NG WAI LANG v. LEUNG CHI SING AND ANOTHER

HCA 2238/2018

[2019] HKCFI 2875

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2238 OF 2018

________________________

BETWEEN

________________________

_________________________________

DECISION

_________________________________

Introduction

1.  The Writ in this case was issued by the Plaintiff (“P”) on 24 September 2018.

2.  The 1^st Defendant (“D1”) filed his Defence and Counterclaim on 4 March 2019. The Counterclaim was for the “delivery up” of certain items of machineries said to be worth RMB 4,500,000 plus HKD 300,000, or alternatively damages for an alleged wrongful interference with goods, etc, to be assessed.

3.  By a summons filed on 13 August 2019 (“the Summons”), P applied for summary judgment for the sums of (1) HKD 7,000,000; and (2) HKD 105,000 against D1. The Summons was opposed by D1 at the call-over hearing on 16 September 2019. According to the official records in the Court File, D1 was legally represented on 16 September 2019.

4.  On 16 September 2019, after hearing oral submissions from the parties’ solicitors, a Master of this Court adjourned the Summons for arguments on a date to be fixed. The Summons was eventually fixed to be heard by me substantively today (20 November 2019).

5.  On 5 November 2019, D1 filed a Notice to Act in person.

6.  On 11 November 2019, P’s solicitors wrote a letter to my clerk informing me of the fact that to the best of their knowledge, D1 had in fact been adjudicated bankrupt on 17 July 2019, after P issued the Writ but prior to the date P took out the Summons.

7.  By the said letter, P applied, unilaterally, for leave to have the Summons withdrawn, for this hearing to be vacated, and for me to make no order as to costs.

8.  Since no documentary proof of (1) D1’s alleged bankruptcy; or (2) the Official Receiver’s written consent had been attached to the said letter, I raised requisitions in relation to the same.

9.  Answers to my requisitions reached me in the afternoon of 19 November 2019. In gist, according to P, D1 was adjudicated bankrupt in HCB 3032/2019, and two joint and several private trustees-in-bankruptcy, Mr Fred Lee and Ms Chow Wai Lan Christine (“the Trustees”), had been appointed. An urgent letter had been sent to the Trustees on 14 November 2019 informing them of today’s hearing, but P received no response from the Trustees.

10.  I therefore directed that the hearing today should take place as scheduled, but with the preparation of hearing bundles, etc, dispensed with so as to save costs.

11.  At the beginning of today’s hearing, Mr Cheung, Solicitor for P, handed up a copy of a letter from the Trustees confirming they have no objection to P being granted leave to withdraw the Summons with no order as to costs. Having read the letter and heard further oral submissions from Mr Cheung, my decision is to give the following directions: -

(1) Leave be granted to P to withdraw the Summons;

(2) There be no order as to costs for the Summons;

(3) Liberty to apply;

(4) P’s solicitors shall within 7 days from today draw up, seal and file this Order, and serve sealed copies of this Order onto (a) D1; and (b) the Trustees for their record and/or further actions; and

(5) The written version of this oral decision be sent to (a) D1; and (b) the Trustees for their record and/or further actions.

     (Collectively, “the Decision”)

12.  My reasons for the Decision are as follows.

The Law

13.  As Rogers V-P had said in Koh Kee Suan v Ip Kay Lo [2001] 3 HKLRD 439 at 441-D: -

“The effect of a bankruptcy order is, of course, that upon the making of the order, the Official Receiver is constituted the receiver of the property of the bankrupt: see s.12 of the Bankruptcy Ordinance (Cap.6). Thus, the bankrupt was divested of, and ceased to have, any interest in, either his assets or his liabilities.”

14.  When one reads Section 2 of the Bankruptcy Ordinance (Cap 6) (“BO”), one can see that the definition of “property” includes “things in action”, and that should, subject to some exceptions, include legal rights to sue.  By Section 12 of the BO, on the making of a bankruptcy order, no creditor “to whom the bankrupt is indebted in respect of any debt provable in bankruptcy” shall proceed with any action or legal proceedings unless with the leave of the Bankruptcy Court. Further, by Section 34(1) of the BO, “demands in the nature of unliquidated damages arising otherwise than by reason of a contract, tort, promise or breach of trust” shall not be provable in bankruptcy.

15.  In Law Society of Hong Kong v Wong Siu Ki Oswald [2001] 4 HKC 636, Burrell J made it clear that debts (in that case indemnity costs of disciplinary proceedings brought under the Legal Practitioners Ordinance, Cap 159) which fall within Section 34(1) of the BO would not be provable in bankruptcy and can therefore be sued upon (or proceeded with) without leave of the Bankruptcy Court. That was applied by Kwan J (as Kwan V-P then was) in Re Chow Shun Yung (unrep, HCB 5334/2005, 10 June 2005), and by G Lam J in Re Luo Xing Juan Angela [2019] HKCFI 2674.

Discussion

16.  On the materials placed before me, D1 appears to have been adjudicated bankrupt prior to the date P took out the Summons. Applying the law as set out above to our current situation, D1 may well have incurred recoverable costs for the Summons, and recovering such costs may well be something of importance. As such, it would be quite wrong, as a matter of principle, for me to simply “make no order as to costs” as demanded by P on P’s unilateral application, without hearing from the Trustees at all. I would decline to do so. Fortunately, as it turned out, the Trustees were able to communicate their consent vis-à-vis P’s application to this Court at the beginning of this hearing. But for that communication, I would have reserved the question of costs for further arguments.

17.  I should say for the record that D1 has a counterclaim against P, and a CMS hearing has already been scheduled to take place on 9 March 2020. On the materials placed before me, the Trustees do not appear to have been made aware of the same.

18.  P, the Trustees and the 2^nd Defendant would need to inform this Court, in good time, as to what they would like to do with this action generally, and the upcoming CMS hearing specifically.

19.  It is for all of the above reasons that I do give the directions which I have just referred to, which I believe would be the most appropriate in the circumstances.

Final Remarks

20.  I do thank Mr Cheung for his most able assistance.