LOH & COMPANY v. SURVIVAL TECHNOLOGY(a firm)

IN THE COURT OF APPEAL

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JUDGMENT

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Headnote: 0.81 r.9 R.S.C. - construction - "individual" not include a body corporate.

Silke,J. A.:

1. We gave our decision in this matter on 7th January and stated that we would give our reasons later. This we now do.

2. This is an appeal from an Order of His Honour Judge Wilson, made on 24th October 1985, wherein he refused leave to Fudak Investment Limited - "Fudak" - to intervene in the action as between the named plaintiff, Loh & Company, - "the plaintiff" - and the named defendant, Survival Technology (a firm), - "the defendant". The learned judge also refused an application that judgment entered, on 2nd October 1985, by the plaintiff in default of defence be set aside and refused leave to Fudak to file a defence herein on behalf of Survival Technology.

3. Leave to appeal was granted by the judge on 12th November 1985.

4. In order that the matter be brought properly before us, we gave leave to Fudak to amend its Notice of Appeal and the application was, sensibly, not contested. The entitlement of the Notice now reads: Loh & Company - Plaintiff; Survival Technology (a firm) - Defendant; Fudak Investment Limited trading as Survival Technology - Appellant.

5. The history of the matter is this: On 17th August 1985, the plaintiff issued a writ claiming from the defendant the sum of $40,316 for services rendered in a professional capacity.

6. Loh & Company is a firm of solicitors, the sole proprietor of which is a Miss Loh. It will be necessary to amend further the entitlement of the action but nothing turns on this. She, and others, had at one time been directors of Fudak. On 18th January 1985, Fudak was registered under the Business Registration Ordinance, the form used being Form 1(b) under the regulations made on foot of that Ordinance. The heading of the Form is: "Application by a body corporate for registration". In the body of the Form under the heading "Business(es) carried on (if any)" - item 1(a) "Name under which carried on" - is entered "Survival Technology" with an address at Shop 33, Harbour Crystal Centre, Ground Floor, 100 Granville Road, Tsimshatsui East, Kowloon. That form was signed by Miss Loh as a director of the applicant firm.

7. Later, disputes arose and two directors, Gordon James Yapp and Miss Loh, notified the Registrar of Companies of their resignation as directors with effect from 15th June 1985. That notice was filed on 19th June p.92 and was signed by Dr. Yapp. The plaintiff sent four costs bills all dated 30th June 1985 to Survival Technology. There are various allegations made in various affidavits which were before the judge and before us and into which we do not think it necessary to enter for reasons which will appear later. But there is a dispute as to the receipt of those bills and there may develop a dispute as to the authority under which the plaintiff did the work concerned.

8. The writ was served by prepaid ordinary post to the premises occupied by Survival Technology. It is only right to add that there was dispute as to the service of the writ arising from the address; it did not contain the restriction "ground floor" and it is said that the numbering of the shops is repeated in other shops in other floors in the building in the same manner as is the numbering on the ground floor shops.

9. The plaintiff, being apprehensive of a removal of assets by the defendant, - and it is not disputed that the business has failed, - procured, on 26th September 1985, an Interim Attachment Order. That order was made absolute on 24th October in the course of the proceedings from which stems this Appeal. It has been executed and the bailiff has secured $18,000 which sum has been paid out to the plaintiff. In the light of the view taken by this Court, an order was made in respect of that at the conclusion of the proceedings as also was an order in respect of the sum of $22,000 paid in by the defendant as a condition for the granting of leave.

10. Having granted an amendment to the title of the Notice of Appeal, we went on to permit the appellant to amend the body of that Notice as well. Nothing turns on that as the sole matter argued before us, and it was accepted by both counsel that the appeal stood or fell upon its determination, was the application of Order 81 rule 9 and its effect on service of the writ.

11. This order falls within that portion of the Rules of the Supreme Court entitled "Partners". It reads:-

"An individual carrying on business within the jurisdiction in a name or style other than his own name, may be sued in that name or style as if it were the name of a firm, and rules 2 to 8 shall, so far as applicable, apply as if he were a partner and the name in which he carries on business were the name of his firm."

12. It is Mr. Patrick Chan's submission on behalf of the appellant that this rule does not apply where a limited company is carrying on its business under a firm name. Mr. K.B. Ng for the respondent concedes that there is no authority on the construction of the word "individual" appearing in rule 9 of the Order but he asks that we give to the Order generally a liberal and fair construction. The issue is: Can the word "individual" contained in the Order and the rule include a body corporate?

13. We have been referred to Mary L. Lynn v. Consolidated Sales Limited, ⁽¹⁾ to the Business Registration Ordinance and its history, to the legislative history of the present Order, stemming as it does from the old Order 48A rule 11, and to the normal definition of "person" as including a body corporate. In Mary L. Lynn, Pickering J. (as he then was), giving the judgment of the Full Court said at page 380:-

"In our view 0.81 r.9 applies to cases where an individual trades under a name other than his own and is a procedural rule designed to prevent such a person from escaping liability by reason of his creditor's unawareness of the true name of the person operating the business with which the creditor has been dealing."

Here, with respect to the plaintiff, the true position was well known to them. It was that of a limited company trading as a particular named firm. Had they seen fit to sue the appellant in the entitlement which now appears in the Notice of Motion, that is "Fudak Investment Limited trading as Survival Technology", then we very much doubt if the matter would, on this issue, have reached this Court.

14. The trial judge's reasons for making the Orders he did appear in this paragraph in his judgment:

"          It appeared to me that 'Survival Technology' was a legal entity capable of suing and being sued. The defendant's own Exhibit CPT-1, the Business Registration Certificate, showed that such a business had been registered. There were numerous references in the affidavits to the 'business of Survival Technology'. It appeared that Survival Technology operated a bank account, operated a shop and held a tenancy.

 

        I took the view that the judgment was a regular one and therefore the defendant in order to set aside judgment had to show merit, i.e. some arguable or triable issue. The draft Defence (Exhibit CPT-8) was a bare denial and disclosed no triable issues whatsoever."

We would not seek to disagree with the judge's findings on the draft defence. He, however, went on:

"          I was of the view that all the evidence on the constitution of and relationship between Fudak Investment Ltd. and Survival Technology tended to show was that one was simply the 'alter ego' of the other. The evidence suggested to me that each was simply one and the same group of persons."

15. It does not appear that the interesting arguments which have been addressed to us in relation to Order 81 rule 9 were canvassed before the trial judge. Had they been, and had he fully appreciated the position, we think that his Orders might well have been different.

16. On the construction of rule 9, we do not think that the word "individuals" in the context of the rule as a whole can include a body corporate. It was not proper to serve "Survival Technology (a firm) "with the writ in these proceedings and the service is a nullity. That being so, Mr. Chan succeeds on this net point and the appeal must be allowed.

17. The order which necessarily flows once the appeal is allowed is that the Orders of the trial judge be set aside with the exception of the order absolute for attachment. This, in effect, has been carried out and is dead. Consequentially, we ordered that the sum of $18,225 presently in the hands of the plaintiff be repaid into Court and to remain there pending the outcome of these proceedings. Further, that the $22,000 now in Court in the name of the action also to remain in Court pending the outcome of these proceedings - but we attached a condition as to the monies remaining in Court: they would so remain provided that the plaintiff reserves the writ upon the now entitled defendant within 7 days from this date and that defendant serves his defence within 14 days thereafter.