Huang Tzung-Hao v A Team Corporation Ltd [1999] FJHC 160; HBC0346D.1998S (2 September 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 0346 OF 1998

BETWEEN:

HUANG TZUNG-HAO
1st Plaintiff

YANG MAN-HWA
2nd Plaintiff

AND

A TEAM CORPORATION LIMITED
1st Defendant

YU SHIN HO
2nd Defendant

Counsel: Mr V. Kapadia for the 1st & 2nd Plaintiffs
Mr S. Maharaj for the 1st & 2nd Defendants

Hearing: 18th August 1999
Decision: 2nd September 1999

DECISION

This is an application pursuant to Order 26 Rule 1 of the High Court Rules 1988, for an order giving the Defendants leave to file and serve interrogatories on the Plaintiffs, and for an order requiring the Plaintiffs to answer the interrogations within 21 days of service on them.

Order 26 Rule 1(3) of the High Court Rules provides as follows;

“On the hearing of an application under this rule, the court shall give leave as to such only of the interrogatories as it considers necessary either for disposing fairly of the cause or matter, or for saving costs; and in deciding whether to give leave the court shall take into account any offer made by the party to be interrogated to give particulars or to make admissions or to produce documents relating to any matter in question”.

Order 26 Rule 1(4) provides;

“A proposed interrogatory which does not relate to such a matter as is mentioned in paragraph (1) shall be disallowed notwithstanding that it might be admissible in oral cross-examination of a witness”

The facts giving rise to this action are set out in the Statement of Claim. They are that:

“The Plaintiffs are business persons carrying on business of exporters from Taiwan and China.

The 1st Defendant is a limited liability company having its registered office at Suva in Fiji.

The 2nd Defendant is and was at all material times a director of the 1st Defendant.

In or about 1997 at the request of the 2nd Defendant the Plaintiffs appointed the 1st Defendant as their agent in Fiji for the sale of shoes to retail outlets.

The Plaintiffs then supplied shoes in large quantities to the 1st Defendant which sold and delivered the shoes on behalf of the Plaintiffs to various retail stores and the sum outstanding by the said retail stores was F$229,602.00.

On the 15th of August 1997 the Plaintiffs and the Defendants entered into a Deed whereby the 1st Defendant agreed to collect the moneys outstanding by the retail stores and remit the same to the Plaintiffs. The 2nd Defendant guaranteed the performance of the obligations of the 1st Defendant.

The Defendants subsequently collected moneys from the retail outlets but have refused to remit the same to the Plaintiffs and have also refused to account the same to the Plaintiffs.

The sum presently outstanding to the Plaintiff is the sum of F$166,143.10.

The Plaintiffs have made several demands on the Defendants but the Defendants have refused to pay the same”.

The Plaintiffs ask for judgment in the sum of $166,143.10 plus interest, an order that the Defendants provide details of the Plaintiffs’ money collected by them and damages for breach of contract.

On 15th July 1998 an ex parte application for a mareva injunction against the assets of the Defendants was granted by Pathik J. An application was made by the Defendants to dissolve the injunction and it was granted on 1st December 1998 “upon condition that the defendants
deposit into court the sum of $33,659.53 within 21 days”. The condition was not complied with and the mareva injunction therefore stands.

By Statement of Defence filed on 7th August 1998, the Defendants state that by a written agreement dated 27th October 1996. The 1st Plaintiff and the 2nd Defendant’s brother Yu Shin-Wei had entered into a joint venture agreement to market shoes to retail outlets in Fiji. The Defence further states that the plan was to incorporate a new company in Fiji but that instead the 1st Plaintiff went to China and Taiwan and exported shoes in the nature of the 1st Defendant. It states that the 1st and 2nd Plaintiffs then decided not to operate in Fiji and left Yu Shin-Wei behind to collect remaining amounts due by retail shoes outlets. It was then that the “Deed” referred to in the Statement of Claim was drawn up. The Defence claims that it was Yu Shin-Wei who collected the money and that when the Plaintiffs asked the 2nd Defendants for payment, the Defendant refused to pay. The Plaintiff then told the retail outlets not to make further payments to the Defendants or Yu Shin-Wei. Yu Shi-Wei then left the country after the Defendants paid him $36,000.00 as commission. Finally the Defendants say that only the sum of $19,845.75 is now legitimately due to the Plaintiffs and the details are set out in the Statement of Defence.

