TSE KWONG CHUNG v. HO HUNG KIT

TSE KWONG CHUNG v. HO HUNG KIT

On the balance of probabilities the court found that Tse was not an employee of Wing Yip but had entered into a joint venture with Ho using Wing Yip as the corporate vehicle; Tse and Ho were equal partners sharing 50% of net profits; the four lump sum payments of $1.7M were distributions of Tse's profit share not loans; Ho must account for all income, expenses and profits of the joint venture (including post-17 July 2006 Western Corridor orders and the Clinic Project) and pay sums found due to Tse after credit for those distributions.

Citation
TSE KWONG CHUNG v. HO HUNG KIT
Parties
Plaintiff (hca 1507/2006): Wing Yip Development (Hong Kong) Company Limited; Defendant (hca 1507/2006); Plaintiff (hca 2233/2006): Tse Kwong Chung; Defendant (hca 2233/2006): Ho Hung Kit
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
6 September 2013
Case Number
HCA2233/2006
Procedural Posture
Civil Trial / Judgment (court of First Instance)
Outcome
1st Action (HCA 1507/2006) dismissed; 2nd Action (HCA 2233/2006) successful in part with order for account of profits against Ho
Legal Topics
Joint Venture, Employment Status, Profit Sharing, Account of Profits, Loans Vs Distributions, Fiduciary Duty, Corporate Veil, Costs
Source Language
EN
Contract Law Company Law Partnership/joint Venture Employment Law Equity and Fiduciary Duties Accounting for Profits Joint Venture Employment Status +6 more

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Parties

Wing Yip Development (Hong Kong) Company Limited

Plaintiff (hca 1507/2006)

Tse Kwong Chung

Defendant (hca 1507/2006); Plaintiff (hca 2233/2006)

Ho Hung Kit

Defendant (hca 2233/2006)

Procedural Posture

Civil Trial / Judgment (court of First Instance)

Legal Issues

  1. 1 Whether Tse was an employee of Wing Yip or an equal partner with Ho using Wing Yip as a corporate vehicle
  2. 2 What were the material terms of the agreement (10% commission as employee v 50% profit share as joint venture)
  3. 3 Whether Tse is entitled to share profits from post-17 July 2006 Western Corridor orders and the Clinic Project

Ratio Decidendi

On the balance of probabilities the court found that Tse was not an employee of Wing Yip but had entered into a joint venture with Ho using Wing Yip as the corporate vehicle; Tse and Ho were equal partners sharing 50% of net profits; the four lump sum payments of $1.7M were distributions of Tse's profit share not loans; Ho must account for all income, expenses and profits of the joint venture (including post-17 July 2006 Western Corridor orders and the Clinic Project) and pay sums found due to Tse after credit for those distributions.

Court Disposition

1st Action (HCA 1507/2006) dismissed; 2nd Action (HCA 2233/2006) successful in part with order for account of profits against Ho

Orders

  • Dismiss 1st Action; order nisi that Wing Yip pay Tse costs of HCA 1507/2006, to be taxed if not agreed
  • Direct that an account be taken of all income, expenses and profits of the joint venture between Ho and Tse including the Undisputed Projects (including post-17 July 2006 Western Corridor orders) and the Clinic Project