WU HIN KWOK PATRICK v. YIP YEE TUNG CANDY AND ANOTHER

HCSD10/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND
NO.10 OF 2003

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J U D G M E N T

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1. The statutory demand in this case arose out of the failure on the part of the applicant to comply with the maintenance order made against him on 6 September 2000 in the family proceedings, DCMP No.220 of 1999. The applicant applies to set aside the statutory demand, which is not opposed.

2. The only question now before me is the question of costs. The general principle is that costs should follow the event. But it is still a matter of discretion, which, of course, must be exercised judicially.

3. It has been said time and again that bankruptcy proceedings should not be used as a means for debt collection. We are not at the stage of the bankruptcy petition. We are still at the stage of the statutory demand. Issuing a statutory demand is the first thing to do in so far as institution of bankruptcy proceedings is concerned. It is one of the two ways to prove that a debtor is unable to pay the debt. And inability to pay the debt is a prerequisite for bankruptcy proceedings to be issued against the debtor. The statutory demand may or may not be met. If it is met, then no further steps will be taken. If it is not met, the creditor may proceed with the bankruptcy petition, or he may refrain from doing so, depending on the circumstances and the advice that he may have from his legal advisers.

4. In the present case, it has been said by the applicant that there are other means to enforce the maintenance order. But I think the respondent is entitled to issue the statutory demand which will undoubtedly have the effect of forcing him to comply with the maintenance order. If the demand is not satisfied, it does not necessarily follow that the respondent would therefore proceed with the bankruptcy petition. She may be advised not to take such a step, although there is a good possibility that she will do so. Leaving aside the question whether it is right to issue the statutory demand as a way to enforce the maintenance order, in my view, she is, as a matter of right, entitled to apply and obtain a bankruptcy order against the applicant if he is clearly unable to pay his debts.

5. The applicant, in essence, argued that the debt is subject to substantive dispute. It is therefore unreasonable to issue the statutory demand. But in my view, if a creditor reasonably takes the view that the dispute sought to be raised by a debtor is without merits, the creditor is entitled to proceed with the issuing of the statutory demand. On the evidence before me, I am satisfied that the respondent is entitled to issue the statutory demand. The applicant complains that there is malice on the part of the respondent. There is no evidence to support this serious allegation. In my view, the applicant brought about the litigation on himself. As rightly pointed out by Ms Wong, appearing for the respondent, he is entitled to apply to the Family Court to vary the maintenance order, but did not do so until 25 March this year, more than two years after the making of the maintenance order and after the statutory demand has been issued.

6. The applicant's complaints against Ms Wong, as the solicitor for the respondent, are, in my view, entirely unmeritorious. In any event, there is no evidence to show that the conduct of Ms Wong falls within the ambit of Order 62, rule 8 of the Rules of the High Court to justify any costs order against her personally.

7. For this reason, I will set aside the statutory order with no order as to costs.