RE CHAN CHI LOI

HCB 8632/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 8632 OF 2006

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J U D G M E N T

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Introduction

1.  By summons dated 12 September 2016 (“Summons”), Mr Chan Chi Loi (“Debtor”) applied under s 33(1)(a) of the Bankruptcy Ordinance, Cap 6 (“Ordinance”) to annul the Bankruptcy Order (“BO”) granted against him on 13 July 2007 by Chu J (as she then was).  According to the Summons, the purported ground of the application was that there was no legal basis to make the BO.  In the Summons, the Debtor also sought damages from the creditor for what was said to be the malicious and illegal petition presented against him.

2.  The BO granted by Chu J was after a contested trial in June 2007.  As summarised in her judgment dated 13 July 2007 at [39], Chu J rejected all the grounds on which the Debtor opposed the Petition.  Instead, Chu J was satisfied of the debts stated in the Petition and that the Debtor appeared to be unable to pay his debts.  Hence, the granting of the BO by Chu J.

3.  Afterwards, the Debtor’s appeal to the Court of Appeal under CACV 227/2007 was dismissed on 17 January 2008.  His application for leave to appeal to the CFA was dismissed in April 2008 by the Court of Appeal and in October 2008 by the CFA.

Further procedural history

4.  The Summons is already the 3^rd application by the Debtor under s 33(1)(a).

5.  The Debtor’s 1^st application under s 33(1)(a) was made by summons on 29 January 2009.  It was dismissed by Chu J on 23 February 2009. 

6.  As summarised in the Reasons for Decision of Chu J dated 2 March 2009, the Debtor raised altogether 3 grounds in support of the annulment application.  The 1^st two grounds revolved around the question of security which the Petitioner was said to have wrongly failed to mention in the statutory demand.  These two grounds had previously been rejected by Chu J and by the Court of Appeal and the Debtor was thus res judicata.  The 3^rd ground related to costs.  Chu J rejected this ground as well.  Chu J therefore found no merits in any of the Debtor’s grounds in support and thus dismissed the 1^st annulment application.

7.  Afterwards, the Debtor sought to appeal against Chu J’s annulment decision out of time.  It was dismissed by Chu J on 9 April 2009.  The Debtor further appealed to the Court of Appeal in CACV 101/2009.  The further appeal was also dismissed on 23 October 2009.  The Debtor then applied for leave to appeal to the CFA.  The leave application was dismissed by the Court of Appeal and by the CFA on 15 and 27 January 2010 respectively.

8.  The Debtor made his 2^nd application under s 33(1)(a) by summons dated 24 January 2014.  His 2^nd application was dismissed by Master Au‑Yeung on 14 July 2014 after a contested hearing in which both the Debtor and the Petitioner were represented by Counsel. 

9.  On that occasion, the Debtor apparently argued that the BO ought not to have been made because he was clearly solvent at the time the BO was made: see Master Au‑Yeung’s Reasons for Decision dated 22 July 2014 at [1].  For reasons fully set out in the Master’s Reasons for Decision, the Debtor’s argument was rejected and the 2^nd annulment application was dismissed accordingly.

10.  The Debtor’s subsequent appeal against Master Au‑Yeung’s decision was dismissed by the Court of Appeal on 12 June 2015 in CACV 164/2014.  His application for leave to appeal to CFA was dismissed by the Court of Appeal on 25 August 2015 and by the CFA on 18 April 2016.

Deliberation

11.  As this court said earlier, the Summons is already the Debtor’s 3^rd annulment application which came only months after the CFA had dismissed his application for leave to appeal regarding the 2^nd annulment application.

12.  In Kam Hung Cheung v Bank of China (Hong Kong) Ltd [2009] 3 HKLRD 597 at [10] and [11], the Court of Appeal expressed the law in this way:

“10. The Debtor applied for annulment of the bankruptcy order pursuant to section 33(1)(a) of the Bankruptcy Ordinance (Cap 6 of the Laws of Hong Kong), which provides as follows:

(1) The court may annul a bankruptcy order if it at any time appears to the court that ―

(a) on any grounds existing at the time the order was made, the order ought not to have been made; or …

Legal principles

11.  In paragraphs 22 to 26 of her judgment, Chu J elucidated the legal principles pertaining to an application for annulment. Neither party has taken issue with those principles, which we will respectfully adopt:

22. The relevant decided cases show that, in considering whether to exercise the power under section 33(1)(a), the court should first look at whether there were any grounds on which a bankruptcy order ought not to have been made at the material time when it was made.  If the court does not think that such grounds existed, it cannot invoke section 33(1)(a) to annul the bankruptcy order.  If the court thinks that such grounds existed, it still has to consider whether it should exercise its discretion to annul the bankruptcy order: see Society of Lloyds v Waters [2001] BPIR 698, 704G–H, and also Artman v Artman [1996] BPIR 511, 513–514, and Askew v Peter Dominic Ltd [1997] BPIR 163, 164.”

13.  Further, the Court of Appeal in Re Chan Chi Loi unrep, CACV 164/2014, 12 June 2015 at [12] expressed the view that although s 33(1)(a) does not expressly limit the number of times a bankrupt can apply to annul a bankruptcy order, that does not mean he can make such applications incessantly and without restraint.  After the previous application had failed, a bankrupt could not apply for annulment under s 33(1)(a) again on the basis of the same facts or grounds or grounds based on the same facts which he could have raised but had failed to do so.  This is because such conduct would be falling foul of the res judicata principle and constitute an abuse of process of the court.

14.  According to the Debtor’s affirmation dated 12 September 2016, the basis of the application to annul and for damages is that the Petition was presented maliciously and contrary to the requirements under sections 6(2)(b), 6(2)(1)[sic] and 6A(1)(a) of the Ordinance, as well as r 44(5) of the Bankruptcy Rules, Cap 6A.  No particulars were provided in his affirmation to substantiate the grounds of the application.

15.  In the present case, after considering the Debtor’s said  affirmation, as well as his skeleton submissions, this court agrees with the observations of the Official Receiver in his report dated 17 October 2016 and the Petitioner’s skeleton submissions that the Debtor’s affirmation does not introduce any new facts or evidence and that the issues now raised by the Debtor have previously been raised and adjudicated upon by various courts before, ever since the contested bankruptcy petition heard by Chu J in 2007.

16.  In these circumstances, this court is of the firm view that the present annulment application does not satisfy the requirements of s 33(1)(a) and it also falls foul of the res judicata principle.  The application must therefore be dismissed.

17.  For completeness, this court also sees no legal or factual basis in holding the Petition was malicious or illegal.  Nor can it see any jurisdictional basis in awarding damages to the Debtor under the Ordinance. The claim for damages must also be dismissed. 

Disposition and costs order nisi

18.  In the circumstances, this court hereby dismisses the Debtor’s summons dated 12 September 2016.

19.  There will be an order nisi that costs be to the Petitioner and the Official Receiver, to be summarily assessed on paper and paid by the Debtor forthwith. As far as the Petitioner is concerned, his costs are on a nisi basis summarily assessed at HK$85,000.  As far as the Official Receiver is concerned, his costs are on a nisi basis summarily assessed at HK$22,000.