TAM MEI KAM v. HSBC INTERNATIONAL TRUSTEE LTD AND OTHERS

HCMP 2981/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2981 OF 2004

____________

____________

_____________

D E C I S I O N

_____________

1. This is an application by the joint and several trustees in bankruptcy of Madam Tam under the Rules of the High Court, O 15 r 6 to be joined as a party in these proceedings. Madam Tam was adjudged a bankrupt in HCB 3777/2011. These proceedings were instituted by Madam Tam against the 1st respondent for maintenance under the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481 to be paid to her out of the estate of Madam Mui Yim Fong, deceased.

2. Monthly interim maintenance payment at HK$140,000 had been agreed between the 1st respondent and Madam Tam.  Such payments had however been suspended for want of funds since 1 March 2012.

3. The 1st respondent has advised the court that subject to order of the court, it now has the funds and is willing to pay Madam Tam the arrears of maintenance from 1 March 2012 and future maintenance on a monthly basis from 1 September 2013.  

4. However, the trustees have on 2 September 2013 applied in HCB 3777/2011 for an income payments order (“IPO”) against Madam Tam. In that application, the trustees ask for HK$1,289,381 out of the accrued interim maintenance to be paid by the 1st respondent herein to the trustees.  Regarding the future monthly maintenance, the trustees ask for HK$89,755 per month to be paid to the trustees from 1 October 2013 to 31 January 2014 and for HK$99,755 to be so paid from 1 February 2014 until the discharge of the bankruptcy. 

5. The trustees have also applied to be joined as a party in these proceedings under O 15 r 6(2)(b) which provides:

“6. (2) Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application-

(b) order any of the following persons to be added as a party, namely-

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

6. Counsel for the trustees submitted that the trustees are under a duty to protect and preserve the estate of the bankrupt in the interest of the creditors.  Such duty would include the collection into the estate of amounts payable to the bankrupt other than what is required for the bankrupt’s reasonable domestic needs.  The amounts vested in the estate would then be distributed to the bankrupt’s creditors.  For such reason, counsel submitted that the trustees are a party directly affected either legally or financially by any order that may be made on the 1st respondent’s application in these proceedings. 

7. Since the 1st respondent’s application to resume paying the maintenance to Madam Tam is yet to be determined, the trustees would like to be heard in the application on how much is to be paid out by the 1st respondent and to whom. 

8. Counsel further submitted that insofar as the court’s discretion is concerned, it should be exercised to join the trustees as a party herein.  The joinder would enable the trustees to take timely and appropriate action or to take out appropriate applications to preserve and protect Madam Tam’s estate and the interest of her creditors.

9. Madam Tam opposed this application.  She said the trustee’s interest in the payments to be made by the 1st respondent only extends to payments to be made on and after 1 October 2013 and not to the arrears.  Furthermore, such interest is only a creditor’s commercial one which is divorced from the 1st respondent’s obligation to pay her maintenance (see Shanghai Land Holdings Limited (In Receivership) v Chau Ching Ngai and Anor. HCA 2704/2003 unreported by Sakhrani J dated 22 July 2004).

10. Regarding the question of whether the trustee’s interest extends to the arrears, I do not think I need to decide it.  It is a matter to be decided in the IPO.  In any case, the trustees’ claim of interest in the future payments is accepted by Madam Tam to be an interest though subject to the qualification that it is merely a commercial interest.  Hence, the real question is whether the trustee’s interest in the maintenance is merely a commercial interest of a creditor. 

11. Section 43E(1), (3), (5) and (6) provide:

“(1) The court may, on the application of the trustee, make an order (an income payments order) claiming for the bankrupt's estate so much of the income of the bankrupt during the period for which the order is in force as may be specified in the order.

…

(3) An income payments order shall, in respect of any payment of income to which it is to apply, either-

(a) require the bankrupt to pay the trustee an amount equal to so much of that payment as is claimed by the order; or

(b) require the person making the payment to pay so much of it as is so claimed to the trustee, instead of to the bankrupt.

…

(5) Sums received by the trustee under an income payments order form part of the bankrupt's estate.

(6) For the purposes of this section the income of the bankrupt comprises every payment in the nature of income which is from time to time made to him or to which he from time to time becomes entitled, including any payment in respect of the carrying on of any business or in respect of any office or employment.”

12. The trustees want to join as a party in these proceedings so as to seek payment by the 1st respondent of part of the maintenance for Madam Tam under section 43E(3).  Such payment, if ordered, will be received by the trustees and become part of Madam Tam’s estate under section 43E(5).  The trustees therefore apply to join in these proceedings so as to advance a proprietary claim to part of the maintenance that the 1st respondent is going to pay Madam Tam. 

13. The interest claimed by the trustees is thus of a proprietary nature and not a mere commercial interest of a creditor.

14. In the premises, I allow the trustees’ application.  I grant them leave to intervene in these proceedings.  I order that they be named the 5th respondent in these proceedings. 

15. I also make a costs order nisi that Madam Tam do pay the trustees the costs of this application to be taxed by me summarily.  The solicitors for the trustees should file and serve a bill of costs within the next 14 days.  Madam Tam should file her list of objections within the next 14 days.  The court will then proceed to assess the costs summarily on paper.

16. I also make a costs order nisi that the trustees do pay the costs of the 3rd respondent in this application summarily assessed at HK$4,000 and such sum to come out of Madam Tam’s estate. 

17. I also make a costs order nisi that the trustees do pay the costs of the 4^th respondent in this application summarily assessed at HK$6,000 and such sum to come out of Madam Tam’s estate. 

18. Finally, I suggest that the parties may consider seeking to have the application for the IPO to be heard together with the 1st respondent’s application for payment of maintenance to Madam Tam.