The Defendants say that this sum is held by them to pay VAT and Income Tax, and that the “Deed” was signed without proper explanation of it by the Solicitors.

The interrogatories in respect of which the Defendants seek leave of the court are as follows:

1. Did Second Defendant’s brother namely Yu Shin-Wei enter into a joint venture agreement with Huang Tzung-Hao (the 1st Defendant) in 1996 to market and wholesale shoes to retail outlets in Fiji?
   
2. Did Huang Tzung-Hao and Yu Shin-Wei propose to incorporate a company in Fiji to carry out the joint venture enterprise in Fiji?
   
3. Was a company incorporated and if not why not?
   
4. Did Huang Tzung-Hao before the company was incorporated go to China/Taiwan and ship shoes to Fiji in the name of A TEAM CORPORATION LIMITED and continued to do so thereafter?
   
5. Were the shipments of shoes consigned to A TEAM CORPORATION’S name cleared by Huang Tzung-Hao and Yu Shin Wei in Fiji and thereafter sold to retail outlets in Fiji?
   
6. Was the joint venture arrangement between Huang Tzung-Hao and Yu Shin-Wei on 27th October, 1996 terminated and Huang Tzung-Hao agree to pay commission to Yu Shin-Wei?
   
7. Did Huang Tzung-Hao and Yang Man-Hwa leave behind Yu Sin-Wei in Fiji as they did not want to stay and carry on business in Fiji to do the collection for payment of shoes already sold out to various outlets under a commission arrangement?
   
8. After making the arrangement as stated in Question (7) above, did Yu Sin-Wei remain behind and attend to collection in Fiji?
   
9. Is it correct or not that the agreement dated 15th August, 1997 prepared by

Messrs Sherani & Co. was done late to formalise the collection arrangement as the shoes had been imported into Fiji in the name of A TEAM CORPORATION LIMITED. Does the commission payment stated therein reflect the Commission that was payable to Yu Shin-Wei?

10. Is it not correct that the collection in terms of the Agreement dated 15th August, 1997 was to be done by Yu Shin-Wei who remained behind in Fiji and did in-fact collect the money on behalf of the Plaintiff?
    
11. Did Huang Tzung-Hao take with him $6,800.00 from the Bank on the 15th August, 1997?
    
12. Did Huang Tzung-Hao want money to be paid to him as collected rather than wait till $120,000.00 was collected by Yu Shin-Wei?
    
13. Did refusal by Yu Shin-Wei and or the Defendants to pay the money as collected lead Huang Tzung-Hao to stop the various retail outlets to pay the amounts owed by them to A TEAM CORPORATION?
    
14. Does Huang Tzung-Hao agree with paragraph 2 (xii) of the defence with regards to the accounting therein stated?
    
15. If Huang Tzung-Hao does not agree with the accounting shown in terms of Q.(14), then in what respect does he disagree and why?
    
16. Does Huang Tzung-Hao have his own company named ABC Footwear Limited in which the shareholders are as follows: Ratu Tui Bogidrau, Adi Litia Cakobau, Chen Yi Ting and Huang Tzung Hao?
    
17. Does Chen Yi Ting the afore-stated second last shareholder in Q.(16) also have a company named Sunrise Trading Company?
    
18. If the answers to Q.(16) and Q.(17) are in the affirmative then why have the plaintiffs exported the goods into Fiji in the name of A TEAM CORPORATION LIMITED and not in the names of the above-named company or companies names?
    
