WAH YUNG ENGINEERING AND DEVELOPMENT CO LTD v. LAM CHING SHEUNG

[English Translation – 英譯本]

CACV 1712A/2001

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 1712of 2001

(on appeal from HCB NO. 4060 of 2000)

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REASONS FOR DECISION

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Hon Cheung JA (giving reasons for the decision of the Court):

The Order of the Court of Appeal on 5 March 2002

1.  A bankruptcy order was made against Madam Lam Ching Sheung (hereinafter “Madam Lam”) by Kwan J on 22 May 2000.

2.  On 5 March 2002, the Court of Appeal (Leong CJHC, Cheung JA and Chung J) allowed Madam Lam’s appeal against the bankruptcy order, set aside the bankruptcy order and ordered the petitioner, Wah Yung Engineering and Development Company Limited (hereinafter “Wah Yung”), to pay costs of the appeal.

Madam Lam’s Application

3.  By a summons issued on 15 October 2007, Madam Lam applied to this Court for the following order:

[I] request the Court of Appeal to rectify the order made on 5 March 2002 ‘setting aside’ the bankruptcy order.

Madam Lam was in fact requesting this Court to clarify the meaning of “setting aside” the bankruptcy order. The relevant summons was passed on to the full court of the Court of Appeal for determination.

Other Court Orders

4.  Subsequent to the decision of the Court of Appeal on 5 March 2002, Cheung J ruled in his written Judgment of 26 July 2004 that the meaning of “setting aside” the bankruptcy order was temporarily staying the bankruptcy order instead of quashing it. Thereafter, Master Kwang discharged the bankruptcy order on 9 July 2005 by reason of the expiry of its four-year period.

Meaning of “Setting Aside”

5.  Of the three members comprising the Court of Appeal which made the decision on 5 March 2002, Leong CJHC has retired, and Chung J and I were the two other members. Madam Lam’s ground of appeal against the bankruptcy order was that, as she had fully repaid the debts and it was Wah Yung which had not repaid the loan it owed her, she should not have been adjudged bankrupt. The Court of Appeal agreed that there were substantive arguable issues in the grounds she intended to put forward and hence she was justified in opposing the bankruptcy petition. This Court therefore set aside the relevant bankruptcy order. Subsequently, Madam Lam commenced proceedings against Wah Yung. On 20 September 2005, Deputy Judge To held in HCA 1157/2002 that Wah Yung was liable to repay to Madam Lam a sum of $21,259,937.41 with interest. Deputy Judge To also dismissed Wah Yung’s counterclaim against Madam Lam.

6.  On the face of it, the term “setting aside” carries two meanings: first, quashing the order in question; second, temporarily staying it. The order must be construed in light of the facts of the case. By “setting aside” the bankruptcy order, the Court of Appeal intended to “quash” it rather than “temporarily staying” it. This meaning was in fact apparent from this Court’s Judgment as a whole.

7.  We have also referred to the court record written in English by the Clerk to Leong CJHC on 5 March 2002. The relevant part of the record reads as follows:

Handing down judgment

Order:      1.     Appeal be allowed, the bankruptcy order of Hon Kwan J dated 22.5.2001 against debtor (appellant) Ms Lam Ching Sheung be set aside.

                2.     There be an order nisi that the costs of the appeal be paid be [sic] the petitioner (respondent).

8.  The words “set aside” in the above record clearly indicate that the bankruptcy order was quashed. As this Court had quashed the order, it was unnecessary for Master Kwang to discharge it. We therefore set aside Master Kwang’s order. We also dismiss the relevant bankruptcy petition.

Costs

9.  In his supplementary report of 29 November 2007, the Official Receiver requested this Court to award him the sum of $6,000 being costs of this application. We do not think the Official Receiver should be awarded such costs. He should have made an early request to this Court to clarify the actual meaning of the term “set aside” but he failed to do so. Miss Chow, representing the Official Receiver, informed this Court that she would not seek to be awarded the said costs.

10.  The Official Receiver has also applied to this Court for an order that, in the event of the bankruptcy order being set aside, the creditor who filed the bankruptcy petition (i.e. Wah Yung) should pay the Official Receiver’s costs of $13,230 in dealing with this bankruptcy case.

11.  Pursuant to this Court’s order of 6 December 2007, the Official Receiver served the documents relevant to this application and his report on Wah Yung on 7 December 2007. Wah Yung was absent and unrepresented at this hearing. We order Wah Yung to pay to the Official Receiver the abovementioned costs of $13,230.

12.  Wah Yung shall also pay to Madam Lam costs of the applications before Cheung J and Master Kwang.