RE FUNG CHAU WON t/a CHI SHING CO

HCB 6785/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 6785 OF 2001

_________________________

_________________________

_______________

D E C I S I O N

_______________

1. This is an application by the bankrupt Mr. Fung Chau Won ("Mr. Fung") to rescind the bankruptcy order made against him on 13 December 2001. The application is made pursuant to section 98 of the Bankruptcy Ordinance on the ground that the bankruptcy order made against Mr. Fung is irregular. It is submitted on behalf of Mr. Fung that he has no knowledge about the bankruptcy proceedings as at the material times he was not in Hong Kong.

Mr. Fung's Case

2. The background of Mr. Fung's case may be summarized as follows:-

a)	Prior to 26 April 2000, Mr. Fung was carrying on a business under the name of Chi Shing Company ("his business") at the address of Units 11 and 13, 11th Floor, Block A, Wah Kai Industrial Centre, 221 Texaco Road, Tsuen Wan, New Territories ("the Wah Kai Centre address").
b)	In about the end of April 2000, he moved his business from the Wah Kai Centre address to Flat/Room 2, 8th Floor, Wealthy Industrial Building, Nos. 22-26 Wing Yip Street, Kwai Chung, New Territories ("the Wing Yip Street address"). The removal was necessitated by the resumption of the whole building of Wah Kai Industrial Centre by the Kowloon Canton Railway Corporation ("KCRC") and pursuant to a Government Notice dated 30 June 1999. In the 1st affirmation of Mr. Fung of 15 October 2002, a copy business registration certificate was exhibited to show that he had moved his business to the Wing Yip Street address as at 30 May 2000.
c)	On or about 1 November 2000, Mr. Fung moved out of the premises at the Wing Yip Street address as he could not afford to pay the rental. He moved his business to Flat/Room L, Block 1, 22nd Floor, Golden Dragon Industrial Centre, 150-160 Tai Lin Pai Road, Kwai Chung, New Territories ("the Golden Dragon Centre address"). A copy business registration certificate was also exhibited to show that he was carrying on his business at the Golden Dragon Centre the address as at 16 February 2001. However, Mr. Fung admitted that address stated in the said business registration certificate is wrong. The correct address should be Flat/Room L, Block 1, 22nd Floor, Golden Dragon Industrial Centre and not Flat/Room 1, Block L as stated in the said business registration certificate. But despite that the address is wrong, he stated that he had once received a letter from the Rating and Valuation Department sent to the incorrect address. His surveyor a Mr. Raymond Foo also managed to locate the correct premises despite that the wrong address had been given to him.
d)	On 12 February 2001, the petitioner's solicitors issued a Writ of Summons in the District Court claiming Mr. Fung for a sum of $119,786.99 together with interest and costs. In the said Writ, two addresses of Mr. Fung are stated therein, one is the Wing Yip Street address. The other is the old residential address of Mr. Fung in Ho Man Tin ("the Ho Man Tin address"). Mr. Fung admitted that he had moved out of the Ho Man Tin address long time ago in about 1994. His present residential address is at Room 2416, Kwong Sun House, Kwong Ming Court, Tseung Kwan O, New Territories, Hong Kong ("the Tseung Kwan O address").
e)	On 29 March 2001, default judgment was obtained by the petitioner against Mr. Fung for the sum of $105,126.23 together with interest and costs of the action on an indemnity basis.
f)	On 19 April 2001, a statutory demand was issued by the solicitors for the petitioner demanding Mr. Fung to pay a sum of $110,769.93 being the amount awarded to the petitioner under the said default judgment. The address of Mr. Fung as stated in the statutory demand was the Wing Yip Street address. According to the petitioner, the statutory demand was served on Mr. Fung on 29 May 2001 by ordinary post to the Wing Yip Street address and by advertisement in the "Sing Tao Yat Po" Chinese newspaper.
g)	Pursuant to a substituted service order made by the court on 30 November 2001, the petition was also served on Mr. Fung on 6 December 2001 by ordinary post at the Wing Yip Street address and again by advertisement in the "Sing Tao Yat Po" Chinese newspaper.
h)	On 13 December 2001, a bankruptcy order was made against Mr. Fung in his absent. It is to be noted that as at the date of the hearing of the present application, Mr. Fung has not taken any steps to set aside the default judgment.
i)	In the 1st affirmation of Mr. Fung, he stated that the bankruptcy order against him should be set aside as he had no knowledge about the bankruptcy proceedings. He said that he was not in Hong Kong when the Writ of Summons was issued in the District Court. He was also not in Hong Kong when the statutory demand and the petition were said to have been served on him. His travelling records obtained from the Immigration Department were also exhibited to support his contention that at the material times he was not in Hong Kong.
j)	In his 1st affirmation, Mr. Fung further stated that the KCRC had through the Lands Department offered to compensate him for the resumption of his premises at the Wah Kai Centre address. The offer was in the sum of $521,000 for which he had already received a sum of $411,000 as provisional compensation. If he agrees to accept the balance of the compensation in the sum of $110,000 ($521,000 - $411,000), he could use the said balance to discharge the debt stated in the statutory demand. In any event, Mr. Fung argued that he has a good claim against the KCRC for compensation in relation to the resumption of his premises. He estimated his claim to be in excess of $3 million.

