RE: GRAHAM MEAD also known as GRAHAM PETER MEAD, a Debtor and EX PARTE: MANCHES & CO., a Creditor

HCB 821/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 821 OF 1998

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J U D G M E N T

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1. This is a petition for a bankruptcy order against Graham Mead ("the Debtor") presented by the creditor which is a firm of solicitors in London. The petition is founded on a judgment debt obtained in the High Court of London on 1 September 1997.

2. The petition was first heard on 28 September 1998. There have been a number of adjournments to enable further evidence to be filed. At the hearing on 30 March 1999, the Debtor was given leave to file further written submissions on or before 20 April 1999. This somewhat unusual course arose from the fact that the Debtor who acted in person did not receive the petitioning creditor's submissions prior to the hearing and needed time to take advice in the UK. By letter dated 18 April 1999, the court was advised by the Debtor that having taken such advice, he would not be taking any further action in the UK "at the present time".

3. The judgment in respect of unpaid solicitors' fees upon which the petition is based is a default judgment obtained in London. The Debtor applied to the High Court in London to set aside the default judgment in January 1998 but the application was dismissed on 21 May 1998. A statutory demand was sent to the Debtor on 22 June 1998. There has been no application to set aside this statutory demand.

4. The petition is opposed by the Debtor. His principal ground is that he has lodged a complaint with the Office for the Supervision of Solicitors ("OSS") in the UK about the fees of his former solicitors and the OSS may decide the complaint in his favour. In that eventuality, it was submitted, the legal basis of the default judgment would be invalid.

5. In issue was the scope and extent of the powers of the OSS. In particular, the question is whether the OSS has power to reduce the solicitors' bill where the firm in question has already obtained a judgment in respect of outstanding fees. The letter dated 7 January 1999 from the OSS to the Debtor leaves it beyond doubt that the OSS has no power to reduce the bill if its effect is to overturn a judgment of the court. The material part of that letter reads as follows :

"However, the main reason why we cannot assist you in your complaint is, as I said above, because there is a judgement against you for the monies claimed by the firm. Whilst I appreciate that the firm have charged you more than you say they estimated the matter would cost, for this Office to reduce the bill would effectively be to overturn the judgement of the Court. This is something which we are not empowered to do."

The OSS has accordingly closed the file and advised the Debtor that if he were dissatisfied with the decision, it was open to him to request the Legal Services Ombudsman to review the file.

6. The only other point which arises concerns the service of the bill of costs. It is a jurisdictional point first raised by the Official Receiver at the hearing on 28 December 1998. Section 69 of the Solicitors Act 1974 provides as follows :

"69 (1) Subject to the provisions of this Act, no action shall be brought to recover any costs due to a solicitor before the expiration of one month from the date on which a bill of those costs is delivered in accordance with the requirements mentioned in subsection; (2) ....

(2) The requirements referred to in subsection (1) are that the bill -

(a) ...

(b) must be delivered to the party to be charged with the bill, either personally or by being sent to him by post to, or left for him at, his place of business, dwelling-house, or last known place of abode;

...."

According to the petitioning creditor, the bill under cover of the letter from its handling partner was faxed to the Debtor on 3 June 1997 and proceedings were issued against him by way of a writ of summons on 4 July 1997. According to the Debtor, it was transmitted to him by email on 4 June 1997 and that he received the original on 10 June 1997.

7. In Zuliani v. Veira [1994] 1WLR 1149, the Privy Council had to consider whether a solicitor can be allowed to recover costs on the basis of a bill that failed to comply with the requirements of s.69(2). Lord Nolan, delivering the judgment of the Judicial Committee held at 1154G-H (held) :

".... The statutory provisions are of the greatest importance. They must be strictly enforced in the interests of justice both to solicitors and to their clients. But it by no means follows that an action brought on a bill which fails to satisfy one or more of the statutory requirements or which contains erroneous items must necessarily be dismissed without consideration of the merits. It has long been established that a court, confronted with a defective bill, is entitled to look into all the circumstances of the case and in appropriate cases to allow the solicitor to withdraw the bill and to deliver a fresh one: see, for example, Chappell v. Mehta [1981] 1 All E.R. 349, 351-352 and the cases there cited per Lawton L.J. ...."

The defect at the present case is purely technical : it is not the case that the Debtor never received the bill : a copy reached him on time and the original also reached him albeit a few days out of time. The only difference is that the reverse side of the bill was not faxed or sent by email to the Debtor. In my judgment, such a defect does not render the English order void.

8. Counsel for the petitioning creditor submitted, correctly in my view, that the Debtor's recourse is to apply to have the English order set aside.

9. It is evident from the Debtor's letter dated 18 April 1999 that no further action is being taken by the Debtor in relation to the English order in the UK. Although this is qualified by the phrase "at the present time", it is not a material qualification since, realistically, the Debtor cannot afford to further delay an application if one is contemplated. It would also appear that the Debtor is not seeking to challenge the OSS's answer or to take matters further.

10. In the circumstances, given that the Debtor has no meritorious answer to the petition and is unable to pay the judgment debt, the Debtor is adjudged bankrupt.