RE VONG WUN MAN

HCB 11934/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPCTY PROCEEDINGS NO. 11934 OF 2004

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J U D G M E N T

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1.  This is an application issued by Vong Wun Man (“the bankrupt”) to annul the bankruptcy order made by Master Kwang against him on 23 March 2005, pursuant to section 33(1)(a) of the Bankruptcy Ordinance, Cap. 6.

2.  The application was filed on 19 January 2006.  It was on the basis that the bankruptcy order ought not to have been made on two grounds:

(1) the bankrupt alleges that the service of the statutory demand and of the petition on him was irregular and defective; and

(2) he disputes the underlying judgment for the petitioning debt obtained by the petitioner in HCMP No. 3773 of 2000. 

3.  The petition was presented by the Industrial and Commercial Bank of China (Asia) Limited on 10 December 2004.  It was alleged in the petition that the bankrupt is indebted to the petitioner in the aggregate sum of HK$10,206,874.68 with interests and costs, being the outstanding amount due on the judgment debt obtained by the petitioner against the bankrupt as one of the 2^nd defendants in the HCMP on 7 December 2000.

4.  A statutory demand of the aforesaid debt was served on the bankrupt by advertisement in a Chinese newspaper circulating in Hong Kong on 28 June 2004, after unsuccessful attempts were made to serve him personally.

5.  The petition was served by substituted service pursuant to an order obtained on 14 February 2005.

6.  As stated earlier, the bankruptcy order was made on 23 March 2005.  The Official Receiver was appointed trustee in bankruptcy without a committee of inspection on 24 June 2005.  According to the report of the Official Receiver, a bank balance of HK$12,000.00 odd was realised to date.  Only one proof of debt was submitted, this was by the petitioner, claiming HK$8,185,248.46.

7.  The Official Receiver received a letter dated 14 May 2005 from the bankrupt’s solicitors giving notice of his intention to apply for a discharge of the bankruptcy order.  However, it was only on 9 March 2006 that the Official Receiver was put in funds by the bankrupt’s solicitors, for the advertisement of a notice of the annulment application in the Gazette and in English and Chinese newspapers in Hong Kong, and the notice was duly advertised on 24 March 2006.

8.  The petitioner initially informed the Official Receiver that it would object to the application for annulment if its debt and costs are not fully paid.  Later, on 20 April 2006, the petitioner and the bankrupt signed a consent summons to annul the bankruptcy order and to set aside the statutory demand and petition, with no order as to costs, save that the agreed costs of the Official Receiver at HK$18,226.00 are to be paid by the bankrupt.

9.  As pointed out in the Official Receiver’s report, the important question on this application is whether the court is satisfied with the merits and all the circumstances to exercise its discretion to annul the bankruptcy order.  Whether the petitioner consents or not is just one of the factors for consideration.

10.  The bankrupt has filed one affirmation in support of this application.  I have also before me the affirmations made by the process server of the petitioner’s solicitors on the service of the statutory demand and the service of the petition.  The petitioner did not file any evidence to answer the allegations in the supporting affirmation of the bankrupt.

11.  The statutory requirement on the service of a statutory demand is found in rule 46(2) of the Bankruptcy Rules.  The obligations of a petitioning creditor in complying with the statutory requirement are comprehensively discussed in the judgment of Barma J in Re Pang Mei Lan May, HCB No. 9118 of 2004, 24 February 2005, paragraphs 23 to 28, and 30 to 37.  I agree with the analysis in his judgment.

12.  The service of the statutory demand was said to be defective on these grounds.

13.  Firstly, when the process server attempted personal service of the statutory demand in June 2004, he only served it on the last known residential address of the bankrupt in Tsim Sha Tsui.  Service was not successful and the process server was informed by the caretaker in the building and by a neighbour that the bankrupt had moved out for a year.  He did not attempt service on the last known business address of the bankrupt in New Trend Plaza, North Point, Hong Kong.  I think this is a bad point.  The process server did attempt service subsequently on the business address in November 2004, before the petition was allowed to be filed by the court.  He was told by a caretaker in New Trend Plaza that the bankrupt had moved out for two years.

14.  Secondly, when the attempted personal service was unsuccessful, the petitioner caused the statutory demand to be advertised in a Chinese newspaper in Hong Kong on 28 June 2004.  In so doing, it is alleged that the petitioner had failed to “do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention” as required by rule 49(2), as the bankrupt was and is a Macau resident, as the petitioner knew or should have known. 

15.  The petitioner should have known from the guarantee executed by the bankrupt in its favour in 1996 that the bankrupt was the holder of a Portuguese passport.  The petitioner should also have known from the annual return (exhibited to the process server’s 1^st affirmation) of All Wide Investments Limited (“All Wide”), of which the bankrupt was a director and shareholder, that as at the date of the annual return in March 2004, the bankrupt did not have a Hong Kong identity card and was the holder of a passport issued in Macau.  Further, in the title of the petition and other documents filed in these proceedings, the bankrupt was stated to be the holder of a Macau identity card.  The bankrupt has also disclosed his movement records showing that in June 2004, he had only stayed in Hong Kong for less than an hour on 10 June 2004 when he arrived at the ferry terminal and left by the Hong Kong airport.  I think there is substance about this complaint.  The petitioner should at least have also advertised in a newspaper in Macau, knowing the bankrupt’s connection with Macau.  I hold that the petitioner had failed to comply with the obligation under rule 49(2) and service of the statutory demand was bad for this reason.

16.  Thirdly, it was alleged that the petitioner did not make enquiries with the Official Receiver of the whereabouts of the bankrupt, knowing that All Wide was compulsorily wound up, and had therefore failed to take reasonable steps to obtain from the Official Receiver an address of the bankrupt at which personal service of the statutory demand might be attempted.  I was told by counsel for the bankrupt that All Wide was ordered to be wound up in August 2004.  Hence, when the process server first attempted service of the statutory demand on the bankrupt in June 2004 and up to the date when he made his 1^st affirmation on 24 July 2004, All Wide had not yet been put into liquidation.  There was nothing to indicate to the petitioner that this company was wound up until another search was made by the petitioner’s solicitors on 2 February 2005.  It is not strictly necessary to deal with this allegation as I have already found on the second ground that the service of the statutory demand was bad, so I do not propose to rule on this.

17.  As the petition was founded on the statutory demand and the service of the latter was bad, the bankruptcy order must be annulled.  It is not necessary to consider separately the service of the petition itself.

18.  It is also unnecessary to deal with the grounds put forward by the bankrupt disputing the judgment in default obtained against All Wide, the bankrupt and another in the HCMP.  I note that no allegation is made by the bankrupt that the service of the originating summons in those proceedings on him was defective or that the judgment obtained against him was irregular.  I fail to understand how the judgment obtained against All Wide, if it were indeed irregular because of the alleged defective service on All Wide, would have availed the bankrupt as the 2^nd defendant.  The petitioner had made a demand on him for repayment on his personal guarantee in respect of All Wide’s liability to the petitioner.  I do not propose to say more about this.

19.  I make the following orders on this application:

(1) the bankruptcy order is annulled;

(2) the bankruptcy petition is dismissed;

(3) the notice of annulment is to be advertised by the Official Receiver at the expense of the bankrupt; and

(4) the bankrupt is to pay the Official Receiver’s costs agreed in the sum of HK$18,226.00.