RE NG MOK YU

HCB 5031/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5031 OF 2012

____________

____________

_____________

D E C I S I O N

_____________

1.  The bankruptcy petition in this matter was dismissed on 8 July 2013 leaving only the question of costs outstanding which is before me this morning.

2.  The petitioner agrees that it should bear its own costs and that it should pay the costs of the Official Receiver.  The only question is whether it should be ordered to pay the respondent’s costs as well. These costs are relatively modest and include the costs of filing one affirmation in opposition to the petition and appearances before the bankruptcy judge on 5 November 2012, 19 November 2012 and eventually before me on 8 July 2013 for the dismissal of the petition.

3.  The petition was based on a judgment obtained in default of notice of intention to defend in High Court Action 1185/2011 dated 12 January 2012.  The petitioner issued a statutory demand dated 2 April 2012 on the strength of that judgment.  There being no response to the statutory demand the petitioner presented the petition on 2 August 2012.

4.  On 15 November 2012, the respondent filed an application in High Court Action 1185/2011 to set aside the default judgment. The petitioner itself applied by summons dated 13 June 2013 to set aside that judgment which was eventually set aside by order of the court on 26 June 2013 with costs to the defendant.  Following that, the petitioner asked for leave to withdraw the petition.  Instead, on 18 July 2013, I dismissed the petition.

5.  The guiding principle is of course that costs generally follow the event.  There is a recognised exception so that a successful defendant may not be awarded all his costs if it can be said that the defendant has brought about the litigation (see Ritter v Godfrey [1920] 2 KB 47 at 60).  By that Atkin LJ said it is meant the defendant:

“... has so conducted himself as to lead the plaintiff reasonably to believe that he had a good cause of action against the defendant and so induce him to bring the action.”

6.  On the evidence, by the respondent’s own admission, the statutory demand did come to his notice in mid 2012.  The statutory demand contained on its front page a prominent warning that it is an important document and that:

“You must deal with this demand within 21 days of its service upon you or you could be made bankrupt and your property and goods taken away from you. Please read this demand and note carefully.”

7.  The petitioner says the respondent had only himself to blame in not responding at all to the statutory demand.

8.  However, even if the respondent responded to the statutory demand by saying that the judgment was obtained in default, it is not clear, on the evidence before me, that the plaintiff would simply have let the matter rest there.  On the evidence, the plaintiff did not concede that the default judgment obtained should be set aside until June 2013.  In fact, it filed an affirmation in January 2013 in High Court Action 1185/2011 to contest vigorously the defendant’s application to set aside the default judgment.

9.  Even if the respondent had taken steps vis-à-vis the statutory demand there would, as it seems to me, in all probability, have been a contest over the validity of the statutory demand.  Equally, the petitioner did not concede the bankruptcy petition should be withdrawn or dismissed until July 2013. 

10.  In these circumstances, I am not satisfied that there are sufficient reasons to depart from the general rule.  There will therefore be an order that the costs of the petition be paid by the petitioner to the respondent.

11.  I will now rise and stand the matter down for the parties to try to agree on a figure for the purpose of gross sum assessment.