WING YIP DEVELOPMENT (HONG KONG) COMPANY LTD v. TSE KWONG CHUNG

WING YIP DEVELOPMENT (HONG KONG) COMPANY LTD v. TSE KWONG CHUNG

The court found on the balance of probabilities that no contract of employment existed between Wing Yip and Tse; instead Ho and Tse entered an agreement as equal partners using Wing Yip as the corporate vehicle to undertake projects introduced by Tse and to share profits 50:50; the four lump sum payments totalling...

Source-derived case information.

Citation
WING YIP DEVELOPMENT (HONG KONG) COMPANY LTD v. TSE KWONG CHUNG
Parties
Plaintiff in HCA 1507/2006: Wing Yip Development (Hong Kong) Company Limited; Defendant in HCA 1507/2006; Plaintiff in HCA 2233/2006: Tse Kwong Chung; Defendant in HCA 2233/2006: Ho Hung Kit
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
6 September 2013
Case Number
HCA1507/2006
Procedural Posture
Civil Commercial Litigation (contract, Partnership, Fiduciary and Accounting Disputes) / Judgment Following Trial (decision Dated 6 September 2013)
Outcome
1st Action (HCA 1507/2006) dismissed; 2nd Action (HCA 2233/2006) successful in part with order for an account of joint venture profits and payment ascertained thereby (credit for lump sum payments)
Legal Topics
Joint Venture Using Corporate Vehicle, Profit Sharing and Account of Profits, Employment Status Vs Independent Contractor, Loans Versus Distributions, Poaching/competitive Conduct, Separate Legal Personality
Source Language
en
Contract Law Partnership and Joint Venture Employment Law Fiduciary Duties Equity and Trusts Company Law Accounting and Accounts Civil Procedure +6 more

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Parties

Wing Yip Development (Hong Kong) Company Limited

Plaintiff in HCA 1507/2006

Tse Kwong Chung

Defendant in HCA 1507/2006; Plaintiff in HCA 2233/2006

Ho Hung Kit

Defendant in HCA 2233/2006

Procedural Posture

Civil Commercial Litigation (contract, Partnership, Fiduciary and Accounting Disputes) / Judgment Following Trial (decision Dated 6 September 2013)

Legal Issues

  1. 1 Whether Tse was an employee of Wing Yip with a contract of service entitling him to salary and 10% commission or whether he and Ho formed a joint venture using Wing Yip as corporate vehicle to share profits 50:50
  2. 2 The precise terms of the agreement between Ho and Tse
  3. 3 Whether Tse was entitled to share profits from post 17 July 2006 Western Corridor purchase orders and the Clinic Project

Ratio Decidendi

The court found on the balance of probabilities that no contract of employment existed between Wing Yip and Tse; instead Ho and Tse entered an agreement as equal partners using Wing Yip as the corporate vehicle to undertake projects introduced by Tse and to share profits 50:50; the four lump sum payments totalling HKD 1,700,000 were interim distributions of Tse’s profit share not loans; consequentially the plaintiff's claim (HCA 1507/2006) was dismissed and the defendant/plaintiff in HCA 2233/2006 was entitled to an account of all income, expenses and profits of the joint venture (including post‑17 July 2006 Western Corridor orders and the Clinic Project) with credit for the lump sums paid.

Court Disposition

1st Action (HCA 1507/2006) dismissed; 2nd Action (HCA 2233/2006) successful in part with order for an account of joint venture profits and payment ascertained thereby (credit for lump sum payments)

Orders

  • Dismissal of Action No. 1507 of 2006 (Wing Yip v Tse)
  • Order nisi that Wing Yip pay Tse the costs of HCA 1507/2006, to be taxed if not agreed