RE LAM MICHAEL ALAN NIGEL

HCB 3929/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 3929 OF 2000

____________

_____________

D E C I S I O N

_____________

1. I have before me an application by the bankrupt to annul a bankruptcy order made on 28 February 2001 in his absence, under section 33(1)(a) of the Bankruptcy Ordinance, Cap. 6, which provides that the court may annul a bankruptcy order if at any time it appears to the court that the order ought not to have been made, on any grounds existing at the time that the order was made.

2. The bankrupt has appeared in person and made his submissions in English, both orally and in writing. He has filed a total of eleven affidavits in support of his application, some of which were filed in the course of the application and after it was adjourned on 23 April 2002. I allowed him to rely on them as there was no objection from the Secretary for Justice, the petitioning creditor in these proceedings. The bankrupt has also referred me to twenty authorities in his list of authorities dated 15 May 2002. It is necessary to set out in some detail the background leading to the application that I heard on 23 April 2002.

The background

3. The bankrupt was employed by the Territory Development Department of the Hong Kong Government as a residential engineer in April 1994. In about October 1994, he issued a cheque to his employer for the sum of HK$50,885.00, being one month's salary in lieu of three months' notice for him to terminate his contract of employment. He left Government service in 1994. His cheque was not honoured when presented for payment. The Government brought proceedings against him on the cheque in the District Court in 1997 and applied for summary judgment against him in January 1998. The application came before Muttrie DJ on 4 March 1998. The bankrupt was absent at that hearing. He claimed he had used his mobile phone to notify Mr Herbert Li, Senior Government Counsel who had appeared throughout for the Government in the proceedings relating to the bankrupt, that he was delayed in traffic and could not arrive in court on time. He asked Mr Li if the latter would agree to an adjournment or to wait until he arrived and was informed by Mr Li this was entirely a matter for the judge. When the bankrupt eventually arrived in court, the courtroom was empty and he did not know the outcome of the application.

4. Summary judgment was granted by the judge on 4 March 1998 for the sum of the cheque, with interest and costs. On 19 March 1998, the bankrupt received a copy of the judgment through the post. He did not pay the judgment sum or lodge an appeal against the judgment. Execution was issued and was returned wholly unsatisfied on 17 June 1998. According to the bankrupt, between March 1998 and February 1999, he had contacted Mr Li and other Government staff to negotiate a settlement. On 23 March 1999, the bankrupt wrote to Mr Li giving notice that he would appeal against the judgment made a year ago. On 8 April 1999, Mr Li replied to the bankrupt referring to the bankrupt's previous offer to pay by instalments and his change of stance in disputing the judgment debt. Mr Li gave final notice that unless full payment was received within two weeks of the letter, bankruptcy proceedings would be commenced without further notice. Apparently, nothing was heard from the bankrupt.

5. On 10 October 2000, the Secretary for Justice filed a petition for bankruptcy on the basis that execution was issued in respect of the debt and was returned wholly unsatisfied. The debt in the petition was in the sum of HK$110,532.72, which was made up of the judgment sum with interest at the judgment rates from 7 November 1994 down to 11 September 2000, taxed costs with interest thereon and costs of the execution.

6. On 17 January 2001, a Master made an order for substituted service of the petition on the application of the Secretary for Justice. It was ordered that personal service would be dispensed with and substituted service be effected by advertising a notice of the petition in one issue of a Chinese newspaper and one issue of an English newspaper on a weekday published and circulating in Hong Kong. That order was duly complied with on 16 February 2001.

7. On 28 February 2001, a Master made the bankruptcy order in the absence of the bankrupt. He claimed to have learned about this from one of his banks that had frozen his account in March 2001. On 19 March 2001, he issued a summons in these proceedings to set aside the bankruptcy order. His application came before me on 28 March 2001. I adjourned his application to 18 April 2001 because the bankrupt indicated that he would like to supplement his 1st affidavit sworn on 19 March 2001. I gave directions on the filing of affidavits by the bankrupt and the petitioner. At the adjourned hearing on 18 April 2001, the bankrupt failed to attend court without any explanation. I therefore dismissed his summons to set aside the bankruptcy order. On 11 May 2001, an order was made by a Master that the bankrupt's estate be administered in a summary manner.