The grounds for rescinding the bankruptcy order

3. The main ground relied on by Mr. Fung to rescind the bankruptcy order is that he had no knowledge about the service of the statutory demand and the petition. He stated that at the time of the service of the statutory demand and petition, he was outside the jurisdiction of Hong Kong. Relying on order 10, rule 1 of the High Court Rules (which requires the defendant to be within the jurisdiction of Hong Kong at the time of the service of the writ), Mr. Lam, Counsel for Mr. Fung, argued that the bankruptcy order against Mr. Fung was obtained on an irregular basis, and like any irregular judgment, should be set aside without going into the merits of Mr. Fung's case.

4. Further, Mr. Lam argued that the petitioner had not taken all reasonable efforts to serve the statutory demand and the petition on Mr. Fung. He argued that had the petitioner's solicitors conducted an updated business registration search against the business of Mr. Fung, the petitioner would have knowledge of the Golden Dragon address of Mr. Fung. Mr. Lam contended that although the Golden Dragon address stated in the business registration certificate is incorrectly described as Flat/Room 1, Block L, a document sent to that address would still reach Mr. Fung.

5. Mr. Lam further submitted that the bankruptcy order against Mr. Fung should be set aside because Mr. Fung has a substantial claim against KCRC.

The attempts to serve the statutory demand and petition by the Petitioner's solicitors

6. According to the solicitors for the petitioner, they had taken all reasonable efforts to cause the statutory demand and the petition to be served on Mr. Fung. In the 1st affirmation of the process server, a Mr. Ling Lai Ming Midco of 19 July 2001 ("the process server"), he had summarized the various attempts he had made to serve the statutory demand on Mr. Fung. He states in his 1st affirmation as follows:-

"4a.	On Saturday, 12th May, 2001 at 3:20 p.m., I attended at Flat 2, 8th Floor, Wealthy Industrial Building, 22-26 Wing Yip Street, Kwai Chung, New Territories (the "said address"), being the Judgment Debtor's usual and last known address. Instead of the "Chi Shing Company", I noticed one "Good-use Paper Products" was situated at the said address. I knocked on the door, but received no response. I then made enquiries with the caretaker and he informed me that the said Chi Shing Company had moved out from the said address for several months. According to the caretaker, the said Chi Shing Company probably is still operating elsewhere in Hong Kong.
b.	On Wednesday, 16th May, 2001 I caused a letter (the "said letter") to be sent to the Judgment Debtor stating that I would on Saturday, 26th May, 2001 at 10:30 a.m. attend at the said address. There is now produced and shown to me marked hereto "LLMM-3", a true copy of the said letter.
c.	To the best of my knowledge, the said letter sent to the Judgment Debtor at the said address has not been returned by the Post Office.
d.	On Saturday, 26th May, 2001 at 10:30 a.m., I attended the said address as scheduled. I knocked on the door of the unit at the said address, but received no response. Then, at 11:45 a.m. on the same day, I attended at the said address again. One female therein suggested me to go to one "Gold Mettle Engineering Limited" ("Gold Mettle") on the 4th Floor of the same building for enquiries about the Judgment Debtor.
e.	One adult female at the said Gold Mettle informed me that the Judgment Debtor at one time used her company to collect mail and she believed he is still carrying business in Hong Kong but she would not know exactly where.
5.	The Judgment Creditor and I verily believe that the Judgment Debtor is keeping out of the way with a view to avoiding service.
6.	Neither the Judgment Creditor nor I has any information or knowledge that the Judgment Debtor has another address within Hong Kong.

