IN THE DISTRICT COURT OF HONG KONG
HOLDEN AT VICTORIA
ACTION NO. 1852 OF 1968.
—————– ACTION NO. 1853 OF 1968. —————– ACTION NO. 1854 OF 1968. —————– ACTION NO. 1855 OF 1968. —————– ACTION NO. 1856 OF 1968.
ACTION NO. 1853 OF 1968.
ACTION NO. 1854 OF 1968.
ACTION NO. 1855 OF 1968.
ACTION NO. 1856 OF 1968.
Coram: J.T. Williams, D.J. in Court.
Date of Judgment: 1 August 1968
1. The plaintiffs claim for food supplied to the defendants as partners in the Imperial Restaurant between February and June 1967. Therestaurant only existed from 8th February 1967 to 2nd June 1967.
2. Only 1st and 2nd defendants were served and they deny ordering goods for the Imperial Restaurant and that they were partners in it.
3. It would seem that the food sued for was in fact delivered to the restaurant and that the plaintiffs have not been paid for it butthere is no evidence that it was supplied at the request of 1st and 2nd defendants. There is no evidence that 1st and 2nd defendantshad ever concerned themselves in the affairs of the Imperial Restaurant or held themselves out as partners in it.
4. The only evidence against 1st and 2nd defendants is an application form Ex. P.3, for registration of the Imperial Restaurant underthe Business Registration Ordinance Cap. 310, which was filed in the Business Registry on 12th April 1967 by one KWAN Chan Fong and naming 1st and 2nd defendants amongthe partners.
5. 1st and 2nd defendants say that they had given $10,000 and $3,000 respectively to KWAN Chan Fong for shares in a restaurant to berun as the Imperial Restaurant Ltd. Their receipts, Exs.D7 and D8, dated December 1967, show the money was received for shares ina limited company. The evidence shows that the Imperial Restaurant never came into …(illegible) a limited company at any time materialto this action.
6. In cross-examination 1st and 2nd defendants agreed that they did not appreciate the difference between a partnership and a limitedcompany, and that when they parted with their money they had simply been concerned with an investment. Miss Lee, counsel for theplaintiffs, argued that since the 1st and 2nd defendants did not seem to know what they were investing in i.e. a partnership or alimited company it is a bit late now to pretend that they intended to invest in a limited concern only.
7. That submission is not unreasonable when linked with the application form Ex. P.3 which records them as partners in the unincorporatedbusiness.
8. 1st and 2nd defendants served third party notices upon KWAN Chan Fong and two others alleging they had wrongfully registered 1stand 2nd defendants as partners in the Imperial Restaurant. KWAN Chan Fong filed a defence asserting that they had agreed to the restaurantoperating as a partnership until it could be registered as a limited company. The other two third parties filed defences pointingout that they themselves were not registered as partners because they objected to the restaurant operating until it was registeredas a limited company.
9. 1st and 2nd defendants referred to correspondence with the registrar of companies showing that KWAN Chan Fong, at all material times,was endeavouring to register the Imperial Restaurant as a limited company. However, that correspondence takes one no further in thisaction because it is not inconsistent with KWAN Chan Fong’s defence as a third party which reveals that he wanted to register itas a limited company.
10. The 1st defendant attended the opening ceremony of the Imperial Restaurant on 9th February 1967, and 8 days later she says she handedher identity card to KWAN Chan Fong so that he could register the company. One wonders if it did not occur to her that the ImperialRestaurant must have opened prematurely if it was not then registered.
11. KWAN Chan Fong and the other two third parties might have given evidence clarifying the position, but by a consent order made atcall-over the third parties were excused from appearing at the hearing during the first two days. Counsel explained that the objectof that order had been to enable the issues between the plaintiffs and 1st and 2nd defendants to be decided before continuing asagainst the third parties. I would have thought that the issue as to the partnership of 1st and 2nd defendants would have concernedKWAN Chan Fong considerably, because he asserts that they are partners. It could be most disconcerting for this Court to find thatthat 1st and 2nd defendants were not partners and accordingly dismiss the plaintiffs’ claims, and for this court or some other courtto decide to the contrary in an action between 1st and 2nd defendants and KWAN Chan Fong.
12. After careful consideration of all the evidence I am disposed to accept the evidence of 1st and 2nd defendants that they were registeredas partners without their consent.
13. Mr. Gittins, Q.C. has pointed out a provision in the Business Registration Ordinance Cap. 310 which, as the present proceedings demonstrate, can be abused to the detriment of innocent persons. Section 19(1) permits one to obtain from the Commissioner certified copies of documents which the ordinance requires the Commissioner to keep.Section 19(2) reads:-
14. By section 5 anyone commencing business shall apply for registration in the prescribed manner and regulation 3 of the Business Registration Regulations prescribes Form 1(c) for use in registering a partnership. The said form makes provision for the names, addresses and identity cardnumbers of partners to be entered in the form. Regulation 4(2) requires the Commissioner to keep a register of such applications. It follows that under section 19(2) the said application formsbecame evidence of their own contents once they have been registered.
15. Thus a person named as a partner in an application form is deemed a partner until the contrary is proved. The Ordinance providesa means of registering a person as a partner without his knowledge or even against his wish, and using the record as prima facieevidence against him on the issue of partnership.
16. Creditors of the business may, as in the present proceedings, be put to considerable trouble and expense in suing persons who havebeen wrongfully named as partners. Likewise the latter may be put to trouble and expense in rebutting a presumption under section19(2) that they are partners.
17. Mr. Gittins Q.C. may be right in suggesting that the attention of the Legal Department be drawn to this matter.
18. In the present action it will be noted that the plaintiffs who relied upon the application form are having to pay their own costsand those of the 1st and 2nd defendants.
19. The claims of the plaintiffs are dismissed with costs to 1st and 2nd defendants and there will be a certificate for counsel.
Pamela Lee instructed by H.H. Lau & Co. for all Plaintiffs.
Gittins, Q.C. & Patrick Yu instructed by P.C. Woo & Co. for 1st & 2nd Defendants.