8. Almost a year later, on 3 April 2002, the bankrupt issued a Notice to appeal against a Master's decision out of time in respect of the bankruptcy order made against him. The appeal came before me on 23 April 2002 apparently because the form for an appeal from a Master to a judge in chambers was used. I explained to the bankrupt at the outset that he had two options. He could appeal against the bankruptcy order made by the Master and if that were his position, I would have no jurisdiction to hear the appeal as this must be heard by the Court of Appeal under section 98(2) of the Bankruptcy Ordinance. The other option was to apply to annul the bankruptcy order, as he had done in March 2001. If that were his position, then I would proceed to hear his application notwithstanding that it was formulated as an appeal. After giving him time to consider his alternatives, he told me he would not proceed with an appeal against the bankruptcy order and that he would apply to annul it.

9. The bankrupt then gave an explanation why he did not attend court on 18 April 2001. He had gone to England on 7 April 2001 on an open plane ticket to sort out the question of access to his children with his ex-wife. He was very upset and he could not return to Hong Kong for the hearing on 18 April 2001. As to why he waited almost a year to renew his application to set aside the bankruptcy order, he said he felt he had to take action because of a letter from the Official Receiver to him dated 9 March 2002. In that letter, the Official Receiver stated that the bankrupt had failed to submit various documents which were sent to him again in November 2001, being a tax authorisation, the statement of affairs, and the preliminary examination questionnaire. The letter served as a final reminder that he should submit such documents and he must attend the Official Receiver's Office for an appointment on 9 April 2002, failing which the Official Receiver would apply for a warrant of arrest for his apprehension without further notice to him. Obviously, the bankrupt has chosen to ignore the bankruptcy order altogether until matters have reached a crisis. He told me he had written to the Official Receiver on 9 April 2002 stating that he would only comply with the request of the Official Receiver if he should fail to set aside the bankruptcy order on 23 April 2002. According to the Official Receiver, the bankrupt had been unco-operative and abusive to their staff.

10. To complete the picture, I should mention that on 19 April 2002, the bankrupt issued a summons in the District Court action to set aside the judgment made against him more than four years ago, claiming that he was absent from the hearing because he was delayed in traffic and that he had all along denied the petitioner's claim.

11. The bankrupt made his submissions before me on 23 April 2002. I adjourned the hearing because it was only when Mr Li addressed me that it was brought to my attention that the bankrupt had applied for legal aid on 3 April 2002. I therefore adjourned the application for six weeks. When the hearing resumed on 17 May 2002, the outcome of the bankrupt's application was still not known. I was not prepared to extend the stay of proceedings due to legal aid application any further, and the hearing continued.

12. I now turn to the grounds relied on by the bankrupt to annul the bankruptcy order.

Service of the petition

13. The bankrupt submitted that substituted service of the petition on him was irregular. The order for substituted service should not have been made in the first place as this should have been made only in the rarest circumstances. He was residing in Shenzhen in mainland China and was out of the jurisdiction at the material time. He had an arrangement with a mail collection service at Unit 1001 of the Sheung Shui Shopping Arcade and was allocated a mailing address being box 1 of the said premises. The petition was not left at this mailing address. He did not read the Chinese newspaper in which the notice of the petition was advertised and although he might have read the English newspaper, he would never read advertisements so the notice did not come to his attention. He claimed that the petitioner should have complied with these provisions of the Rules of the High Court: O. 10 r. 1(2), O. 65 r. 2, and O. 11 r. 5A.

14. The provisions of the Rules of the High Court relating to service of process do not apply to bankruptcy proceedings, see section 99(1) of the Bankruptcy Ordinance. The procedural provisions governing service of a petition are rules 59 and 31 of the Bankruptcy Rules.

15. Rule 59 reads as follows:

"(1) Service of a creditor's petition shall be effected by the creditor or his solicitor, or a person in their employment, delivering a sealed copy of the petition to the debtor.

(2) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is evading service of the petition or any other legal process, or for any other cause, it may order substituted service to be effected in such manner as it thinks fit.

(3) Where an order under paragraph (2) has been carried out, the petition shall be deemed to have been duly served on the debtor."

16. Rule 31 is in these terms:

"When the debtor is not in Hong Kong, or cannot be found, the court may order service on him of the petition or any order made against him, or of any summons issued for his attendance, to be effected within such time and in such manner as it thinks fit."

17. The order for substituted service was made by a Master in these circumstances.

18. On 18 October 2000, a bailiff's assistant went to the usual or last known address of the bankrupt at House 31, DD 292, Lot 464, Ko Tong Ha Yeung, Sai Kung Country Park, New Territories with the view of serving the petition on him and was informed that he had moved out two years ago. On 15 November 2000, another bailiff's assistant called at Unit 1003 of the Sheung Shui Shopping Arcade and was told by a staff that the bankrupt was a client of the mail collection service and that he was provided with a correspondence address for that purpose. The bailiff's assistant left a message with the staff requesting the bankrupt to contact the bailiff's office so that the petition might be served on him. On 25 November 2000, yet another bailiff's assistant called at the mail collection service to effect service of the petition and was told by an unidentified staff that the bankrupt was unknown to her. A message was also left with that staff, presumably for the bankrupt to contact the bailiff's office. Other than the two addresses mentioned above, the petitioner had no information at the material time of the exact whereabouts of the bankrupt.

