LEE PUI CHUN v. CHENG CHI WAH AND OTHERS

HCSD 13/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO 13 OF 2016

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J U D G M E N T

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1.  By a statutory demand dated 24 February 2016 (“Statutory Demand”), the Respondents (“Creditors”), claimed that Madam Lee Pui Chun (李佩珍) (“Lee”) owed them a debt in excess of HK$4.679 million together with interest of over HK$863,000. The debt was costs ordered by Mr Justice L Chan against Lee on 4 November 2013 in HCA735 of 2008 (“HCA735”). The amount of the costs was certified after taxation in an Allocatur dated 1 February 2016.

2.  The Statutory Demand was served personally upon Lee who signed it on 15 March 2016 to acknowledge receipt.

3.  This is Lee’s application to set aside the Statutory Demand.

4.  In her affirmation in support dated 5 April 2016, Lee said she did not admit the debt. She also made some allegations of impropriety against the Creditors (or some of them).  It seems that Lee is disputing both the propriety of the costs order against her and the amount certified in the Allocatur. This court was however informed by solicitors for the Creditors that Lee’s application to review the taxing master’s decision and to re-open the taxation had already been dismissed. Lee’s application for a stay of execution of the costs order had also been dismissed.

5.  In a more lengthy affirmation of Lee dated 22 July 2016 (consisting of over 500 pages of annexures), she enclosed a large number of documents which appear to have been filed and/or otherwise deployed in HCA735 and pertain to the substantive merits of the Judgment of Mr Justice L Chan. While her appeal against the Judgment of Mr Justice L Chan is still pending, no date for the substantive appeal has been fixed yet.

6.  The applicable legal principles are well-established.

7.  Under Rule 48(5)(b) of the Bankruptcy Rules, the court may grant an application to set aside a statutory demand if the debt is disputed on grounds which appear to be substantial. In determining whether a debt is disputed on substantial grounds, the burden is on the debtor to show that there is a genuine triable issue that the debt is disputed on substantial as opposed to trivial or frivolous grounds.  However, where a statutory demand is based on a judgment or order, as in the present case, the court will not go behind the judgment or order and inquire into the validity of the debt: Re Maydwell [1999] 3 HKLRD 325; Fung Tak Chi v Billion Eagle Ltd [2010] 4 HKLRD 571. This is so even though there is a pending appeal against the judgment or order: Re Choy Wai Bor unrep HCB8565 of 2001; Kwan J (as she then was); 28 May 2002.

8.  In the view of this court, simply making an assertion that Lee does not admit the debt is far from being sufficient for the purpose of setting aside the Statutory Demand. This is no more than a bare denial and hardly a substantial ground for the present purpose. Equally, making lengthy accusations against the Creditors and enclosing hundreds of pages of documents in an affirmation without a clear explanation as to how they impinge upon the Judgment or costs order of Mr Justice L Chan or the taxed amount of costs certified in the Allocatur is equally insufficient for the present purpose.

9.  For the above reasons, this court is not satisfied that sufficient grounds exist under Rule 48 of the Bankruptcy Rules which would entitle Lee to set aside the Statutory Demand. 

10.  In the circumstances, this court would make the following orders:

(1) The application to set aside the Statutory Demand be dismissed.

(2) Pursuant to Rule 48(7), the Creditors be authorized to present a bankruptcy petition against Lee forthwith.

11.  There shall also be an order nisi that costs of and occasioned by the application be to the Creditors to be taxed if not agreed and paid forthwith.