7.	I believe that the Judgment Debtor is within jurisdiction on the grounds that:-
	1)	the Judgment Debtor is a permanent resident of Hong Kong, having the Hong Kong Identity Card number appearing in the Bankruptcy Petition.
	2)	The judgment Debtor is most likely still carrying on business in Hong Kong as deposed in Paragraphs 4(a) and 4(e) hereof."

7. In his 1st affirmation, the process server stated that the statutory demand was served on Mr. Fung on 29 May 2001 by advertising a notice of the statutory demand in the "Sing Tao Yat Po" and by sending a copy of the statutory demand by ordinary post to the Wing Yip Street address. The copy statutory demand sent to the Wing Yip Street address had not been returned by the post office. In the 2nd affirmation of the process server of 9 August 2001, he confirmed that neither the petitioner nor himself had any information or knowledge that the Mr. Fung had left Hong Kong.

8. As for the service of the petition, the process server had also summarized the various attempts he had made to serve the petition on Mr. Fung in his 3rd affirmation of 5 November 2001. The attempts are as follows:-

"3a.	On Friday, 31st August, 2001 at 10:00 a.m. I attended at Flat 2, 8th Floor, Wealthy Industrial Building, 22-26 Wing Yip Street, Kwai Chung, New Territories (the "said address"). Instead of the "Chi Sing Company", I noticed that one "Good-use Paper Products" was situated at the said address. I knocked on the door, but there was no sign of anyone therein. I then made enquiries with the caretaker, he informed me that the said Chi Shing Company had moved out from the said address for quite some time.
b.	I crave leave to refer Paragraph 4(d) of my 1st Affirmation dated 19th July, 2001, there was one female at the said address who suggested me to go to one "Gold Mettle Engineering Limited" ("Gold Mettle") on the 4th Floor of the same building for enquiries about the Judgment Debtor.
c.	Therefore, I then went to the said Gold Mettle for enquiries, however, there was no one in the flat at that time.
d.	On Thursday, 11th October, 2001 I caused a letter to be sent by ordinary post to the Judgment Debtor stating that I would on Monday, 29th October, 2001 at 10:30 a.m. attend the said address. There is now produced and shown to me marked hereto "LLMM-1", a true copy of the said letter.
e.	To the best of my knowledge, the said letter sent to the Judgment Debtor at the said address has not been returned by the Post Office.
f.	On Monday, 29th October, 2001 at 10:30 a.m. I attended at the said address as scheduled. However, there was no one in the flat. I then went to the said Gold Mettle for enquiries, one adult female therein informed me that the Judgment Debtor at one time used her company to collect mail. She believed that the Judgment Debtor is still carrying business in Hong Kong but she would not know exactly where.
4.	I had previously attempted to serve a Statutory Demand personally on the said Judgment Debtor, but to no avail. Service had to be effected by way of substituted service.
5.	I crave leave to refer to my 1st and 2nd affirmations dated 19th July, 2001 and 9th August, 2001 respectively in respect of service of the Statutory Demand.
6.	Neither the Judgment Creditor and I has any information or knowledge that the Judgment Debtor has another address within Hong Kong.

7.	I verily believe that the Judgment Debtor is within jurisdiction on the grounds that:-
	1)	the Judgment Debtor is a permanent resident of Hong Kong, having the Hong Kong Identity Card number appearing in the Bankruptcy Petition.
	2)	The judgment Debtor is most likely still carrying on business in Hong Kong as deposed in Paragraphs 3(f) hereof.

