RE KWOK HIU CHUN DAMIEN

HCB 5440/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 5440 OF 2012

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D E C I S I O N

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1.  This is the Bankrupt’s application for leave to lodge his Notice of Appeal with the Court of Appeal (CA) out of time against an order of Master S Lo dated 4 February 2016 (Order) by which his application to exclude from the bankruptcy estate (Estate) the long service payment (LSP) received from his ex-employer was dismissed with costs.

2.  The applicable legal principles are not in dispute: see Lee Chick Choi v Best Spirits Co Ltd, unrep, HCMP 371/2015, 21 May 2015, CA at §19.  The court will take into account: (a) the length of the delay; (b) the reasons for the delay; (c) the merits of the appeal; and (d) the degree of prejudice to the other party if the application is granted.  Where the delay is substantial and not wholly excusable, the applicant must show a real prospect of success on the merits, ie, a strongly arguable case, and not merely a reasonable prospect of success.

3.  The length of delay here is about 3 months.  The issues concern (b) to (d) as identified above. 

4.  The circumstances of the delay are somewhat unusual.  It is common ground that the deadline for the appeal against the Order expired on 14 April 2016.  Two weeks before the deadline, the Bankrupt filed a Notice of Appeal against the Order to a Judge in Chambers (NA).  I agree with Mr Chan, appearing for the Official Receiver (OR), that although the Bankrupt was acting in person at the time, it is reasonably clear from the document he filed that he was assisted by lawyer(s).  However, the parties are in agreement that the NA was defective in that the appeal should be heard by the CA. 

5.  On 13 April 2016, legal aid was granted to the Bankrupt.  On 22 April 2016, counsel was assigned for him.  The solicitors and counsel assigned by the Director of Legal Aid was the same team which acted for the Bankrupt in his application heard by Master S Lo.  In response to a letter from the OR dated 16 June 2016 which pointed out the defect in the NA, that notice was withdrawn by consent on 28 June 2016.  It should be noted that the OR had indicated on 24 June 2016 that she was not prepared to agree to an extension of time for the appeal by reason of the absence of merits. 

6.  Subsequently, on 6 July 2016 the Bankrupt filed a summons returnable before a Judge in Chambers for leave to lodge an appeal against the Order to the CA out of time (Summons).  The OR, based on her understanding of the law, again took issue with the application.  She maintained that it should be made to the CA and not to a Judge.  The Bankrupt agreed to withdraw the Summons and applied on 12 August 2016 to the CA for an extension of time to appeal.

7.  On 30 September 2016, the CA gave judgment in Poon Sin Mei Cindy v FWD Life Insurance Co (Bermuda) Ltd, unrep, HCMP 1456/2016, which held that the Court of First Instance (CFI) has jurisdiction to deal with an application for extension of time to appeal to the CA.

8.  Thereafter, the parties agreed that the application before the CA should be withdrawn (and leave was granted by Lam VP to do so) and that the Bankrupt would make a fresh application to the CFI. Hence the present application. 

9.  In these circumstances, Mr Chan has fairly accepted that the operative delay is confined to a period of about 3 months, ie, from 14 April 2016 to 6 July 2016. 

10.  I propose to deal firstly with issues (b) and (d).  It is reasonably plain that the NA was filed based on the erroneous view of those advising the Bankrupt.  However, the Bankrupt and his advisors acted swiftly when the error was identified by the OR.  Assessed in the circumstances set out above, I believe that the delay is relatively short. 

11.  In respect of the error on the part of the Bankrupt’s advisors, unfortunate as it is such a mistake is understandable.  It may be said that the OR herself had made a similar error on the correct legal procedure when she took issue with the Summons.  I agree with Mr Wong, appearing for the Bankrupt, that Poon Sin Mei, supra, did not break any new ground (see paras 16-29 of the Reasons for Decision).  That decision approved an earlier one of Yuen JA (sitting alone) in Re Li Sau Ying, unrep, HCMP 2384/2007, 11 December 2007.  In these circumstances, I do not believe that it is right for the court to look too harshly at the error of the Bankrupt’s advisors.

12.  On the question of prejudice to the OR if this application is granted, the only prejudice identified is the delay to the OR’s work in administering and distributing the Bankrupt’s estate.  I do not believe that a delay of 3 months in this context is a serious prejudice.  In the premises, this application turns upon whether the intended appeal has a reasonable prospect of success. 

13.  There are 3 proposed grounds of appeal.  The first ground has been abandoned. 

14.  The 2^nd and 3^rd grounds are related.  In short, it is argued that the LSP constituted accrued benefits or vested benefits which were protected under s.16 of the Mandatory Provident Fund Schemes Ordinance, Cap 485, and was excluded from the Estate.  Further, the set off exercised by the Bankrupt’s ex-employer in respect of the accrued/vested benefits against the LSP could not change the nature of that payment. 

15.  I believe that there is a reasonable prospect of success in these grounds.  The relevant statutory provisions are complex.  On the authorities before the court, these issues have not been examined by the court.  Hence, any view taken by the Bankrupt’s ex-employer or the Mandatory Provident Fund Schemes Authority is, with respect, not beyond argument.  I should also mention that the point is of some importance to the general public. 

16.  For these reasons, I grant the relief sought in the Summons filed on 17 November 2016 with a costs order nisi that the costs of and occasioned by the Summons be in the cause of the appeal.