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 was allowed in part: the Master’s orders were varied to require targeted discovery of primary transactional banking and income/purchase/asset records for the 3rd defendant from incorporation to September 2008 (verified on affidavit) while refusing broad audit working papers and any supporting accounting discovery for the 4th defendant; further evidence on appeal was admitted under Order 58 r1(5) on special grounds.

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
HCA2712/2006
Procedural Posture
Civil Litigation Discovery and Tracing of Misappropriated Funds / Appeal From Master's Decision on Specific Discovery (hearing and Decision 16 September 2009)
Outcome
Appeal allowed in part; Master's orders varied
Legal Topics
Specific Discovery, Relevance and Necessity of Documents, Tracing Misappropriated Funds, Audited Accounts and Audit Working Papers, Scope and Limitation of Disclosure, Admission of Further Evidence on Appeal Under Order 58 R1(5)
Source Language
EN
Civil Procedure Equity Company Law Tracing Discovery Specific Discovery Relevance and Necessity of Documents Tracing Misappropriated Funds +3 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 and Tracing of Misappropriated Funds / Appeal From Master's Decision on Specific Discovery (hearing and Decision 16 September 2009)

Legal Issues

  1. 1 Whether the documents sought are relevant and necessary for fair disposal or saving costs for tracing misappropriated funds
  2. 2 Scope and limits of specific discovery and whether audit working papers must be disclosed
  3. 3 Whether discovery against the 4th defendant is justified by available circumstantial evidence

Ratio Decidendi

The appeal was allowed in part: the Master’s orders were varied to require targeted discovery of primary transactional banking and income/purchase/asset records for the 3rd defendant from incorporation to September 2008 (verified on affidavit) while refusing broad audit working papers and any supporting accounting discovery for the 4th defendant; further evidence on appeal was admitted under Order 58 r1(5) on special grounds.

Court Disposition

Appeal allowed in part; Master's orders varied

Orders

  • Discovery ordered limited to specified classes of documents in respect of the 3rd defendant from incorporation to September 2008 comprising banking records (cheque books and stubs, deposit slips, account withdrawal slips, cash books, telegraphic transfer forms and confirmations), records of income (daily sales...
  • Audited accounts for the 3rd and 4th defendants limited to the end of their financial year 2007-2008 as ordered by the Master; audited accounts to date refused