9. The process server also confirmed in his 4th affirmation of 22 November 2001 that neither the petitioner nor himself had any information or knowledge that Mr. Fung had left the jurisdiction.

10. On 30 November 2001, the Court granted an order for substituted service of the petition on Mr. Fung. Pursuant to the said order for substituted service, the petition was served by the petitioner's solicitors on Mr. Fung on 6 December 2001 by advertising a notice of the proceedings in the "Sing Tao Yat Po" and by sending a sealed copy of the petition to the Wing Yip Street address.

The reports of the Official Receiver

11. According to the 2 reports filed by the Official Receiver, Mr. Fung has a total liability of $414,549.19. The Official Receiver took the view that even if Mr. Fung has accepted the balance of the compensation in the sum of $110,000, he still would not have sufficient money to pay off all his liabilities. The Official Receiver expressed doubts as to whether Mr. Fung would be successful in his compensation claim against the KCRC for $3 million.

12. Further, the Official Receiver pointed out that there has been delay in taking out the present application by Mr. Fung to rescind the bankruptcy order. The application was made on 24 October 2002, which was over 10 months from the date of the making of the bankruptcy order.

13. At the hearing of the present application, the attendance of the Official Receiver was dispensed with.

The arguments

14. At the hearing, Mr. Lam argued that the legal principles in setting aside a default judgment under the High Court Rules should apply in setting aside a bankruptcy order. He referred the Court to a number of cases on setting aside a default judgment on the ground of irregular service under O.10, r.1 of the High Court Rules. These included Fok Chun Hung v Lo Yuk Shi [1995] 2 HKC 648, Desirable International Fashion Ltd v Chiang Shi Chau [1997] 3 HKC 170, Chu Kam Lun v Yap Lisa Susanto [1999] 3 HKC 378, Po Kwong Marble Factory Ltd v Wah Yee Decoration Co Ltd [1996] 4 HKC.

15. Relying on the above cases and O.10, r.1 of the High Court Rules (which requires the defendant to be within the jurisdiction of Hong Kong at the time of service of the writ), Mr. Lam submitted that the bankruptcy order made against Mr. Fung should be set aside as at the time of the service of the statutory demand and petition, Mr. Fung was outside the jurisdiction of Hong Kong. Mr. Lam contended that the bankrupt Mr. Fung had no knowledge of the statutory demand and petition.

16. I do not agree with the submission of Mr. Lam above. In the first place, O.10, r.1 of the Rules of the High Court (which deals with the service of a writ) does not apply to bankruptcy proceedings at all, not to mention the legal principles established thereunder in relation to setting aside a default judgment based on irregular service. Under O.1, r.2 of the Rules of the High Court, it is expressly stated that the High Court Rules do not apply to bankruptcy proceedings. (See also the unreported judgment of Madam Justice Kwan in Re Lam Michael Alan Nigel, HCB 3929/2000, at paragraph 13 thereof). Indeed, under s. 99(1) of the Bankruptcy Ordinance, it states that the rules and practice of the High Court may apply to bankruptcy proceedings if those rules and practice are not inconsistent with the provisions of the Bankruptcy Ordinance. As for the service of the statutory demand and the petition are concerned, there are specific provisions in the Bankruptcy Rules governing how the statutory demand and the petition are to be served, namely rules 46 and 49 and rules 31 and 59 of the Bankruptcy Rules. In my view, O.10, r.1 of the High Court Rules does not apply to bankruptcy proceedings.

