("Mr Fong"). The claim is that the father ("Mr Chan") and the 2nd plaintiff were partners with Mr Fong in two noodle shops Tak Shing Noodle Shop and Fu Shing Noodle Shop and that Mr Fong misappropriated $1,463,043.56 from the partnership.

3. The defendant denies that Mr Chan and the 2nd plaintiff were partners in the noodle shops. However, he goes on to make a counterclaim that if the court finds that they were partners, they must contribute towards the profits tax of $575,766.00 which was paid by the estate in respect of the profits tax payable for the years between 1990 and 1997.

4. The subject matter of the appeals is an application which was made by the plaintiffs for inspection pursuant to Order 24 rule 11 of the Rules of the High Court.

5. The documents which the plaintiffs seek to inspect are:

1. Letters of Administration with schedule of property annexed to the estate of Mr Fong dated 22 July 1999

2. Affirmation of the Administrator dated 16 July 1998 and

3. Photocopy of the Certificate of Exemption from Estate Duty.

6. The Judge did not interfere with the Master's order that the Letters of Administration be inspected. However so far as the Affirmation was concerned he ordered that all of the contents of the Affirmation be blanked out save item 8 which related to Business in Account 1. He set aside the order for the inspection of the Estate Duty Certificate.

7. The defendant does not object to the blanking out of the parts of the affirmation. The appeal accordingly is confined to the question as to whether the Estate Duty Certificate is to be inspected.

8. The reason given in the summons for inspection which lay before the Master in support of this inspection was that the plaintiff did not know whether profits tax had been paid by the estate or indeed if it had that it had related to the noodle shops. It was claimed that the documents sought would throw light on this.

9. It was complained that the Judge had adopted too narrow an approach to the question and had not sufficiently taken into account the principles laid down in Merchants' and Manufacturers' Insurance Company Limited v. Davies and Another (C.A.) [1938] 1 KB 196 or Pacific Link Communications Ltd v. Wong Man Him Melvyn and Another [1996] 1 HKC 474.

10. What appears to have been overlooked by the plaintiffs is that if the counterclaim is proceeded with it will be incumbent upon the defendant to prove that it has paid the profits tax before it can succeed in recovering a share of it from the plaintiffs. They of course will need to prove that the payment did in fact relate to the noodle shops. In addition to this it is doubtful whether the Certificate of Exemption from Estate Duty which is the only remaining outstanding document the subject of this appeal is likely to throw much light on this topic.

11. This appeal is accordingly dismissed and costs be to the defendant.