19. How long have the Plaintiffs been in Fiji doing business of selling shoes and other goods in Fiji?
    
20. Do Huang Tzung-Hao and Yang Man-Hwa have work permits to work in Fiji?
    
21. If the answer to Q.(20) is in the affirmative then under which company or companies names are the work permits issued and since when?
    
22. Why did the Plaintiffs stop the retail outlets from paying the A TEAM CORPORATION LIMITED the monies owed and which it was authorised to collect on behalf of the Plaintiffs under the Agreement dated 15/8/97?
    
23. If the Plaintiffs stopped from the retail outlets to pay A TEAM CORPORATION LIMITED then where is that right given in the afore-stated Agreement dated 15/8/97?
    
24. Do the Plaintiffs agree that they are required to issue VAT invoices to the customers to whom they have sold the shoes?
    
25. Do the Plaintiffs agree that VAT in respect of all their business transactions especially of the sales of the shoes to various outlets since they started the business in Fiji?
    
26. Have the Plaintiffs paid VAT in respect of all their business transactions especially in respect of the sales of the shoes to various outlets since they started the business in Fiji?
    
27. If the Plaintiffs have paid VAT then could they provide details of the same since they started trading in Fiji?
    
28. If the Plaintiffs have not paid VAT then what is the reason for non-payment of the same?
    
29. Have the Plaintiffs paid income tax to Inland Revenue Department in relation to their business since the commencement of the same?
    

(i) Further have the Plaintiffs lodged income tax returns to the Department of Inland Revenue since the commencement of business? If so, then provide Income Tax File Number and details.

(ii) If the Plaintiffs have not lodged the income tax returns then why have not done so?

(iii) Do the Plaintiffs agree that they have been importing shoes into Fiji for a number of years now?

(iv) If the answer to Q.29(iii) is in the affirmative then can the Plaintiffs provide full details of the imports into Fiji and the value of the same?

(v) Have the Plaintiffs been paid for all the imports into Fiji and what has happened to the proceeds of the sale?

(vi) Why didn’t the Plaintiffs agree to authorise the A TEAM CORPORATION from paying the VAT and Income Tax from the amounts collected by it?

30. Do the Plaintiffs not agree that the Yu Shin-Wei be renumerated for the services rendered to them in the collection of the monies owed to them. If not why?

31. How much of the monies owed by the various suppliers to the Plaintiffs as stipulated under paragraph (2)(xii) of the defence under the headings:

Cheques Not Deposited - $44,205.69

Cheques Dishonoured - $38,216.13

Have now been collected by the Plaintiffs themselves or by their agents?

32. Do the Plaintiffs agree that the rental for bulk store is payable by them for shoes kept on their behalf by A TEAM CORPORATION LIMITED. If not, then why is it not payable?

33. Do the Plaintiffs not agree that in terms of the Agreement dated 15/8/97 the Defendants are automatically authorised to pay VAT and Income Tax from the collection made thereunder and pursuant to it?
    

This application was heard on 18th August 1999. Mr S. Maharaj for the Defendants submitted that all the interrogatories are relevant to the action, that they would narrow down the issues to be tried and that they would save the court time. Mr V. Kapadia objected to all the interrogatories on the ground that the Defendants were in any event entitled to discovery in the normal way, that most questions were already answered by the Plaintiffs in the affidavits sworn in support of the mareva injunction, that the questions were irrelevant and constituted a fishing expedition.

The principles relevant to the granting of leave, are well-settled.

Interrogatories relating solely to credit are not permitted (Order 26 Rule 1(4) and Kennedy -v- Dodson [1895] UKLawRpCh 6; (1895) 1 Ch 334, 341).

Interrogatories are permitted provided they are relevant to the facts in issue or relevant to the existence of facts in issue (per Lord Esher M.R. in Marriot -v- Chamberlain [1886] UKLawRpKQB 89; (1886) 17 QBD 154, p 163.