17. For the purpose of the present application, I shall set out below the material provisions relating to the service of the statutory demand and the petition namely:-

"R.46. Requirements as to service
(1)	Rule 49 has effect as regards service of the statutory demand, and proof of that service by affidavit to be filed with a bankruptcy petition.
(2)	The creditor shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor's attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected.
(3)	Where the statutory demand is for payment of a sum due under a judgment or order of any court and the creditor knows, or believes with reasonable cause-
	(a)	that the debtor has absconded or is keeping out of the way with a view to avoid service; and
	(b)	there is no real prospect of the sum due being recovered by execution or other process.
The demand may be advertised in one or more newspapers; and the time limited for compliance with the demand runs from the date of the advertisement's appearance or (as the case may be) it first appearance.
R.49. Proof of service of statutory demand
(1)	Where under section 6A of the Ordinance the petition must have been preceded by a statutory demand, there must be filed in court, with the petition, an affidavit proving service of the demand.
(2)	Every affidavit must have exhibited to it a copy of the demand as served.
(3)	......
(4)	......
(5)	If neither paragraph (3) nor (4) applies, the affidavit must be made by a person having direct personal knowledge of the means adopted for serving the statutory demand, and must-
	(a)	give particulars of the steps which have been taken with a view to serving the demand personally.
	(b)	State the means whereby (those steps having been ineffective) it was sought to bring the demand to the debtor's attention; and
	(c)	Specify a date by which, to the best of the knowledge, information and belief to the person making the affidavit, the demand will have come to the debtor's attention.
(6)	The steps of which particulars are given for the purposes of paragraph (5)(a) must be such as would have sufficed to justify an order for substituted service of a petition.
(7)	If the affidavit specifies a date for the purposes of compliance with paragraph (5)(c), then unless the court otherwise orders, that date is deemed for the purposes of these rules to have been the date on which the statutory demand was served on the debtor.
(8)	......
(9)	The court may decline to file the petition if not satisfied that the creditor has discharged the obligation imposed on him by rule 46(2)."
R.31. Service of Petition etc.
When the debtor is not in Hong Kong, or cannot be found, the court may order service on him of the petition or any order made against him, or of any summons issued for his attendance, to be effected within such time and in such manner as it thinks fit.
R.59. Service
(1)	Service of a creditor's petition shall be effected by the creditor or his solicitor, or a person in their employment, delivering a sealed copy of the petition to the debtor.
(2)	If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is evading service of the petition or any other legal process, or for any other cause, it may order substituted service to be effected in such manner as it thinks fits.
(3)	Where an order under paragraph (2) has been carried out, the petition shall be deemed to have been duly served on the debtor."

18. In my view, there is no requirement under Rules 46 and 49 of the Bankruptcy Rules that at the time of the service of the statutory demand, the debtor must be within the jurisdiction of Hong Kong. As pointed out by Madam Justice Yuen (as she then was) in the case of Re Damnerncharwanit [2000] 1 HKC at page 581:

"The purpose of a statutory demand is to provide a statutory ground for a creditor's petition. So long as there is a possibility of founding jurisdiction when the petition is presented, I can see no reason why the statutory demand should be set aside for 'want of jurisdiction'. Effect must be given to the clear wording of s 4, sub-s (b) of which requires and requires only the presence of the debtor on the day the petition is presented. To read into that a requirement that the statutory demand cannot be served unless the debtor is domiciled or resident or is carrying on business in Hong Kong or has to be present in Hong Kong on the day on which the statutory demand is served would be to add a requirement to the legislation which is not there."

19. In my judgment, what is required of the petitioner under R.46(2) of the Bankruptcy Rules is that, he shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor's attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected. What is reasonable must be judged objectively, but in the light of the information actually or constructively available to the creditor at the time (see Re Li Wai Man ex. Parte Hang Tung Securities Limited [1999] HKCU 1310, per Yuen J (as she then was).

20. In the present case, the process server Mr. Ling had set out in his 1st affirmation (see paragraph 6 above) the various attempts he had made to effect service of the statutory demand on Mr. Fung. He stated that he had on 3 occasions and during the office hours visited the Wing Yip Street address which was the usual and last known address of Mr. Fung. Prior notice was also given to Mr. Fung before he made the 2nd visit. Further, he had made enquiries with the caretaker and the occupier of the premises at the Wing Yip Street address. He had even gone to the 4th floor of the same building to make enquiries. According to the process server and the petitioner, they had no information or knowledge that Mr. Fung had left Hong Kong. They believed that Mr. Fung was within the jurisdiction of Hong Kong as he is a permanent resident of Hong Kong and had carried on business in Hong Kong. In my view, the petitioner's solicitors had done all that is reasonable to bring the statutory demand to the attention of Mr. Fung. As attempts for personally service failed, I find that sending a copy of the statutory demand by ordinary post to the Wing Yip Street address and by advertising a notice of the statutory demand in the "Sing Tao Yat Po" satisfied the requirement of service under R. 46(2). I accept that at the material times, the petitioner had no actual or constructive information or knowledge that Mr. Fung was out of the jurisdiction of Hong Kong. I find that the statutory demand had been validly served on Mr. Fung.