19. As personal service was not successful, the petitioner sought an order for substituted service on 4 December 2000 by advertising a notice of the petition in a Chinese and an English newspaper. Requisitions were raised by the Master's office if the debtor was within the jurisdiction or believed to be so and the grounds of belief, and whether the proposed method of substituted service would probably bring the petition to the notice of the bankrupt. The petitioner then obtained from the Immigration Department the movement records of the bankrupt from 1 January 2000 to 28 December 2000 and they showed that the bankrupt was a frequent visitor to Hong Kong on a daily basis from the mainland. During the last three months of 2000, he was present in Hong Kong for about 20 days a month on average and the dates he did not cross the border to Hong Kong were mainly public holidays, Saturdays and Sundays. In view of that, the petitioner proposed to advertise a notice of the petition on a weekday, not being a public holiday, in one issue of a Chinese newspaper and one issue of an English newspaper published and circulating in Hong Kong, as this would probably bring the petition to the bankrupt's notice.

20. In my judgment, it was entirely appropriate for the Master to order substituted service of the petition in the method as suggested in those circumstances. The service by advertisement made in accordance with the order for substituted service was valid. It is irrelevant that the notice of the petition advertised in the two newspapers did not actually come to the bankrupt's attention. I also reject the submission of the bankrupt that the order for substituted service should be set aside because he was not given an opportunity to state his case or that there was breach of the rules of natural justice in the circumstances.

21. As for the bankrupt's submission that his movement records were unlawfully obtained by the petitioner from the Immigration Department and the petitioner should not be allowed to rely on these records to apply for substituted service, I reject this entirely. The petitioner sought and obtained the movement records to respond to the requisitions raised by the Master's office for the purpose of applying for substituted service. I accept the submission of Mr Li that the petitioner may rely on sections 58(1)(d) and 58(2) of the Personal Data (Privacy) Ordinance, Cap. 486.

Section 4(1) of the Bankruptcy Ordinance

22. It was alleged by the bankrupt that the bankruptcy order was made without jurisdiction because he is not caught by any of the jurisdictional requirements in section 4(1) of the Bankruptcy Ordinance. He claimed he is not domiciled in Hong Kong, nor did he have a residence in Hong Kong.

23. It is sufficient for a petitioner to satisfy any one of the jurisdictional requirements in section 4(1) and one of them is that the debtor has had a place of residence in Hong Kong at any time in the period of three years ending with the day on which the petition is presented. The petition was presented on 10 October 2000. According to paragraph 52 of the bankrupt's 2nd affidavit, he stated that he "[does] not have a resident [sic] in Hong Kong now, or since 1 January 1999." I note also in his skeleton submissions exhibited to his 10th affidavit, it was stated in paragraph 1.15 that in December 1998, he moved out of House 31, Ko Tong Ha Yeung in Sai Kung and "no longer [has] a home in Hong Kong." In his 3rd affidavit, he asserted that he "had not reside [sic] at House 31, DD 292, Lot 464, Ko Tong Ha Yeung, Sai Kung Country Park, for over three years from [10 October 2000]". He has not denied that he had a place of residence in Hong Kong at any time within the relevant three-year period. Whether that residence was the address as stated is immaterial. He is clearly within section 4(1), as submitted by Mr Li.

24. I would also hold that another of the jurisdictional requirements in section 4(1) has been satisfied, as the bankrupt was personally present in Hong Kong on the day in which the petition was presented. The movement records showed that he arrived in Hong Kong on 10 October 2000 at 07:46 hours and left the same day at 18:20 hours.

The bankrupt's name

25. It was alleged by the bankrupt that he had changed his name before the commencement of the bankruptcy proceedings, the name of the debtor in the petition is incorrect and the name of the person adjudged bankrupt in the bankruptcy order is likewise incorrect and for that reason, the bankruptcy order is a nullity and should be set aside.

