TANG CHUNG WAH aka TANG CHUNG WAH, ALAN AND ANOTHER v. JONATHAN RUSSELL LEONG AND OTHERS

TANG CHUNG WAH aka TANG CHUNG WAH, ALAN AND ANOTHER v. JONATHAN RUSSELL LEONG AND OTHERS

Defendants' decision to settle and to instruct lawyers not to pursue counterclaims was a bona fide commercial decision within their authority as majority partners and not a breach of fiduciary duty; limited breaches of clause 7.2 occurred by D1, D4 and D7 in timing (and D1 in completeness) for which nominal damages were appropriate; clause 7.1 may require reasonable securities and plaintiffs failed to provide acceptable indemnity; Settlement Deed is binding on all partners; accounting for WIP and receivables and other specified relief to proceed by account.

Citation
TANG CHUNG WAH aka TANG CHUNG WAH, ALAN AND ANOTHER v. JONATHAN RUSSELL LEONG AND OTHERS
Parties
1st Plaintiff: Tang Chung Wah aka Tang Chung Wah, Alan; 2nd Plaintiff: Lee Fung Ying, Alison; 1st Defendant: Jonathan Russell Leong; 2nd Defendant: Chiu Wing Cheung, Ringo; 3rd Defendant: Lam Hung Yun, Andrew; 4th Defendant: Gary Terrence James; 5th Defendant: Lo Ngai Hang aka Lo Ngai Hang, Tony; 6th Defendant: Au Yiu Kwan aka Au Yiu Kwan, Alvin; 7th Defendant: Patrick Rozario; 8th Defendant: Li Wing Yin aka Li Wing Yin, Amos; 9th Defendant: Tsui Ka Che, Norman
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
19 January 2016
Case Number
HCA1691/2011
Procedural Posture
Partnership Dispute; Breach of Fiduciary Duties; Enforcement of Deed of Termination / Judgment on Trial (court of First Instance)
Outcome
Judgment largely for defendants on principal claims; limited breaches found against certain defendants in respect of clause 7.2; Settlement Deed held binding on partnership; accounting directions ordered; costs ordered largely for defendants.
Legal Topics
Deed of Termination, Disclosure Obligations (clause 7.2), Indemnity and Securities (clause 7.1), Authority to Bind Partnership, Settlement Deed Validity, Nominal Damages, Accounting for Work in Progress and Receivables, Access to IT Systems, Costs Allocation
Source Language
EN
Partnership Law Fiduciary Duties Contract Law Equity Civil Procedure Arbitration Enforcement Deed of Termination Disclosure Obligations (clause 7.2) +7 more

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Parties

Tang Chung Wah aka Tang Chung Wah, Alan

1st Plaintiff

Lee Fung Ying, Alison

2nd Plaintiff

Jonathan Russell Leong

1st Defendant

Chiu Wing Cheung, Ringo

2nd Defendant

Lam Hung Yun, Andrew

3rd Defendant

Gary Terrence James

4th Defendant

Lo Ngai Hang aka Lo Ngai Hang, Tony

5th Defendant

Au Yiu Kwan aka Au Yiu Kwan, Alvin

6th Defendant

Patrick Rozario

7th Defendant

Li Wing Yin aka Li Wing Yin, Amos

8th Defendant

Tsui Ka Che, Norman

9th Defendant

Procedural Posture

Partnership Dispute; Breach of Fiduciary Duties; Enforcement of Deed of Termination / Judgment on Trial (court of First Instance)

Legal Issues

  1. 1 Whether D1, D4 and D7 breached clause 7.2 of the Termination Deed and fiduciary duties by failing to disclose documents and render accounts
  2. 2 Whether other defendants breached duties by supporting/condoning non-disclosure
  3. 3 Whether D7 breached duties by instructing UK/US lawyers not to file counterclaims/defences

Ratio Decidendi

Defendants' decision to settle and to instruct lawyers not to pursue counterclaims was a bona fide commercial decision within their authority as majority partners and not a breach of fiduciary duty; limited breaches of clause 7.2 occurred by D1, D4 and D7 in timing (and D1 in completeness) for which nominal damages were appropriate; clause 7.1 may require reasonable securities and plaintiffs failed to provide acceptable indemnity; Settlement Deed is binding on all partners; accounting for WIP and receivables and other specified relief to proceed by account.

Court Disposition

Judgment largely for defendants on principal claims; limited breaches found against certain defendants in respect of clause 7.2; Settlement Deed held binding on partnership; accounting directions ordered; costs ordered largely for defendants.

Orders

  • Findings: D1, D4 and D7 in breach of clause 7.2 of the Deed of Termination in relation to timing; D1 also in breach as to completeness
  • Nominal damages: order that the 1st, 2nd and 7th defendants each pay HK$10 to the plaintiffs