21. As for the service of the petition is concerned, the process server had also set out in his 3rd affirmation (see paragraph 8 above) the various attempts he had made to effect service of the petition. I do not intend to repeat the details of those attempts but having considered the efforts made, I accept that personal service of the petition on Mr. Fung could not be effected as he could not be located at his usual and last known address. I also accept that the circumstances of the case justified an order for substituted service of the petition on Mr. Fung by advertising a notice of the petition in the "Sing Tao Yat Po" and by sending a sealed copy of the petition by ordinary post to the Wing Yip Street address. According to the petitioner and its solicitors, they had no information or knowledge (actual or constructive) that Mr. Fung was out of the jurisdiction at the material times. Of course, if there is evidence which shows that the petitioner or its solicitors had knowledge or information that Mr. Fung was not in Hong Kong at the time the application for substituted service order was made, the substituted service of the petition as above would be defective and not valid. But this is not the case here. In my view, since the substituted service order made by the court on 30 November 2001 had been carried out by the petitioner's solicitors, under R.59(3) of the Bankruptcy Rules, the petition shall be deemed to have been duly served on Mr. Fung. Indeed, and as pointed out by Madam Justice Kwan in Re Lam Michael Alan Nigel (supra) at page 9, paragraph 20 that:

"The service by advertisement made in accordance with the order for substituted service was valid. It is irrelevant that the notice of the petition advertised in the two newspaper did not actually come to the bankrupt's attention."

22. I would add that since Mr. Fung was and is domiciled in Hong Kong (which is admitted by Mr. Lam, Counsel for Mr. Fung), S. 4(1)(b) of the Bankruptcy Ordinance, which requires the debtor to be personally present in Hong Kong on the day on which the petition is presented, does not apply.

23. At the hearing, Mr. Lam argued that the petitioner's solicitors should have conducted an updated business registration search before they attempted service of the statutory demand and the petition. He submitted that had this been done, the petitioner should have knowledge that Mr. Fung had moved his business to the Golden Centre address.

24. I do not agree with the submission of Mr. Lam above for the following reasons:-

(a)

The Golden Centre address as set out in the business registration certificate dated 16 February 2001 was not the proper and correct address of Mr. Fung. As admitted by him, the flat number and the block number had been incorrectly stated on the business registration certificate. Although Mr. Fung stated that he had once received a letter from the Rating and Valuation Department sent to the incorrect address and that his surveyor had no difficulties in locating the correct premises, in my view, the address as described in the said business registration certificate remains to be an incorrect and a wrong address. There is indeed evidence from the process server that when he attempted to locate the Golden Centre address (according to the information described in the business registration certificate) on 19 November 2002, he was not able to find the address. According to the affirmation of the process server of 29 September 2003, he stated as follows:-

"4. I was instructed by my principal to locate the address known as Flat/Room 1, Block L, 22nd Floor, Golden Dragon Industrial Centre, 152-160 Tai Lin Pai Road, Kwai Chung, New Territories which is referred to as the Golden Dragon premises by the Respondent in his Affirmation.

5. On or about 19th November 2002 at 3:00 p.m., I attempted to locate the Golden Dragon address, but to no avail.

6. The below is a summary of my findings:-

a) The Golden Dragon Industrial Centre (the "said Centre") comprised four buildings as particularized below.

