TANG KUN YEUNG as registered manager of TANG MAN FAT TSO AND ANOTHER v. TANG WOUNG SHIU

HCB 3608/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCYPROCEEDINGS NO. 3608 OF 2006

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J U D G M E N T

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1.  This was the trial of a bankruptcy petition presented by Tang Kun Yeung (as registered manager of Tang Man Fat Tso) and Tang Cho Wah (whom I shall refer to as the 1^st and 2^nd Petitioners respectively) against Tang Woung Shiu (whom I shall refer to as the Debtor).  The petition is based on a debt of HK$772,248.98 due from the Debtor to the Petitioners under three allocaturs in HCA 5527 of 1998, under which costs awarded against the Debtor in the Petitioners’ favour in those proceedings were taxed.  Those proceedings involved a claim by the Debtor against the Petitioners arising out of their dealing with certain property said to belong to the Tang Man Fat Tso, of which the Debtor was a member.  The claim was unsuccessful, as the amended statement of claim was struck out and the claim dismissed in October 2002, at the beginning of the trial of the action by Deputy Judge Kwok, S.C.

2.  Some time later, the Petitioners appointed attorneys to act for them under powers of attorney.  By a power of attorney dated 7 March 2006, the 1^st Petitioner appointed his son, Tang Chi Kin, to be his lawful attorney to (among other things) demand, sue for and receive the taxed costs owing and payable by the Debtor to him under HCA 5527 of 1998.  By a power of attorney dated 22 June 2005, the 2^nd Petitioner appointed Wong Yiu Moon as his attorney to act in accordance with section 7 of the Powers of Attorney Ordinance (Cap. 31).

3.  Although the petition was issued in the names of the Petitioners, it appears from it that it was presented by the attorneys on their behalves.  The attorneys also made a joint affirmation verifying the petition.

4.  When the petition came on for trial on 17 November 1996, the Debtor contended that the powers of attorney granted to Tang Chi Kin and Wong Yiu Moon were invalid, and that accordingly, the verifying affirmation in respect of the petition having been made by the attorneys, it was ineffective, and the petition should fail as there was no valid verifying affirmation in respect of it.  He also contended that even if the powers of attorney were valid, the verifying affirmations were ineffective since they should have been made by the Petitioners themselves, and not by their attorneys.  In support of this proposition, he relied on Clauss v Pir [1987] 2 All ER 752, which establishes that where an act is required to be done by a party personally (in that case, making an affidavit in relation to discovery), it cannot be done by an agent or attorney on his behalf.

5.  At that hearing, I came to the view that, in the light of section 9 of the Bankruptcy Ordinance (Cap. 6), and rules 57 and 58 of the Bankruptcy Rules, although an affirmation verifying a petition can be made by a person, other than the petitioner, who has personal knowledge of the matters to which he deposes, it is necessary for the deponent (or deponents, if more than one) to have personal knowledge of the matters to which they depose.  The form of verifying affirmation contained in Form 11 in the Bankruptcy (Forms) Rules also supports this conclusion.  In the light of that, it seemed to me that the verifying affirmation made by the attorneys jointly, which was made on the basis of information and belief, and did not indicate that they had personal knowledge of the matters stated, was not sufficient.  Mr Wong, who appeared for the Petitioners informed me that the Petitioners were now in a position to make verifying affirmations themselves, and the matter was accordingly adjourned to 9 January 2007 to enable them to do so.

6.  The Debtor also sought and was given leave to file a further affirmation in opposition, subject to the Petitioners having an opportunity to reply to his further evidence.

7.  During the adjournment, each of the Petitioners filed a verifying affirmation, thus remedying the position in this respect.

8.  As he had indicated, the Debtor also filed a further affirmation in opposition to the petition, and the 1^st Petitioner filed further evidence in reply thereto.

9.  When the matter resumed on 9 January 2007, the Debtor indicated that he maintained his contention that the powers of attorney were invalid.  He submitted that the effect of this was that the issue and service of the statutory demand on which the petition was based (and presumably the presentation of the petition itself) on the instructions of the attorneys was ineffective.

10.  I do not think that there is any merit in this point.  The point has already been unsuccessfully raised by the debtor in the context of a challenge to two of the allocaturs on 15 September 2006.  On that occasion, Sakhrani J ruled that the powers of attorney were valid.  I respectfully agree with his conclusions, for the reasons which he gave in his decision of 15 September 2006 in HCA 5527 of 1998.

