STEP BY STEP LTD AND OTHERS v. DOROTHY JANE FURNESS AND OTHERS

STEP BY STEP LTD AND OTHERS v. DOROTHY JANE FURNESS AND OTHERS

Further evidence on appeal was admissible on special grounds to show that the limited disclosure ordered by the Master was insufficient; the Master’s discovery order was varied to permit focussed discovery of specified primary transactional classes for the 3rd defendant from incorporation to September 2008 (banking records, records of income, records of purchases and expenses, records of assets) verified by affidavit; broader supporting working papers and correspondence with auditors and discovery in respect of the 4th defendant were refused as not necessary or amounted to fishing; audited accounts were limited to the end of the financial year 2007–2008 and not to date.

Citation
STEP BY STEP LTD AND OTHERS v. DOROTHY JANE FURNESS AND OTHERS
Parties
1st Plaintiff: STEP BY STEP LIMITED; 2nd Plaintiff: NEW SUCCESS ENTERPRISES LIMITED; 3rd Plaintiff: STEP UP LIMITED; 1st Defendant: DOROTHY JANE FURNESS; 2nd Defendant: RAPHAEL HOMER ECHALUCE; 3rd Defendant: ENTERTAIN COMPANY LIMITED; 4th Defendant: MAD DOGS WANCHAI PUBLIC HOUSE LIMITED
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
16 September 2009
Case Number
HCMP838/2007
Procedural Posture
Civil Discovery Application / Appeal From Master Ko's Order (in Chambers)
Outcome
Appeal allowed in part; Master Ko's orders varied to permit limited discovery for the 3rd defendant and to refuse other broader categories and discovery for the 4th defendant; audited accounts limited to financial year end 2007–2008.
Legal Topics
Specific Discovery, Tracing Misappropriated Funds, Relevance and Necessity of Documents, Audited Accounts, Admission of Further Evidence on Appeal
Source Language
EN
Civil Procedure Company Law Equity/trusts Disclosure/discovery Specific Discovery Tracing Misappropriated Funds Relevance and Necessity of Documents Audited Accounts +1 more

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Parties

STEP BY STEP LIMITED

1st Plaintiff

NEW SUCCESS ENTERPRISES LIMITED

2nd Plaintiff

STEP UP LIMITED

3rd Plaintiff

DOROTHY JANE FURNESS

1st Defendant

RAPHAEL HOMER ECHALUCE

2nd Defendant

ENTERTAIN COMPANY LIMITED

3rd Defendant

MAD DOGS WANCHAI PUBLIC HOUSE LIMITED

4th Defendant

Procedural Posture

Civil Discovery Application / Appeal From Master Ko's Order (in Chambers)

Legal Issues

  1. 1 Whether the classes of documents sought were relevant to the issues in dispute
  2. 2 Whether the documents sought were necessary for the fair disposal of the cause or for saving costs
  3. 3 Scope and limits of specific discovery (whether supporting accounting working papers should be ordered)

Ratio Decidendi

Further evidence on appeal was admissible on special grounds to show that the limited disclosure ordered by the Master was insufficient; the Master’s discovery order was varied to permit focussed discovery of specified primary transactional classes for the 3rd defendant from incorporation to September 2008 (banking records, records of income, records of purchases and expenses, records of assets) verified by affidavit; broader supporting working papers and correspondence with auditors and discovery in respect of the 4th defendant were refused as not necessary or amounted to fishing; audited accounts were limited to the end of the financial year 2007–2008 and not to date.

Court Disposition

Appeal allowed in part; Master Ko's orders varied to permit limited discovery for the 3rd defendant and to refuse other broader categories and discovery for the 4th defendant; audited accounts limited to financial year end 2007–2008.

Orders

  • Discovery ordered for the 3rd defendant from incorporation to September 2008 limited to: (i) banking records (cheque books and stubs, deposit slips, account withdrawal slips, cash books, TT application forms, confirmations of inward TTs); (ii) records of income (deposit records for daily sales income and daily sales...
  • Refusal of order for any supporting documents and working papers provided to auditors (the broader open-ended categories) in respect of the 3rd defendant and refusal of discovery of supporting accounting documents for the 4th defendant (category 4)