RE STERHEN HENRY MILLER

1992, No. B114
(Bankruptcy)

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H E A D N O T E

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    A bankruptcy notice that requires the debtor to make payment of the judgment debt to the petitioner's agent alone without specifying the petitioning creditor in the alternative in accordance with Form 5 of the Bankruptcy (Forms) Rules does not invalidate the notice having regard to the proviso contained in s.4 of the Bankruptcy Ordinance.

IN THE SUPREME COURT OF HONG KONG

IN BANKRUPTCY

NO. B114 OF 1992

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J U D G M E N T

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1. This is a petition for a receiving order.

2. The petitioner who is a resident of Korea is the assignee of a judgment debt obtained by the debtor's ex-wife on the 18th November 1985, as amended on the 3rd October 1988, for the sum of $800,000 interest and costs. The judgment debt was assigned on the 24th January 1992 and notice of the assignment was given to the debtor on the same day.

3. Liability for the debt is not disputed.

4. An order was made on the 20th February 1992 granting leave to the petitioner under 0.46, r.2(1)(a) and (b) of the Rules of the Supreme Court to issue execution against the debtor as more than six years had elapsed since the date of the judgment, whilst the party now entitled to issue execution, i.e. the petitioner, has, as a result of the assignment, changed.

5. A bankruptcy notice was issued on the 25th February 1992 and was served on the debtor on the 6th March 1992. The bankruptcy notice required the debtor to make payment of the debt to the petitioner's solicitors Johnson Stokes & Master in Hong Kong within seven days of service_. No alternative for payment to be made to the petitioner personally was included in the bankruptcy notice as prescribed in Form 5 in the Bankruptcy (Forms) Rules. As the debtor failed to comply with the terms of the notice, a bankruptcy petition was presented on the 19th March 1992 and was served on the 2nd April 1992.

6. The petitioner signed the petition and made an affidavit verifying the contents in Korea at K'S Law Center and Notary Office on the 16th March 1992 before three attorneys at law.

7. A notice of intention to oppose the petition was filed on the 11th April 1992 on the grounds that the bankruptcy notice did not comply with s.4 of the Bankruptcy Ordinance and r.2(1) of the Bankruptcy (Forms) Rules. By a further notice filed on the 14th April 1992, the debtor raised a further ground of opposition that the petition is defective in that it is not properly attested.

8. In respect of the second ground, r.51 of the Bankruptcy Rules provides where relevant :-

"Every bankruptcy petition shall be attested. .. If it be attested out of Hong Kong, the witness must be a judge or magistrate or a British consul or vice-consul or a notary public."

Mr Nicholls who appeared for the debtor submitted that the evidence did not show that the petitioner executed the petition and verifying affidavit in the presence of the notaries. However, there is no merit in this ground for in a letter of the 27th April 1992 to the petitioner's solicitors, one of the notaries Kim Sook Hyun said that the petitioner appeared before him and the other two notaries for that purpose, whilst the petitioner also made an affidavit on the 15th May 1992 stating that she executed the petition and verifying affidavit in the presence of the three notaries.

9. I now turn to the other ground of opposition which contends that the bankruptcy notice is bad as payment was only required to be made to the petitioner's agent Johnson Stokes & Master, and not in the alternative to the petitioner as the judgment creditor or her agent.

10. Section 4 of the Bankruptcy Ordinance provides

"4. A bankruptcy notice under this Ordinance shall be issued to a judgment creditor, or creditor who has obtained a final order, by the Registrar on the filing of a request for that purpose, and shall be in the prescribed form, and shall require the debtor to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order, or to secure or compound for it to the satisfaction of the creditor or the court, and shall state the consequences of non-compliance with the notice, and shall be served in the prescribed manner:

11. Provided that a bankruptcy notice-

(a) may specify an agent to act on behalf of the creditor in respect of any payment or other thing required by the notice to be made to, or done to the. Satisfaction of, the creditor;"

Rule 2(1) of the Bankruptcy (Forms) Rules reads

"2. (1) Subject to the provisions of paragraph (2), the forms in the Schedule where applicable, and where they are not applicable forms of the like character, with such variations as circumstances may require, shall be used. .....

Mr Nicholls submitted that as r.2(1) is inconsistent with s.4 by permitting variations to be made to the prescribed forms it could be ultra vires. However, he was not prepared to argue this issue on the present application.

