MAN ON SUM v. MAN PING HEI

HCMP 3163/2016 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO. 3163 OF 2016 (ON AN INTENDED APPEAL FROM HCA NO. 352 OF 2015) BETWEEN MAN ON SUM (文安心) Plaintiff and MAN PING HEI (文炳喜) Defendant Before : Hon Cheung and Poon JJA Date of Plaintiff’s Written Submissions : 14 November 2016 Date of Defendant’s Written Submissions : 21 November 2016 Date of Decision : 13 January 2017 D E C I S I O N Hon Cheung JA (giving Decision of the Court) : 1. This is the plaintiff’s application for leave to appeal against the judgment of Chow J. Background 2.1 The plaintiff in his statement of claim against the defendant claimed that : The plaintiff is a member and beneficiary of a Tong known as Dun Yue Tong (惇裕堂, ‘the Tong’) under section 15 of the New Territories Ordinance (Cap. 97). The defendant is the only surviving registered manager of the Tong. The Tong has maintained a bank account with HSBC where rental income or sale proceeds from the sale of the Tong’s landed properties are deposited. The defendant has been in breach of his duties as a manger as he failed to: 1) inform the members of the Tong whether there are other bank accounts with HSBC or with other banks; 2) account to the members of the Tong all the regular rental income generated from the Tong’s landed properties; and 3) account to the members of the Tong the balance of Tong’s money. 2.2 The plaintiff sought, amongst other things, for an order requiring the defendant to deliver up the account(s) of the Tong, including documents of accounts, the accounting ledgers and financial records, bank savings books and all tenancy agreements relating to the landed properties of the Tong from 2003 to 2014 and, further, for an order that the defendant to provide to the members of the Tong, including the plaintiff, with a statement of account of the Tong with all items of incomes and expenditures for the period from 2003 up to the date of the provision of the statement of account. 2.3 The defendant filed a defence. He claimed that since 2004, he, as the Manager of the Tong, had kept records of the Tong such as minutes of meetings, title deeds, leases, accounts and supplementary documents. He also deposited any cheque payment to the Tong into the bank account. He claimed that the Tong had only one bank account. Apart from him there is a Duty Manager who is responsible for handling the rental and leasing matters of the Tong. The Duty Manager would give cheques for the payment of rents to him but would keep all rental payments in cash in his possession for the purpose of settling the expenses of the Tong. The defendant claimed that the Tong would finalize its accounts and records in the Annual Elders’ Meeting and upon the change of the term of the Duty Manager, copy of the ledger and bank statements would be displayed and posted up at various locations to the members for all reference and such practice has been adopted for many years. 2.4 After the filing of the defence, the plaintiff issued a summons pursuant to Order 43, rule 1 of The Rules of the High Court, asking the defendant to provide the accounts of all monies, assets and properties belonging to the Tong for the past 10 years from 2003 to 2014. The application was heard by Master Chow who made the following order : ‘ 1. The Defendant do within 30 days from the date of this order provide and serve the Plaintiff with copy of passbook held under the Tso of the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) account for the period from 2004 to 2014 and the explanations for the entries in the passbook other than entries for updating of interest;’ 2.5 The defendant appealed to Chow J. The Judge allowed the defendant’s appeal and set aside the Master’s order. The plaintiff sought leave to appeal from the Judge but was refused. The plaintiff now renews his application for leave to this Court. Order 43, rule 1 3. Order 43, rule 1 provides a summary order for an account. Order 43, rule 3 provides that on the hearing of the application, the Court, may, unless satisfied that there is some preliminary question to be tried, order that an account be taken. For the purpose of this application, it is sufficient to refer to the following in the Hong Kong Civil Procedure 2017, paragraph 43/1/3 : ‘ The summary procedure proscribed by O.43, r.l is not appropriate where the parties are engaged in substantial disputes of fact which are fundamental to the manner in which the proposed account is to be taken. Such disputes must first be resolved at trial, see: Kids World Lid v. XL Machine Ltd (unrep., HCA 125/2002, 18 September 2009); Ironwood Capital Management Ltd (unrep., HCA 2836/2004, [2007] H.K.E.C. 2071); and Chan Hon Leung v. Chan Tit Leung (unrep., DCCJ 2580/2009, [2009] H.K.E.C. 1521). Similarly, the respondent should not be ordered to give an account under O.43 on the basis that he assumes that any preliminary issues in dispute will be resolved in his favour (Crane World Asia Pte Ltd v. Hontrade Engineering Ltd (unrep., HCA 109/2014, [2014] H.K.E.C. 1467). The summary procedure made available by O.43, r.l is neither designed or intended for use as a means for obtaining specific discovery (Ho Lee Man v. Wong Wai Kai (No. 2) [1993] 1 H.K.C. 193, CA) or answers to interrogatories (Crane World Asia Pte Ltd v. Hontrade Engineering Ltd (unrep., HCA 109/2014, [2014] H.K.E.C. 1467).’ Our view 4.1 The crux of the Judge’s decision is that there is a preliminary question to be tried in respect of the dispute whether the defendant had already rendered full and proper accounts of the Tong’s assets, income and expenditure over the years. The Judge had earlier summarised the principle namely, where the defendant has already provided an account and the issue is the adequacy of the account provided, such issue should, generally speaking, be regarded as a ‘preliminary question’ to be tried and thus it would not be appropriate to make a summary order for account: see Holborow v Macdonald Rudder (a firm) [2001] WASCA 91; Aaronisle Pty Ltd v Thorpe & Anor [2005] WASC 87; and Tandor Pty Ltd v Australia Liquor Marketers (WA) Pty Ltd [2008] WASC 244. 4.2 The Judge observed at paragraph 7 of his decision on refusing leave : ‘ 7. ….It is a matter of judgment and degree whether the ledgers coupled with the bank passbook publicly displayed or posted up by the defendant amount to an adequate or sufficient account in the circumstances of this case, bearing in mind the nature of the business of the tong. The question of whether the defendant has already provided an adequate or sufficient account in this case is, I believe, a preliminary question to be tried for the purpose of Order 43.’ 4.3 We agree with the Judge’s view. Unless the plaintiff can overcome this hurdle, summary judgment for an account should not be allowed. In our view, the plaintiff has not satisfied the threshold for leave under section 14AA(4) of the High Court Ordinance, Cap. 4. Accordingly the application is refused. 4.4 The defendant asked for costs of $83,676 which includes $60,000 for counsel fee and $1,026 for disbursement namely, photocopying charge and preparation of hearing bundles. Counsel fees consist of the fees to two counsel of $45,000 and $15,000 respectively. In our view, this application does not require the work of two counsel, particularly when there was already an application for leave before the Judge. Likewise, this being a renewed application, we consider the sum of $22,650 as solicitor charge to be excessive. We will allow a sum of $55,000 of which $45,000 is counsel fee. 4.5 Pursuant to Order 59, rule 2A(8) we make an order that no party may under Order 59, rule 2A(7) apply for an oral hearing to reconsider our determination as the plaintiff’s application is totally without merit. (Peter Cheung) (Jeremy Poon) Justice of Appeal Justice of Appeal Mr Anthony P. W. Cheung, instructed by K. M. Cheung & Co., for the plaintiff Mr Adrian Leung and Mr Sunny Chan, instructed by K. C. Ho & Fong, for the defendant