RE KWAN HIN KEE

HCB 9915/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 9915 OF 2007

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J U D G M E N T

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1.  I will first deal with the application by the debtor Kwan Hin Kee to adjourn the hearing of this bankruptcy petition.  He has not appeared today.  He faxed a letter to the court at 9:16 a.m. today stating that he will not be able to attend court as he is sick today and will forward his certificate of sickness in due course.  He asked the court to consider his application for adjournment.

2.  This is not the first time the debtor has applied to adjourn the hearing of his bankruptcy petition on the ground of sickness in this way.  On 9 July 2008, he faxed a letter to the court at 8:42 a.m. seeking to adjourn the hearing that day.  His letter was in identical terms to the letter received this morning.  I adjourned the hearing on that occasion and ordered an early hearing date to be fixed.  He was advised by letter from the court on the same day of the adjournment and directed to serve his submissions in writing 3 days before the adjourned hearing.  I should mention that the debtor, who is acting in person, was a practising solicitor in 1999.  At 11:57 a.m. on the same day, he faxed his 2^nd letter to the court enclosing a medical certificate to certify that he attended the Yaumatei Jockey Club Out Patient Clinic on 9 July 2008, that he was suffering from upper respiratory tract infection, and that he was recommended sick leave that day.

3.  On 9 July 2008, the petitioners’ solicitors wrote to the debtor informing him that their clerk would attend the office of the Clerk of Court on 17 July 2008 at 11:00 a.m. to fix a new hearing date.  They received a letter from the debtor dated 15 July 2008 stating that he would not be able to attend the office of the Clerk of Court on 17 July and proposed to postpone the appointment to 23 July 2008 11:00 a.m.  No reason was given why he would be unable to attend on 17 July 2008.  The appointment to fix a hearing date was postponed to 23 July 2008.

4.  On 23 July 2008 at 9:01 a.m., he faxed an urgent letter to the Clerk of Court stating that his son was quite ill that day and he had to accompany his son to see a doctor at the emergency unit in a hospital.  He suggested postponing the appointment to 30 July 2008 11:00 a.m.

5.  I understand from the petitioners’ solicitors that the debtor did attend court on 23 July 2008 subsequently for the fixing of a date and that today’s date was fixed as the new hearing date.

6.  The debtor did not serve any written submission 3 days before the hearing in compliance with the directions given on 9 July 2008.

7.  The petitioner is opposed to any further adjournment.  Mr Law submitted that the debtor’s conduct was evasive and unco-operative even on the appointment to fix a new hearing date and that the debtor has been adopting a delaying tactic.  I am inclined to agree.  Today’s application is a repetition of what had happened on 9 July and is similar to what the debtor had been doing which resulted in the postponement of the appointment to fix a new hearing date.  He did not specify what his sickness is today, nor did he care to explain in his letter why he had only faxed his letter to the court at the last minute seeking an adjournment.  Looking at the matter in the round, I am of the view that no further indulgence should be given to the debtor.  I decline to adjourn the hearing of the petition.  The matter should not be delayed any further.

8.  The petition was presented by the Bank of China (Hong Kong) Limited against the debtor, based on the unpaid balance of a judgment debt in HCA No. 997 of 2004 including interest in the amount of HK$2,374,129.42.

9.  Judgment was given by Master Hui on an Order 14 application on 24 April 2006 in the petitioner’s favour against both defendants in the action.  The debtor was the 2^nd defendant.  It was adjudged that the defendants are to pay the petitioner HK$1,942,270.52 with interest on the principal sum of HK$1,636,615.71.

10.  The judgment debt arose out of the facilities granted to the 1^st defendant Wenloy Limited in 1999 and the debtor was sued as the guarantor of liabilities of that company.

11.  A statutory demand for HK$2,374,129.42 was issued on 29 December 2006 and served on the debtor personally on 16 February 2007.  On 2 March 2008, he made an application to set aside the statutory demand in HCSD No. 8 of 2007, on the basis that he had lodged an appeal against the judgment of Deputy Judge Muttrie dismissing his appeal from the judgment of Master Hui, and that he should not pay the judgment debt pending the result of the appeal.