12. With regard to the proviso in s.4 for payment to be made to an agent specified in the bankruptcy notice, my attention was drawn to a passage in Williams and Muir Hunter on Bankruptcy 19th Edition, pp.30 and 31 which reads :-

    "Proviso (i) : payment to be made to agent in notice

    Proviso (i) to this section enables the creditor to name an agent in the notice. However, in the prescribed form of notice on a High Court judgment (Form 6, post) the word 'or' between the creditor's and the agent's names is printed in italics, and it was argued, though not decided, in Re Evans that a notice in which the word 'or' was not deleted was bad, as the 'or' formed no part thereof, and it consequently required the debtor to pay both principal and agent, though it was conceded that a notice requiring, in terms, payment to either would be good. This would entail the creditor deleting the word 'or' and rewriting it, but this is surely not necessary. It was there conceded that the notice could require payment to the agent only, sed quaere; even assuming that such a drastic adaptation of the form is a 'variation such as circumstances require' within B.R.7(l), to deny to the debtor the alternative of paying the creditor could hardly benefit the latter and might well increase the former's burden; at any rate in such a case as this, it is submitted, the notice would be bad."

The proviso was introduced in England by s.2 of the Bankruptcy Act 1914 from which s.4 of the Bankruptcy Ordinance is derived.

13. Three authorities referred to in the notes in this passage were cited by Mr Chow, counsel for the petitioner, each being heard before the Bankruptcy Act 1914 came into force so that there was no proviso for payment to be made to an agent. The first Re Persse (1911) 55 SJ 314 concerned a judgment creditor who had two houses in different parts of England and inserted in the bankruptcy notice the address of the house from which he was absent during the currency of the notice. However, his butler was at the address given in the notice and was authorised to receive payments on behalf of the judgment creditor or could have sent for him at any time during the currency of the notice. It was held that the address given was sufficient and the bankruptcy notice was good. In In Re a Debtor [1911] 2 KB 718 it was held that a bankruptcy notice which requires the debtor to pay the judgment debt to the judgment creditors or their solicitors and which contains a statement by the solicitors that they are authorised by the creditors to receive payment and to act for them in respect of all matters specified in the notice is not a bankruptcy notice requiring the debtor to pay the judgment debt in accordance with the terms of the judgment within s.4(1)(g) of the Bankruptcy Act 1883 and was not a good foundation for a receiving order. In the third case In re a Debtor [1912] 1 KB 53 a French firm had obtained a final judgment against the debtor who resided in England and had served. upon him a bankruptcy notice requiring him to pay the amount due on the judgment to the creditors or one or either of them carrying on business at the address of the firm in Paris. It was held that the notice was bad for it required the debtor to pay the judgment debt outside the jurisdiction of the court and was therefore not in accordance with the terms of the judgment under s.4(1)(g) of the Bankruptcy Act 1883. In his submission on this case Mr Chow asserted that as s.4 requires the judgment debt to be paid in accordance with the terms of the judgment, a notice which requires the debtor to pay the debt outside the jurisdiction is bad because it is not in accordance with the terms of the judgment. However, Mr Nicholls in reply submitted that the construction of the section can only lead to the conclusion that payment must be made to the petitioning creditor alone or to the petitioner or his agent, but not to the agent alone. In fact, he contended that there can be no objection to payment being made by any of the modern methods of payment to a petitioning creditor who is resident outside the jurisdiction. Re Evans [1931] B & CR 48 which was referred to in the above passage cited in Williams and Muir Hunter was also referred to by Mr Nicholls, but as no decision was made on the argument addressed to the court, it does not provide any assistance.

14. The bankruptcy notice in this case clearly states that payment should be made to Johnson Stokes & Master, the duly authorised agent of the petitioner. No confusion could therefore arise with regard to the mode of payment. Further, the debtor cannot complain of any prejudice for as he is resident in Hong Kong, it would be more convenient for him to pay here rather than arranging for a banker's draft or a telegraphic transfer to be made to the, petitioner in Korea.

15. In the great majority of cases, the judgment creditor will be resident within the jurisdiction so that the bankruptcy notice Form 5 will be appropriate with the inclusion of the name of the petitioner and/or his agent. However, having regard to the clear wording of the proviso to s.4, there can be no conceivable objection to the use of the name of an agent alone for the purpose of making payment. The submission that a Hong Kong resident must pay a debt to a petitioning creditor who is abroad and not to the authorised agent in Hong Kong can only be described as bizarre.

16. I am therefore satisfied that a bankruptcy notice can be adapted by making provision for payment to the authorised agent of the petitioner without naming the petitioner in the alternative. In my judgment, the failure to include the name of the petitioner in the alternative does not invalidate the bankruptcy notice.

17. Accordingly, there will be the usual receiving order with costs.