RE LAM CHI HO

HCB 4414/2022

[2022] HKCFI 3717

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4414 OF 2022

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R E A S O N S  F O R  J U D G M E N T

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1.  At the second callover hearing of the petition presented by Mr Lam Chi Ho (“Debtor”) for his own bankruptcy, this Court dismissed the petition and ordered the Debtor to pay costs to the Intervener and the Official Receiver assessed at $15,000 and $6,500 respectively. These are the reasons for my judgment.

2.  Ms Tam Man Yi (“Intervener”) is the ex-wife of the Debtor.  At the first callover hearing on 21 November 2022, leave was granted to the Intervener to join as a party to these proceedings. 

3.  The Debtor and the Intervener have since 2016 been embroiled in FCMC 13687/2016 (“FCMC Proceedings”) in that:

(1)  By Order dated 13 September 2018, the Debtor was ordered to make periodic maintenance payment to the Intervener for the benefit of her and the child (“Maintenance Order”);

(2)  On 16 October 2020, the Debtor issued a summons for variation of the Maintenance Order;

(3)  On 21 April 2021 the Intervener issued the Judgment Summons against the Debtor;

(4)  On 15 June 2021, Deputy District Judge D. To adjourned the  Judgment Summons sine die with liberty to restore pending determination of the Debtor’s summons for variation of the Maintenance Order;

(5)  By judgment handed down on 21 June 2022, Deputy District Judge R. Chow dismissed the Debtor’s summons for variation of the Maintenance Order and made the following findings:

(a)  the Debtor’s behaviour was “a manifestation of someone who does not want to find a job”, and the “obvious reason” why the Debtor had “never been keen in and had deliberately stopped looking for jobs” was to “make use of his status of unemployment to shirk his responsibility under the Maintenance Order” (§§76-81);

(b)  the Debtor chose to exhaust most of his personal funds to create a situation where there would be little money left in his account (§§82-90);

(c)  the Debtor took out the application simply because he did not want to pay maintenance anymore (§95);

(d)  the Debtor remained unemployed because he chose not to find a job as the job would give him income to continue to pay maintenance to the Intervener (§§97-99);

(e)  the Debtor continued to have earning capability to make payment to the Intervener under the Maintenance Order (§100); and

(f)  the financial assistance from the Debtor’s family constituted a financial source sufficient for the Debtor to make payment in compliance with the Maintenance Order (§§115-119). 

4.  Following the dismissal of the Debtor’s variation summons, the Intervener restored the Judgment Summons. 

5.  On 10 August 2022, the Debtor filed the petition for his own bankruptcy.  The only debt listed in the Statement of Affairs dated 9 August 2022 (“SOA”) was HK$1,085,536.90 (“Debt”), which represents the periodic maintenance in arrears and the subject matter of the Judgment Summons.

6.  At the first callover hearing of the petition on 21 November 2022, the Intervener appeared in person and opposed the petition on the grounds that (1) the Debtor plainly has the financial means to pay the Debt as he continues to live in a luxurious property on 6 Stubbs Road and has been able to pay his living expenses without any problem; and (2) the Debt falls outside the bankruptcy regime and cannot form the basis of a bankruptcy petition.  The Debtor does not dispute the grounds advanced by the Intervener. Nevertheless, he says that he remains unemployed and does not have the means to pay maintenance to the Intervener.  Nor does he dispute that the reason for presenting the petition is because of the  Judgment Summons taken out by the Intervener. 

7.  In light of the imminent hearing of the Judgment Summons and the legal point raised by the Intervener, this Court adjourned the petition to 12 December 2022.  Leave was given to the Debtor to file an affirmation (if any) to respond to the points made by the Intervener by 5 December 2022.   

8.  The Debtor filed an affirmation on 30 November 2022.

9.  At the hearing on 24 November 2022, Deputy District Judge W.Y. Ho adjourned the Judgment Summons sine die with liberty to restore.

10.  The petition is presented under s.10 of the Bankruptcy Ordinance (Cap. 10) (“BO”) which provides as follows:

“Grounds of debtor’s petition

(1) A debtor’s petition may be presented to the court only on the ground that the debtor is unable to pay his debts.

(2) The petition shall be accompanied by a statement of the debtor’s affairs containing—

(a) such particulars of the debtor’s creditors and of his debts and other liabilities and of his assets as may be prescribed; and

(b) such other information as may be prescribed.

(3) A debtor’s petition may be presented whether or not the aggregate amount of indebtedness is equal to or exceeds the amount provided for a creditor’s petition under section 6(2)(a)[1].”

11.  The principles governing a petition for self-bankruptcy have been explained by this Court in Re So Tsz Man [2022] 1 HKLRD 116, §§10-12, which are reproduced as follows:

“10. The statutory purpose of s.10 of the BO is to permit an insolvent debtor to invoke the bankruptcy jurisdiction where he is unable to pay his debts. By doing so, the debtor gives up all his property in return for being freed from the burdens of his debts and, upon discharge from bankruptcy, to make a clean start. The statutory scheme of bankruptcy is designed to avoid multiple executions and other forms of enforcement against the debtor’s assets and, at the same time, ensures that all creditors will be dealt with fairly and equitably through the bankruptcy process.

11. A self-petition is a serious matter. The debtor is required to file a petition based on Form 3 of the Bankruptcy (Forms) Rules (Cap. 6B) (“Forms Rules”) which requires, amongst others, the debtor to state that he ‘request[s] the court that a bankruptcy order be made against [him]’. The debtor is required to sign the petition in the presence of a witness, and to submit a SOA in Form 28C, which must be verified by an affidavit. All these are designed to ensure that it is only if a debtor is unable to pay a debt and genuinely wishes to seek a bankruptcy order from the Court that he can present a petition to seek such an order.

12. Section 5(3) of the BO provides that the Court has a general power to dismiss or a stay a petition ‘if it appears to it appropriate to do so on the grounds that there has been a contravention of rules or for any other reason’.  Thus, the Court would dismiss a self-petition as an abuse of process if it is shown that the debtor is able to pay his debts (Re Painter, ex p Painter [1895] 1 QB 85, Re Betts, ex p Official Receiver [1901] 2 KB 39; Re Dunn, ex p Official Receiver v Dunn [1949] Ch 640; and Re a debtor (No 17 of 1966), ex p the Debtor v Allen [1967] Ch 590).”

11.   In my view, it is an abuse of process for the Debtor to present the petition for his own bankruptcy.

12.  First, as stated in §3 above, the Debtor was found to have the means to comply with the Maintenance Order but he deliberately chose not to do so.  The Debtor has not appealed against the dismissal of the summons for variation of the Maintenance Order or the findings made by the court.  It is not open to the Debtor to re-open the same issue and asserts that he is unable to pay the Debt, at any rate in the absence of any change of circumstances (none has been suggested). 

13.  Second, the fact that the Debtor obviously has other financial means not disclosed in his SOA is reinforced by the fact that he continues to reside in a luxurious property and has been able to pay his living expenses without any problem. 

14.  Third, the Debt is not a debt on which the court would generally make a bankruptcy order as it is not provable in bankruptcy and is not discharged at the end of bankruptcy (Re Limbu Dal Bahadur,HCB 917/2016, 5 April 2016, §4, per Godfrey Lam J (as he then was); Re Lo Man Hong [2013] 4 HKLRD 126; Re Cheuk On Ching [2004] 3 HKC 192). The Debtor cannot rely on the Debt as the basis for seeking a bankruptcy order from the court.