RE LEE WOON MEI

HCB11340/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO.11340 OF 2004

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REASONS  FOR  RULING

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1. This is the judgment debtor’s application to set aside the judgment creditor’s bankruptcy petition issued on 25 November 2004.  The ground is that the creditor did not do all that was necessary for the purpose of bringing the Statutory Demand to the debtor’s attention as required by Rule 46 of the Bankruptcy Rules.  I allowed the application.  I now give reasons.

2. The judgment debtor Ms Lee and her husband, Mr Wong Hung Vanteren were the joint tenants of property at Flat A, 13^th Floor, Ling Pak Mansion, North Point which was mortgaged to the judgment creditor (“the Bank”).  They failed to pay.  The Bank obtained an order against them in HCA3547/1999.  The property was sold, but it did not cover the outstanding debt.  In September 2001 the Bank took out bankruptcy proceedings against Mr Wong and Ms Lee but, following an offer of settlement, the petitions were dismissed in January 2002.

3. On 6 May 2002 Mr Wong and Ms Lee wrote to the Bank sending it two cheques.  The letter did not give an address, but it did give a telephone number and a fax number.  Thereafter, however, the couple did not maintain the agreed payments and so the Bank, on 24 December 2003, issued a Statutory Demand.

4. On the same day, Mr Chan, a clerk to the Bank’s solicitors attempted to effect service of the Statutory Demand on the judgment debtor at an address at Unit 1305, Jupiter Tower, North Point which he describes as her “usual or last known address”.  He was told by the building caretaker that Ms Lee had moved out a year before, and her whereabouts were unknown.  The solicitors on 30 December 2003 wrote to Ms Lee at the same address to arrange an appointment for service of the Statutory Demand, and Mr Chan again attended there on 6 and 8 January 2004, without success.  He received the same information from the caretaker and a neighbour.  Then on 15 January 2004, postal service was attempted at the same address, and the solicitors published a notice of the Statutory Demand in the Chinese newspaper, Sing Pao. 

6. On 6 October 2004, Mr Chan tried to serve the Statutory Demand on Ms Lee again, this time at the address of the mortgaged property, but without success; he was told that she had left there four years before.  Nevertheless the Statutory Demand was sent by post to Ms Lee at that address on 8 October 2004.

7. On 11 October 2004, solicitors communicated with the Bank on behalf of the husband, Mr Wong.  On 18 and 20 October, further attempts were made to serve the Statutory Demand on Ms Lee at the address of the mortgaged property, again without success.

8. Bankruptcy Petitions were issued against both Mr Wong and Ms Lee on 25 November 2004.  On 6 January 2005 the Master ordered substituted service of both Petitions by post to the Jupiter Street and the mortgaged property addresses and by publication in a newspaper.  On 5 February 2004, he and Ms Lee wrote to the Bank’s solicitors requesting copies of the Petitions.  Both Mr Wong and Ms Lee took out identical summonses to set aside the substituted service and the Petition, returnable on 28 April 2005.  On that day the Bank and Mr Wong consented to an order to set aside the Statutory Demand and withdraw the Petition against Mr Wong; but that against Ms Lee has proceeded to hearing.

9. It is the evidence of Ms Lee that she never received, nor was she aware of the Statutory Demand.  She did not know of the Petition against her, until her husband told her about it in January 2005.  She says that she believes that her husband had given the Bank his latest correspondence address, telephone number and fax number and could have contacted her through him.

10. A Bankruptcy Petition must proceed on the grounds set out in section 6 of the Bankruptcy Ordinance, Cap. 6.  For the purposes of section 6(2)(c), a Statutory Demand must be served on the debtor in accordance with section 6A and the relevant Rules.  Rule 49 of the Bankruptcy Rules provides :

“The creditor shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention and, if practicable in the particular circumstances, to cause personal serve of the demand to be effected.”

By sub-rule (3), the Demand may be advertised in one or more newspapers where the creditor knows, or believes with reasonable cause :

(a) that the debtor has absconded or is keeping out of the way with a view to avoiding service, and

(b) there is no real prospect of the sum due being recovered by execution or other process.

11. Here there is a problem with the service of the Statutory Demand.  In the first place, although Mr Chan depones that the address at Jupiter Tower was Ms Lee’s “usual and last known address”, it is not clear from the papers before me that that is so.  It is apparently a business address.  Mr Chan in his 4^th affirmation depones that this address came to the knowledge of the Bank when Ms Lee wrote to the Bank in April 2002 and that she used it as a correspondence address but the correspondence is not exhibited.  No address was shown on the letter from the couple to the Bank dated 6 May 2002 but the telephone and fax number given thereon are the same as those given on a letter from the couple dated 17 December 2001 bearing to come from an address in King’s Road, North Point.  There is no evidence of any attempt to find Ms Lee either at the King’s Road address or by communicating with the telephone or fax number, before the attempts were made to serve the Statutory Demand in December 2003 and January 2004.

12. It is true that there was a newspaper advertisement of the Statutory Demand.  Mr Chan in his 1^st affirmation deponed that he believed that Ms Lee was avoiding service and his ground for that was the information received from the caretaker and the neighbour, that she had left the Jupiter Tower address a year before.  I doubt that the mere fact of having left an address a year before is sufficient to indicate that a debtor has absconded or is keeping out of the way with a view to avoiding service, but if it is, there is no proper evidence of the status of that address in the first place.  It appears therefore that sub-rule (3) of Rule 46 does not apply.

13. Any later attempts to serve the Statutory Demand at the mortgaged property address were of course pointless because the Bank had already sold that property in 2001.

14. As I have noted, the Petition against the husband, Mr Wong, was withdrawn by consent.  I made the order in terms of the consent summons.  I was not specifically told why the Petition was withdrawn against the husband but not the wife.  It was said that the later correspondence from Mr Wong did not contain any clear wording to say that Ms Lee was with him, and he had no letter of authority to act on her behalf.  Given that they were joint tenants and are now joint debtors as well as husband and wife, and there is no evidence that they have separated, it is difficult to see why they were not treated in the same way.

15. In any event, that matters little, because I am dealing only with the wife here.  I am not satisfied that the Bank did all that was reasonable for the purpose of bringing the Statutory Demand to the her attention; and for that reason I made the order.