11.  Moreover, it is clear from the affirmations filed by the Petitioners in these proceedings that they were aware of and were involved in giving instructions in respect of these proceedings.  They have also filed their verifying affirmations in respect of the petition after being made aware of the Debtor’s complaint about the validity of the powers of attorney.  Thus, even if (contrary to my view) the powers of attorney were not valid, the Petitioners have, I think, clearly ratified the bringing of these proceedings on their behalf.

12.  The other main point taken by the Debtor in opposition to the petition was that he and members of his family, as members of the Tang Man Fat Tso, were entitled to distributions in respect of property of the Tso which had been resumed or sold, and in respect of which there were undistributed proceeds due to them.  The Debtor further claimed, without giving particulars, that the Tso held other properties, and that there were other properties held by other clan organisations in respect of which, or the proceeds of sale of which, he and members of his family had an interest.

13.  So far as the suggestion that the Debtor is entitled to a distribution from proceeds arising from the realisation of property formerly belonging to the Tso is concerned, Mr Wong accepted that on the evidence before me, which consisted of minutes or records of meetings of the Tso, there were two dispositions of property in respect of which funds were available for distribution to the Debtor.  However, he pointed out that it appeared from those records that the amount payable to each member of the Tso from such dispositions was only a sum in the region of HK$2,800.  The Debtor contended that, apart from his own share, he was entitled to have recourse to the shares of 14 other family members for the purpose of meeting the allocaturs, as the proceedings in HCA 5527 of 1998 were, he said, brought for their benefit as well.  Mr Wong did not accept that this was the case, but submitted that this did not, in any event, assist the Debtor, as the total amount would still, even if the Debtor were right, be less than HK$50,000.  Mr Wong also accepted that it appeared from a judgment of Yeung J dated 6 April 2000 in HCA 484 of 1997 that a further sum of HK$300,000 may have been set aside for distribution to the Debtor and members of his family.  However, he submitted, in my view rightly, that taking all of these matters at their highest, the Debtor might be entitled to have the benefit of undistributed amounts totalling just under HK$350,000, which would still be far short of the amount owing to the Petitioners under the allocaturs.  Thus, even taking these amounts into account, and assuming in the Debtor’s favour that these are available to be set off against the petition debt, there remains a substantial debt owing to the Petitioners which the Debtor appears to be unable to pay.

14.  Mr Wong further submitted, also correctly in my view, that the Debtor’s allegations that the Tso and other other Tsos had substantial land holdings was not relevant, since in the absence of a sale or partition or distribution, a member of a Tso has only a life interest in the Tso property (see e.g. Leung Kuen Fai v Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso [2002] 2 HKLRD 705, at 717G), and there was no evidence of any distributions having been made in respect of such other holdings.

15.  So far as the Debtor’s suggestion that there have been dispositions of property by other Tsos is concerned, this is a bare allegation of which no particulars have been given.  It is not, therefore, a basis for resisting the making of a bankruptcy order.

16.  Finally, the Debtor suggested that the Petitioners had not in fact paid their own solicitors the whole of the taxed costs which they had been awarded.  However, he accepted that this was only a matter of suspicion on his part.  While an award of costs is given as an indemnity to a successful party, it does not follow that he must actually have paid the amount of such costs to his legal representatives before seeking to recover them from the party who has been ordered to pay his costs.  So long as there is a liability on his part to pay his legal representatives such costs, they may be recovered from the other party.  Here, there is nothing at all to suggest that the Petitioners do not remain liable to pay their legal representatives such costs, and accordingly this suggestion does not assist the Debtor.

17.  In the circumstances, the Debtor has failed to establish any basis for resisting the petition, and I shall therefore make the usual bankruptcy order against him.  So far as the costs of these proceedings are concerned, I shall make an order nisi that the costs of the petition are to be paid by the Debtor to the Petitioners in any event, save that there is to be no order as to costs in respect of the hearing on 17 November 2006, having regard to the fact that that hearing was adjourned to enable the Petitioners to file further verifying affirmations.  Insofar as the costs cannot be agreed, they are to be taxed on the party and party basis.