Interrogatories are admissible which go to support the applicant’s case or to impeach the respondent’s case.

Interrogatories are only allowed if they are necessary for disposing fairly of the case or for saving costs, and interrogatories are not allowed which relate solely to the evidence the party intends to adduce.

Finally the allowing of interrogatories is a discretionary matter.

I now turn to the interrogatories themselves. Questions 1 to 8 relate to the joint venture agreement that the Defendants claim had been entered into by the Plaintiffs and the man Yu Shin-Wei. In an affidavit sworn by Pratap Singh, Attorney of the 1st Plaintiff, the suggestion that there was a contractual arrangement between the Plaintiffs and Yu-Shin-Wei was denied categorically. At paragraph 7(i), Pratap Singh deposed that

“The Plaintiffs are not aware of Yu Shin-Wei and have had no dealings with him. The Deed was entered into with A Team Corporation Ltd. And Yu Sin-Ho”.

Since, the answer to Questions 1 to 8 will inevitably result in the same answer, I find that they are not unnecessary to dispose fairly of the case, or to save court time. The answers will essentially be a matter of credibility when the witnesses gave evidence. I disallow Questions 1 to 8 inclusive Question 9 relates to the question of why the “Deed” of 15th August 1997, was formalised and as to Yu Shin-Wei’s role. Again, the affidavit of Pratap Singh denies all involvement with Yu Shin-Wei, and denies that Yu Shin-Wei had anything to do with the collection of money. For the reasons given above, I disallow Question 9.

Similarly, Question 10 is disallowed for the same reasons. Question 11 and 12 related to how the Plaintiff wished to be paid. The affidavit of Pratap Singh states that the interpretation given to the Deed on the duty to remit funds by the Defendants is wrong. However this interrogatory is already answered at paragraph 7(iv) of the affidavit which states

“The 1st Plaintiff did not take $6,800.00 from the Bank on 15th August 1997. This allegation by the Defendants is totally denied”.

This also deals with Question 12, since the Plaintiffs clearly state that the duty to remit did not arise only when the total funds were paid by the outlets. I disallow Questions 11 and 12.

Question 13 deals with the suggestion that the Plaintiffs stopped the retail outlets from paying any further sums to the Defendants. This question has not been answered in either of the affidavits filed by the Plaintiffs. It is clearly relevant to the matters in issue, and in particular to the question of why the defendants did not remit the funds. I will allow Question 13.

Questions 14 and 15 deal with the accounts as presented by the Statement of Defence. This has already been answered by Pratap Singh at page 3 of his affidavit, in detail. I disallow these questions.

Questions 16, 17, 18 and 19 are relevant to the Plaintiffs’ other business dealings in Fiji. I can see limited if any relevance to the issues in the case and I disallow them. Similarly, whilst counsel for the Defendant argues that Questions 20 & 21 which deal with the work permits of the Plaintiffs are relevant to the issue of the payment of VAT and taxes, I again see very little relevance, and I disallow them.

I will allow Questions 22, and 23 since they follow from Question 13. However I do not consider Questions 24, 25, 26, 27, 28 and 29 relevant to the matters in dispute in this case, and I disallow them.

Question 30 will lead to a flat denial of the involvement of Yu Shin-Wei, and I disallow it. Question 31 has already been answered in the affidavit of Pratap Singh and I disallow it.

Question 32 is in relation to a bulk-store which has not featured thus far in the pleadings. I see no relevance to the issues and I disallow it.

Finally Question 34 which asks whether the Defendants were to pay VAT and taxes, has already been answered in the affidavit of Pratap Singh in the account of the moneys due. I disallow it.

Of the proposed interrogations filed I therefore allow Questions 13, 22 and 23. The Plaintiffs are to answer these questions within 21 days of service of the interrogatories on them by the Defendants.

Costs are to be in the cause.

[Nazhat Shameem] Ms
JUDGE

At Suva
25th August 1999