RE LIU WING TING STEPHEN trading as STEPHEN LIU AND COMPANY

HCB 4968/2024

[2025] HKCFI 6003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4968 OF 2024

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D E C I S I O N

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1.  On 31 March 2025 I heard and determined a petition seeking a bankruptcy order against the Debtor. I gave extemporary reasons which are short and do not need summarising here.

2.  I concluded that the Debtor had not demonstrated a bona fide defence on substantial grounds to the debt, but the service of the petition had been defective and for the reasons explained in the judgment, I dismissed the petition.

3.  On 3 November 2025 the Creditor issued a summons seeking a stay of taxation of the costs that I ordered that the Petitioner pay pending the determination of an appeal of my judgment. Before me, Mr Lui who had not appeared at the hearing of the petition, argued principally that I should stay the costs order because Grounds (4) and (5) set out in the notice of appeal are strongly arguable, I disagree. Ground (4) is:

“Even if the Learned Judge was correct in holding that the Creditor failed to effect personal service under Rule 59 of the Bankruptcy Rules, the Learned Judge erred in dismissing the Bankruptcy Petition outright, and not exercising the lower Court’s discretion under Rule 203 of the Bankruptcy Rules to either dispense with personal service or allow substituted service to the Debtor’s solicitors under the circumstances of a slip made in the matter of service, or adjourn the Bankruptcy Petition hearing for the Creditor to remedy service.”

4.  Mr Lui accepted that before me the Creditor’s counsel had not sought an adjournment of the petition in order to allow it to be served to cure the defect in service. He relied on a decision of the English Court of Appeal in Re A Debtor[1] as demonstrating that my decision, despite the lack of an application for an adjournment, was wrong.

5.  In the present case, the Creditor had been notified on 12 September 2024 of the Debtor’s objection that the petition had not been properly served. The Creditor took no steps in the six months between having been notified of the Debtor’s objection and the hearing of the Petition to cure any problem that there was with service. In addition, as I have already mentioned, counsel for the Creditor at the hearing did not seek an adjournment.

6.  It seems to me that in the circumstances, even if there is a general rule that in cases where the court rejects a debtor’s defence but upholds a complaint that the petition has not been served, generally the petitioner should be allowed the opportunity to serve the petition, I do not accept that in the circumstances of this case the exercise of that discretion can sensibly be argued to have been clearly wrongly exercised.

7.  The Ground (5) is that having found that the Debtor did not demonstrate a bona fide defence on substantial grounds I should not have given the Debtor his costs of the proceedings. It seems to me that if the decision to dismiss the Petition was correct, this is not a reason to deprive the Debtor of his costs, particularly when he succeeded on the ground which he had brought to the Creditor’s attention six months before the substantive hearing.

8.  Finally the creditor raises its own financial problems as a ground for granting a stay. What I am prepared to do, and Mr Leung for the Debtor did not strongly oppose this, is order that if the sum of HK$325,000 is paid into court within 14 days the taxation is stayed.

9.  I will make an order that the Creditor pays the Debtor’s costs of the present application summarily assessed at HK$79,000.