26. The name of the debtor in the petition and the name of the person adjudged bankrupt was "Michael Alan Nigel Lam". The bankrupt alleged that this was his former English name and he is "now legally known by the name of Nigel Laichong Lam" (see his 1st affidavit). Despite having filed eleven affidavits in court, he has not deposed to the date when his name was changed, by what legal document, or exhibited any document evidencing his change of name. I should mention that there is no change of his name in Chinese and he has always been known as 林禮昌. I am unable to ascertain from the movement records of the Immigration Department whether the bankrupt's name was changed in the manner as he has alleged, because only the Hong Kong Identity Card number of the subject was given in the records as the input information. I note from a bank statement issued to the bankrupt in December 2000 that it was addressed to "Nigel Laichong Lam" and the credit card statements from November 2000 to January 2001 were addressed to "Nigel Lam".

27. In the petition, only the name of the debtor in English was given and his name in Chinese was not stated as well. However, as part of the description of the debtor, there was stated in the petition the address he had resided within three years immediately preceding the presentation of the petition and his Hong Kong Identity Card number. I am satisfied that the address and the Identity Card number have been correctly stated and there is no case of mistaken identity notwithstanding the name in English was not correctly stated, assuming that to be the case. The bankruptcy order was made against the debtor named in the petition and only the name in English was given in the order. Notice of the bankruptcy order was gazetted by the Official Receiver on 9 March 2001 in English and Chinese. There is no error about the bankrupt's name in Chinese.

28. I am not satisfied that the alleged error of the bankrupt's name, even if established, would have rendered the proceedings a nullity and that the bankruptcy order should be set aside. Under section 124(1) of the Bankruptcy Ordinance, no proceeding in bankruptcy shall be invalidated by any formal defect or irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court. I would apply this provision here.

29. Ms Teresa Wong, who appeared for the Official Receiver, has asked me to exercise my power under rule 203 of the Bankruptcy Rules to amend the name of the bankrupt in all the documents in the proceedings, including the bankruptcy order. I have no difficulty about that in principle, but I decline to do so for the time being. I would leave it to the Official Receiver to make the application if the Official Receiver is satisfied that his name in English has indeed been legally changed in the manner as alleged, after having made appropriate inquiries with the bankrupt. I should mention that the bankrupt has a duty to co-operate with the Official Receiver and provide necessary information.

If the bankruptcy court should go behind the judgment debt

30. The bankrupt has cited a number of cases to me to support his submission that the bankruptcy court should go behind the judgment debt. I do not propose to refer to these cases. They have no application in present circumstances. I have related the matters giving rise to the claim against the bankrupt, the cause of action against him, how summary judgment was obtained against him on the dishonoured cheque, the negotiations for settlement that followed soon after the bankrupt had learned of the judgment, and the fact that no application to set aside the judgment was made until four years after it was entered. It would hardly be appropriate to go behind the judgment in this situation. I also reject the submission that the bankruptcy order ought to be set aside in view of the fact that the bankrupt has issued a summons in the District Court to set aside the judgment.

Ex parte application and the duty to make full and frank disclosure

31. It was submitted by the bankrupt that as he was not served with the petition (which I reject) and did not attend the hearing of the petition, the petition was made on an ex parte application and the petitioner came under a duty to make full and frank disclosure to the court. He has alleged that the petitioner had not discharged this duty in a number of respects. I do not propose to set out the matters that should have been disclosed by the petitioner as alleged, as it cannot be seriously suggested that the petitioner had knowledge of them. Besides, I cannot see their relevance. Above all, the hearing of the petition was not an ex parte application. The bankrupt had been validly served with the petition pursuant to the order for substituted service. His absence from the hearing did not make it an ex parte application. There was no breach of the rules of natural justice.

Other grounds as alleged

32. The bankrupt has submitted that at the time the bankruptcy order was made, he had enjoyed credit facilities of his bank and credit card companies which could have been used to settle the debt in the petition had he so wished. These facilities have been terminated once the bankruptcy order was made. Nevertheless, at the time the order was made, he had "reasonable prospect of being able to pay the debt claimed by the [petitioner]", so the petition would have been dismissed by virtue of sections 6D(1)(b) and (3) of the Bankruptcy Ordinance and for that reason the bankruptcy order should be set aside. This submission is devoid of merit as under section 6D(1)(a) if the court is satisfied that the debt in the creditor's petition is payable and has not been paid, secured or compounded for, a bankruptcy order should be made.

33. I reject without reservation the allegation that Mr Li has made any statement in his affirmations which are untrue within his personal knowledge or not true to the best of his information and belief.

Orders

34. There is no merit in any of the grounds advanced by the bankrupt to set aside the bankruptcy order. His application to annul the bankruptcy order is dismissed. I make an order nisi that the petitioner's costs of the hearing on 23 April 2002 and 17 May 2002 shall be paid out of the bankrupt's estate.