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

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

The appeal is allowed in part: the majority of the plaintiffs' open‑ended requests for auditors' working papers and non‑exhaustive supporting documents are overbroad and unnecessary; discovery is ordered only for specified classes of primary transactional and banking records of the 3rd defendant from incorporation to September 2008 (cheque books and stubs, deposit slips, withdrawal slips, cash books, telegraphic transfer forms and confirmations, daily sales/deposit records, purchase contracts, invoices, receipts, petty cash books and copies of asset contracts) to enable tracing of alleged misappropriated funds; discovery of supporting accounting documents for the 4th defendant is refused...

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
HCMP844/2007
Procedural Posture
Civil Litigation Discovery/dispute Over Specific Discovery / Interlocutory Appeal From Master's Discovery Order
Outcome
Appeal allowed in part and Master's orders varied
Legal Topics
Specific Discovery, Relevance and Necessity, Tracing Misappropriated Funds, Audited Accounts, Bank Records, Overbroad Requests and Fishing, Admission of Further Evidence on Appeal
Source Language
EN
Civil Procedure Company Law Equity and Trusts Accounting and Auditors' Work Remedies Tracing and Proprietary Claims Specific Discovery Relevance and Necessity Tracing Misappropriated Funds +4 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 Litigation Discovery/dispute Over Specific Discovery / Interlocutory Appeal From Master's Discovery Order

Legal Issues

  1. 1 Whether the broad classes of supporting accounting documents and working papers sought are relevant and necessary for a fair disposal or saving of costs
  2. 2 Whether discovery should be limited to specified classes of documents and to a particular period
  3. 3 Whether supporting accounting documents for the 4th defendant should be ordered given lack of circumstantial link

Ratio Decidendi

The appeal is allowed in part: the majority of the plaintiffs' open‑ended requests for auditors' working papers and non‑exhaustive supporting documents are overbroad and unnecessary; discovery is ordered only for specified classes of primary transactional and banking records of the 3rd defendant from incorporation to September 2008 (cheque books and stubs, deposit slips, withdrawal slips, cash books, telegraphic transfer forms and confirmations, daily sales/deposit records, purchase contracts, invoices, receipts, petty cash books and copies of asset contracts) to enable tracing of alleged misappropriated funds; discovery of supporting accounting documents for the 4th defendant is refused...

Court Disposition

Appeal allowed in part and Master's orders varied

Orders

  • Master's order varied to require discovery from the 3rd defendant of specified classes of documents from incorporation to September 2008: cheque books and cheque book stubs; cash and cheque deposit slips; account withdrawal slips; cash books; telegraphic transfer application forms and confirmations regarding inward...
  • Master's orders refusing disclosure of auditors' working papers and broad open‑ended supporting documents (category (2) non‑exhaustive items) are affirmed insofar as they were overbroad