LAM KAM SING v. THE TRUSTEE OF THE ESTATE OF THE BANKRUPTCY AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

IN BANKRUPTCY

No. B653 of 1986

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D E C I S I O N

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1. The bankrupt was granted his discharge from bankruptcy on the 10th July 1989 after paying all his debts in full. However, the bankrupt's solicitor challenged the Official Receiver's claim to charge costs under Item 1(a) of the bankruptcy (Fees and Percentages) Order. This issue was therefore adjourned for argument until the 13th July when Miss Lee, for the bankrupt, contended that costs should be awarded on a party and party basis and drew my attention to various provisions in the bankruptcy legislation.

2. Mr Bush for the official receiver submitted that whilst the court has a discretion to award costs under section 100 of the Bankruptcy Ordinance, the costs for which he seeks an order relates to work carried out by the Official Receiver outside the court proceedings, but in connection with his duties in the administration of the bankrupt's affairs. Those duties are set out in section 78(1) of the Bankruptcy Ordinance which provides :-

"78. (1)     As regards the estate of a debtor, it shall be the duty of the Official Receiver-

(a)    pending the appointment of a trustee, to act as interim receiver of the debtor's - estate, add where a special manager is not appointed, as manager thereof;

(b)    to raise money in any case where in the interests of the creditors it appears necessary so to do;

(c)    to summon and preside at the first meeting of creditors;

(d)    to issue forms of proxy for use at the meetings of creditors;

(e)    to report to the creditors as to any proposal which the debtor may have made with respect to the mode of liquidating his affairs;

(f)    to advertise the receiving order, the date of the creditors' first meeting and of the debtor's public examination, and such other matters as it may he necessary to advertise;

(g)    to act as trustee during any vacancy in the office of trustee;

(h)    to assist the debtor in preparing his statement of affairs in case the debtor has no solicitor acting for him and is unable properly to prepare it himself, and for this purpose he may employ at the expense of the estate any person or persons to assist in its preparation."

Mr Bush also drew my attention to other relevant parts of the legislation to which I shall now refer.

3. Section 37 deals with the priority of costs and charges and where relevant reads :-

"37. (1)     The assets remaining after payment of the actual expenses incurred in realizing any of the assets of the debtor shall, subject to any order of the court, first be liable to the following payments, which shall be made in the following order of priority, namely -

(a)    the actual expenses incurred by the Official Receiver in protecting or attempting to protect the property or assets of the debtor or any part thereof and any expanses or outlay incurred by him or by his authority in carrying on the business of the debtor;

(b)    the fees, percentages and charges payable to, or costs charges and expenses incurred or authorized by, the Official Receiver, whether acting as official Receiver or trustee;

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Section 114(1) provides :-

"114. (1)     The Chief Justice may, with the approval of the Legislative Council, by order prescribe a scale of fees and percentages to be charged for or in respect of proceedings under this ordinance."

Pursuant to section 114(1), the Bankruptcy (Fees and Percentages) Order was made on the 17th May 1985. Item 1(a) of Table B in the Schedule roads :-

"1 On -

(a)     the net assets realized or brought to credit by the official Receiver, whether acting as interim receiver, receiver or trustee, after deducting any sums paid to secured creditors in respect of their securities, and not being assets realized by a special manager or moneys received and spent in carrying on the business of the debtor;"

5. The remaining items in Table B set out prescribed fees and charges to which the official Receiver is entitled to charge for different aspects of work.

6. Having considered the various provisions, it is clear that the legislature intended that the Official Receiver should be entitled to charge for his fees and expenses under the Bankruptcy (Fees and Percentages) Order. I accept that this work is to be treated separately from, the Official Receiver's work in the litigation when either the party and party or common fund basis for taxation will apply.

7. Accordingly, I shall make an order that the costs and expenses of the Official Receiver be allowed under Item 1(a) of Table B of the Schedule to the Bankruptcy (Fees and Percentages) Order.