12.  His application to set aside the statutory demand was dismissed by Deputy Judge To on 17 August 2007.

13.  This petition was presented on 21 November 2007.  It was served on the debtor personally on 31 December 2007.

14.  He filed an affirmation on 11 January 2008 to oppose the petition.  He relied on 2 grounds.  Firstly, he had lodged a notice of intended application for leave to appeal to the Court of Final Appeal against the decision of the Court of Appeal on 27 June 2007 in CACV No. 427 of 2006 in respect of an order for security for costs in that appeal.  CACV No. 427 of 2006 is an appeal brought by the debtor against the decision of Deputy Judge Muttrie in the High Court Action.  He contended that a bankruptcy order should not be made pending the result of his application for leave to appeal to the Court of Final Appeal.

15.  Secondly, he had lodged an appeal against the decision of Deputy Judge To dismissing his application to set aside the statutory demand.  This is CACV No. 327 of 2007.  He contended that a bankruptcy order should not be made against him pending the result of that appeal.

16.  I will consider the grounds of opposition in the order raised.

17.  The appeal brought by the debtor in CACV No. 427 of 2006 against the decision of Deputy Judge Muttrie is a non-starter.

18.  On 28 May 2007, Rogers VP ordered the debtor to give security for costs of this appeal on or before 25 June 2007 by making a lodgement in court of HK$155,000.00 by cash or banker’s draft or bank guarantee.  In default of this, and upon the solicitors for the petitioner certifying such default, the appeal was to stand dismissed without further order.

19.  The debtor appealed against the order of Rogers VP requiring him to provide security for costs of the appeal.  This appeal was dismissed by the Court of Appeal on 27 June 2007.

20.  The petitioners’ solicitors filed a certificate on 28 June 2007 certifying that the debtor has defaulted in making a lodgement in court for security for costs, so his appeal in CACV No. 427 of 2006 has been dismissed.

21.  In July 2007, he applied to the Court of Appeal for leave to appeal to the Court of Final Appeal against the decision of the Court of Appeal on 27 June 2007.  Leave was refused by the Court of Appeal on 6 November 2007.

22.  On 11 January 2008, he filed a notice of intended application for leave to appeal to the Court of Final Appeal against the decision of the Court of Appeal on 27 June 2007 and also sought leave to appeal out of time.  This is FAMV No. 2 of 2008.

23.  On 9 April 2008, an order was made by the Appeal Committee of the Court of Final Appeal dismissing his application for leave to appeal on the ground that it discloses no reasonable grounds for leave to appeal.

24.  Thus, the debtor has exhausted all his avenues of appeal from the judgment in the High Court Action upon which the petitioning debt is founded.

25.  As to the 2^nd ground of opposition, although the debtor has lodged an appeal in September 2007 against the decision of Deputy Judge To dismissing his application to set aside the statutory demand, nothing has been done to set down the appeal in CACV No. 327 of 2007 for hearing.  Mr Law submitted this is not a bona fide appeal and just another delaying tactic of the debtor.  I agree.

26.  I have considered the various grounds of appeal raised in the Notice of Appeal in CACV No. 427 of 2006, the Notice of Appeal in CACV No. 327 of 2007 and in the Notice of intended application in FAMV No. 2 of 2008. 

27.  A court of bankruptcy has power to go behind a judgment debt and inquire into the validity of the debt upon the hearing of the petition.  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.

28.  I see no good reason to exercise my discretion to go behind the judgment in the High Court Action.  I agree with the views of the Court of Appeal that Deputy Judge Muttrie was justified in rejecting the debtor’s allegations he did not understand the terms of the facility letter and the guarantee he signed in his plea of non est factum (bearing in mind that he was a practising solicitor at the time), or that a settlement agreement was entered into with the petitioner.  I also agree that the Deputy Judge was correct in his conclusion that the alleged settlement agreement, even if established, was clearly unsustainable in law, for want of consideration.

29.  The judgment of the Court of Appeal in CACV No. 120 of 2005 on 8 February 2006, relied on by the debtor but was not referred to in the judgment of Deputy Judge Muttrie, was decided on very different facts and could not have made any difference to the outcome of the debtor’s appeal from the decision of Master Hui.

30.  I make a bankruptcy order against the debtor.  The petitioner’s costs are to be paid out of the debtor’s estate.