RE CHUNG KAU

HCB581/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDING NO.581 OF 2003

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REASONS FOR JUDGMENT

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1. This is a bankruptcy petition taken out by the Hong Kong Housing Authority ("HKHA") against Mr Chung Kau. On 5 May 2003, after hearing the parties, I made a bankruptcy order with costs against Mr Chung. I have indicated that I will give my reasons in writing, which I now do.

Background facts

2. The background facts leading to this petition may be summarised as follows. Mr Chung is the 2nd plaintiff in HCA No.119 of 2001. The 1st plaintiff is Phoon Lee Piling Co. Ltd ("Phoon Lee"). In that action, they claimed against the HKHA for, inter alia, libel, slander and malicious falsehood. Upon the application by HKHA, Master HC Wong struck out part of the Statement of Claim with costs. The appeal by Mr Chung and Phoon Lee against the master's order was dismissed by A Cheung DJ on 11 July 2002. Mr Chung appealed further to the Court of Appeal under CACV No.303 of 2002.

3. On 1 August 2002, the costs for the proceedings before the master were taxed and allowed at HK$705,597. The costs were not paid up. Accordingly, HKHA served a statutory demand on Mr Chung on 21 August 2002. The demand was not met. On 5 September 2002, Mr Chung took out an application to set aside the statutory demand. Kwan J dismissed the application on 9 September 2003. By a Notice of Appeal, Mr Chung appealed against Kwan J's decision but apparently no further steps had been taken in respect of the appeal.

4. The petition first came before me on 17 March 2003, whereupon I gave directions on filing of evidence. At that time, the Court of Appeal had yet to hear and determine Mr Chung's appeal in CACV No.303 of 2002. But on 2 May 2003, the Court of Appeal dismissed the appeal.

Mr Chung's application for Mr Choy Bing Wing to represent him

5. At the hearing before me on 5 May 2003, Mr Chung applied to be represented by Mr Choy Bing Wing ("Mr Choy"). He wanted Mr Choy to address me on his behalf. Mr Choy was authorised to represent Phoon Lee in the proceedings in HCA No.119 of 2001. He filed an affirmation for Mr Chung to oppose the present bankruptcy petition on 12 March 2003. Mr Chung was acting in person. Although he had no apparent difficulty in addressing me on his own, he was entitled to the help of a McKenzie friend, who could advise him quietly and help him with the presentation of his case. But it was still Mr Chung who had to present the case to the court. The McKenzie friend did not have any right of audience in the High Court. See Lobo v. Kripalani [1998] 2 HKLRD 325, per Godfrey JA at p.328. Accordingly, I refused Mr Chung's application. Mr Choy did advise Mr Chung from time to time and at one stage of the proceedings, for convenience, I invited Mr Chung to seek Mr Choy's advice quietly outside the courtroom, which he did. Throughout the proceedings, Mr Chung addressed me on his own with no difficulty.

No bona fide dispute on substantial grounds

6. The burden rest squarely on Mr Chung to satisfy me that he had a bona fide dispute on substantial grounds regarding the debt in question.

7. The debt that gave rise to this petition is the costs taxed pursuant to the order of the master. When hearing a bankruptcy petition, the court has jurisdiction to go behind a judgment or order and to determine whether there was good consideration for the debt in question. But the court would not normally go behind a judgment or order unless there was sufficient reason to do so : Re Onslow, ex p Kibble (1875) LR 10 Ch 373, Re Beauchamp, ex p Beauchamp [1904] 1 KB 572, Re Flautau, ex p Scotch Whisky Distillers Ltd (1888) 22 QBD 83, followed in Re Yu Tat Yum Robert, ex p Fortune Retail Holdings (Beijing) Ltd [1999] 2 HKC 799. As a general principle, the validity of the judgment debt would only be inquired into, where there was evidence of fraud or collusion, or miscarriage of justice, or there was no good petitioning creditor's debt, apart from the judgment : see Re Hawkins [1895] 1 QB 404, Re Flautau, ex p Scotch Whisky Distillers Ltd (1888) 22 QBD 83, Re Saville (1887) 4 Morr. 277, Re Lipscombe (1887) 4 Morr. 43, Re Fraser [1892] 2 QB 633; Re Howell (1915) 84 LJKB 1399, Re Turvey (1918-1919) B & CR 128, Dawodu v. Amercian Express Bank [2001] BPIR 983.

8. Mr Chung argued that the costs order was obtained by fraud and perjury on the part of HKHA and their legal advisers in HCA No.119 of 2001. He contended that his case must be tried openly and publicly. In my view, raising allegations of fraud alone is not sufficient for the purpose of persuading the bankruptcy court to go behind the judgment or order that gave rise to the petitioning creditor's debt. The debtor must condescend upon particulars and support the allegations with clear and credible evidence. It is not necessary for me to set out the allegations raised by Mr Chung and Mr Choy in full, which I have carefully considered already. I found that they had failed to support these allegations with any credible evidence. Further, I noted that these allegations had in fact been advanced before the master and the deputy judge. They were all rejected : see paragraph 7 of the 3rd affidavit of Mr Peter Pitt-Jones filed on 11 March 2003. As noted above, on 2 May 2003, the Court of Appeal dismissed Mr Chung's appeal against the deputy judge's decision. There was obviously no substance at all in the wild allegations of fraud against HKHA or HKHA's legal advisers. In the circumstances, I rejected Mr Chung's contention and ruled that he had failed to show any ground why I should go behind the master's costs order.

Conclusion

9. On the evidence before me, Mr Chung is liable under the costs order and has been unable to pay the costs taxed pursuant to that order to date. I thus made a bankruptcy order with costs against him.