Block No.	Street Number
1	No. 152-160 Tai Lin Pai Road
2	No. 162-170 Tai Lin Pai Road
3	No. 172-180 Tai Lin Pai Road
4	No. 182-190 Tai Lin Pai Road

b)	There was no Block L within the said Centre at all. I went to the 22nd Floor of No. 152-160 Tai Lin Pai Road "Flat/Room 1". I (Block 1). The units there were arranged in alphabetical order and there was no checked each and every unit on the company.22nd Floor, but could not locate the Respondent
c)	Located at Unit L of 22nd Floor of Block 1 was one Tai Tung Polyethylene Products Factory.
d)	At that time, only one company named 大利鈕扣廠 at Flat D & E on the same floor was open. I enquired with a man therein as to the location of the Golden Dragon Address, however, he could not identify the Golden Dragon Address. Neither had he heard of the Respondent Company despite that he had reportedly been there for over 8 years.
e)	I then made enquiries with the caretakers in the management office for the said Centre, however, they had no record of the Respondent company.
f)	According to the record of the management office, the occupiers or the status of Unit L of the respective buildings were:-

Block 2	Cheung Fai Metal Manufactures Limited
Block 3	Gold Choice (H.K.) Limited & Kar Kee Metal Manufacture
Block 4	vacant

7. In the circumstances, I believe the Golden Dragon Address is not a bona fide address and the Respondent did not "continue(d) to carry on the business of the Company at the said Address" as deposed by the Respondent."

In light of the above, I am of the view that the wrong address as described in the business registration certificate could not be regarded as the usual and last known address of Mr. Fung. It is not a proper address for service.

b)	Further, according to Mr. Fung, he had moved to the Golden Centre address as early as on 1 November 2000. However, he had not explained why the change of his address was only recorded on the business registration certificate on 16 February 2001 (see paragraph 2(vi) of Mr. Fung's 1st affirmation of 15 October 2002). He had also failed to explain why despite that he had moved out of his old residential address in Ho Man Tin as early as in 1994, he had never informed the business registration office of the change of his residential address to his present address in Tseung Kwan O. The inference to be drawn from this is that, Mr. Fung does not want to reveal or disclose his present or updated residential address in the business registration record. According to the business registration search conducted by the petitioner's solicitors on 9 February 2001, the old residential address of Mr. Fung in Ho Man Tin still remains in the business registration record as his residential address. This is despite the fact that he had moved out of the Ho Man Tin address in 1994 and that the whole place had been demolished a few years ago.
c)	According to the petitioner's solicitors, they had conducted a business registration search against Mr. Fung on 9 February 2001. This was before the issue of the statutory demand on 19 April 2001. According to the business registration search, the Ho Man Tin address was described as the residential address of Mr. Fung and the Wing Yip Street address was stated to be his business address. In my view, the Wing Yip Street address was at the material times the usual and last known address of Mr. Fung.

25. In this application, Mr. Fung has referred the court to an English Court of Appeal case namely Re A Judgment Debtor (No. 1539 of 1936) [1936] 3 All ER 767 to support his argument that the debtor must be given notice of the statutory demand. In my view, this English case is quite different from the present case and has no direct application or relevance here.

26. In this English Court of Appeal case, the court had set aside a substituted service order because at the time the creditor's solicitors applied for a substituted service order for service of a bankruptcy notice, the solicitors had not informed the court that the debtor had left England. The court set aside the substituted service order as it took the view that the service of the bankruptcy notice by advertisement in the London Gazette and a local newspaper would not be effective notice to the debtor who was abroad and not in England. As for the present case is concerned, the issue in the English Court of Appeal case does not arise here as at the time of the service of the statutory demand and the petition by way of substituted service, there is no evidence that the petitioner and its solicitors had actual or constructive information or knowledge that Mr. Fung was out of Hong Kong. Further, the service of the statutory demand and the petition is now governed by Rules 31, 46, 49 and 59 of the Hong Kong Bankruptcy Rules.

