CHEUNG WING KWAN,TOMMY v. 香港出口信用保險局AND OTHERS

DCCJ923/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 923 OF 2011

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BETWEEN

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D E C I S I O N

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1.  This is the adjourned hearing of the defendant’s application to strike out the plaintiff’s claim against the defendants on the ground that the plaintiff’s action was frivolous, vexations or an abuse of process of court.

2.  The reason for the defendant’s application was based on the plaintiff’s lack of locus because the plaintiff failed to obtain the consent of the official receiver as the trustee in bankruptcy of the plaintiff, even though the plaintiff is now a discharged bankrupt after the expiry of four years since the order of bankruptcy. 

3.  The plaintiff took out the present action without obtaining the official receiver’s consent under Section 30A(8) of the Bankruptcy Ordinance, Cap.6.  On the last occasion I adjourned the application for 14 days for the plaintiff to obtain the official receiver’s consent. 

4.  The official receiver’s office wrote to this court on 28 June this year in which he stated the position of the official receiver and trustee that he will not give consent or assign the relevant right of action unless he is satisfied that the claim is meritorious and there is sufficient funding or indemnity to cover costs and adverse costs in the event that the claim should fail.  He cited the case of Koh Kee Suan v Ip Kay Lo [2001] 3 HKLRD 439. 

5.  The official receiver further informed the court that he had requested the bankrupt to provide evidence demonstrating the merits of his claim and the relevant indemnity, unless and until the same becomes available the official receiver would not give the consent or assign the right of action.  That was the position set out in the OR’s letter of 28 June 2011 two days ago.

6.  At today’s hearing, I have allowed Mr Cheung time to communicate with the official receiver’s office.  He came back to inform the court he still has not obtained the official receiver’s consent.  He was told that the official receiver can hold a meeting with his creditors to seek the creditor’s consent if Mr Cheung would obtain an adjournment from the court.

7.  Mr Cheung further informed that court that the official receiver will find out from the creditors if they would support the plaintiff’s present action or to take up the action or if they would contribute their own resources to support the plaintiff’s action here.

8.  Mr Thomas, representing the defendants, submitted that it has been 16 months since Mr Cheung’s bankruptcy order was discharged.  Before he lodged and issued these proceedings on 11 March 2011 he should have and would have sufficient time to consult his creditors through the official receiver’s office.  Up to now, he has failed to obtain its consent.  Mr Thomas further argued the reason for the delay is Mr Cheung lacked merits in his claim against the defendants. 

9.  Mr Thomas pointed out that Mr Cheung had admitted there was something wrong in the merchandise he sold to his buyer in New York as indicated in his email to the buyer, that was the basis the 1st defendant refused to compensate the plaintiff.

10.  Mr Thomas also referred to the same case cited by the official receiver, the case of Koh Kee Suan v Ip Kai Lo where Mr. Justice Rogers V.P. held, in his judgment dated 23 February 2001, at page 5, first paragraph:

“It would be wrong in principle if an appeal were pursued which would incur a liability for costs which would have to be borne out of funds available to the creditors.”

It is the same position in the present action because the action involved a claim that took place before Mr Cheung became a bankrupt.  The right to retrieve debts due to the bankrupt vested with the trustee in bankruptcy and, ultimately, the beneficiary of the debts belongs to Mr Cheung’s creditors. 

11.  In the present case, if the plaintiff is allowed to pursue the claim, like the appellant in the Ko case, in the name of the trustee, the costs would fall upon the estate of the bankrupt.  Should the estate be unable to pay the costs, it would fall on the official receiver, in which case the shortfall would effectively have to be met out of public funds (per Rogers V.P. in Koh Kee Sheung v Ip Kai Lo). 

12.  In the present case, if the plaintiff is allowed to carry on with the present case without the consent of the official receiver and his creditors, or should the official receiver give his consent without the consent of the creditors, ultimately, should the plaintiff lose the case the official receiver would have to pay the costs out of public funds.  That is why the official receiver is cautious before consent is given and because of Section 30A(8) of the Bankruptcy Ordinance, the plaintiff without the consent of the official receiver cannot start this action. 

13.  In spite of the time indulgence I gave Mr Cheung to seek the official receiver’s consent, it has not been forthcoming.  It is not fair to delay the application any further and, even if I grant a further indulgence of time to the plaintiff to seek his creditors’ consent in the hope that they could reach a consensus to support his action, it may never happen.

14.  On the aforesaid basis I order the plaintiff’s action be struck out and costs of and occasioned by the application against the Plaintiff be to the Defendants, to be taxed if not agreed.