27. The other argument advanced by Mr. Lam is that Mr. Fung has a substantive claim against the KCRC due to the resumption of his premises at the Wah Kai Centre address. He submitted that if Mr. Fung is successful on the claim, he would have sufficient money to discharge his debts and liabilities. I do not agree. It is quite clear from the letter of the Lands Department dated 3 September 2001 that the proposed claim of $3,480,000 from Mr. Fung had been rejected (see exhibit "FCW-4" in the 1st affirmation of Mr. Fung dated 15 October 2002). Further, the Lands Department had offered compensation to Mr. Fung in the total sum of $521,000 in full and final settlement of his claim. According to Mr. Fung, he had already accepted the provisional payment of $410,000 as stipulated in the said offer letter from the Lands Department. As such, I fail to see how Mr. Fung could have proceeded with his claim for $3,480,000. In my view, there is no substance in this argument.

28. Further, Mr. Fung had stated in his 1st affirmation that he could use the balance of his compensation i.e. $110,000 ($521,000 - $410,000) to discharge the debts of the petitioner. Again, I do not agree. As pointed out by the Official Receiver, Mr. Fung had admitted in his own statement of affairs dated 7 January 2002 that his total liabilities amounted to $493,288. In such circumstances, I also fail to see how the balance of $110,000 would be sufficient to discharge such liabilities. In this regard, I accept the submission of Mr. Maurellet, Counsel for the petitioner, that even at the date of the present application, Mr. Fung was insolvent.

29. At the hearing, Mr. Maurellet has further argued that the bankruptcy order should not be set aside because of the delay on the part of Mr. Fung in taking out the present application. Mr. Maurellet submitted that the bankruptcy order was made on 13 December 2001, but the present application was only taken out on 24 October 2002 which is over 10 months from the date of the making of the bankruptcy order. In the 1st report of the Official Receiver, he also took the view that there was delay in taking out the present application. He stated that the application should have been made within 21 days after the bankruptcy order was made. He referred the court to Butterworths Hong Kong Bankruptcy Law Handbook, 1st edition, at page 238 which deals with the time limit for applying to rescind a bankruptcy order under S.98(1) of the Bankruptcy Ordinance. It states that the court will likely to have regard to the 21 days time limit stipulated under S.98(2) of the Bankruptcy Ordinance. S.98(2) deals with the time limit for lodging an appeal against the decision of the court or the Registrar to the Court of Appeal.

30. On this issue of delay, I am prepared to accept the explanation given by Mr. Fung, namely that during those 10 months period, there was some misunderstanding between himself and the Official Receiver's Office over the $3 million payment that the Official Receiver required as security of his costs if Mr. Fung was to set aside the default judgment obtained by the petitioner against him in the District Court. However, I do not accept the further delay by Mr. Fung in prosecuting the present application.

31. It is to be noted that the present application first came before this court on 13 November 2002. At the first hearing, the court adjourned the matter to a date to be fixed for argument with 3 hours reserved. The court further gave directions for the parties to file and serve their respective affidavits. However, since the 1st hearing, no further steps had been taken by Mr. Fung to prosecute the present application. It is only at the instigation of the Official Receiver that the present application was re-listed for hearing on 16 December 2003 which is almost a year since the first court hearing. In my view, there has been inordinate delay on the part of Mr. Fung in prosecuting the present application.

32. I understand from the 2nd report of the Official Receiver that Mr. Fung had for sometime embarked on settlement negotiations with the petitioner. But if Mr. Fung is serious with his application, one would not expect him to engage in prolonged settlement negotiations but to proceed with the matter expeditiously. However, it seems that Mr. Fung had chosen to leave the matter in abeyance and only proceeded with it at the instigation of the Official Receiver. I doubt very much whether Mr. Fung would proceed with his application if the Official Receiver had not insisted that the application be re-listed for hearing. On this separate issue of delay, I agree with Mr. Maurellet that the court should not exercise its discretion to rescind the bankruptcy order.

Conclusion

33. For the reasons given above, I do not see there is any merit in the application by Mr. Fung to rescind the bankruptcy order. In my judgment, both the statutory demand and the petition had been properly served on Mr. Fung. Further, I accept that at the time of the making of the bankruptcy order and of taking out the present application, Mr. Fung was insolvent. There is no valid ground to rescind the bankruptcy order made against him. The application is therefore dismissed with costs to the petitioner to be taxed if not agreed. There be a certificate for Counsel.