RE: JOHN GILBERT and EX PARTE: ANTHONY PATRICK FAHY

HCB855/1992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO.855 OF 1992

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J U D G M E N T

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1. This is a most unusual case.

2. The bankruptcy petition was presented on 25 March 1993. Both the bankruptcy notice and the bankruptcy petition are based on a judgment obtained by the petitioning creditor against the debtor in Kowloon Land Tribunal Action 82 of 1986.

3. After the presentation of the petition, directions were given for the filing of evidence and both sides filed evidence relating to the petition. Mr Gilbert acknowledged the judgment debt but claimed a right to set that off against a judgment he had obtained against the petitioning creditor in High Court Action 2200 of 1985 which, at that time, was subject to an appeal and assessment of costs.

4. The petition was fixed for hearing on 2 November 1993 before Rogers J. However, on 23 October 1993, the debtor John Gilbert died. Accordingly, the hearing was vacated by consent and the judge ordered that fresh dates be fixed. Since the vacation of the hearing date on 1 November 1993, no further steps have been taken in either fixing fresh dates or otherwise proceeding with the bankruptcy petition.

5. Almost seven years later, on 5 November 1999, the petitioning creditor restored the petition for hearing. In that application, not only does the petitioning creditor's name appear, but there is an additional name, namely Prague Enterprises Limited ("Prague Enterprises"). Be that as it may, the relief sought was that -

"Mr John Gilbert and his executrix has failed to pay his judgment debt for rent since 1987 and his judgment debt to Prague Enterprises since 22 January 1986 plus seven other debts on debit notes issued to his legal aid representatives Messrs Robin Bridge and John Liu and per the enclosed file".

A 2-inch bundle accompanied that application. It is to be noted that Prague Enterprises was not the petitioning creditor.

6. The matter was fixed for hearing on 8 November 1999. However, on that day, the petitioning creditor was indisposed and the matter was adjourned to 22 November 1999. At that hearing, the court gave the petitioning creditor leave to file and serve an affidavit in support of his application and directed that a full explanation be given of why nothing had been done in this petition since 1 November 1993. Leave was also given to the debtor's estate to file evidence in opposition.

7. Pursuant to those directions, the petitioning creditor filed, first, a bundle of documents consisting of approximately 200 pages including an affidavit dealing with the 33 categories of documents which make up the file. A short affidavit in opposition was filed by the debtor and a reply affidavit was filed by the petitioning creditor attached to which were two additional bundles of material.

8. Under section 103 of the Bankruptcy Ordinance, if a debtor by or against whom a bankruptcy petition has been presented dies, the proceedings in the matter shall, unless the court otherwise orders, be continued as if he were alive. So the first point is that the death of the debtor does not put an end to the bankruptcy proceedings.

9. It is of course highly unusual that a petition should remain in abeyance for seven years. It was plainly the petitioning creditor's responsibility to progress the matter given the debtor's demise. Although the court had asked for a full explanation for the delay, the reasons are not at all evident. It would appear that for part of this period the petitioning creditor was hospitalized. However, that did not prevent him from pursuing other High Court actions against Mr Gilbert's estate through legal representatives : it does not of itself explain the lack of action. Be that as it may, leaving aside any possible implications arising from the unconscionable delay, what the court has to consider is whether there is an answer to the judgment debt claimed by the petitioning creditor.

10. The debtor relied on a judgment obtained in HCA 2200 of 1985. After an unsuccessful appeal by the 3rd defendant, those proceedings resulted in a judgment in favour of Mr Gilbert in the sum of $176,225 and also an order for costs. Those costs were taxed at $1,127,834 in March 1995. After the assessment of costs, several attempts were made to register the total judgment obtained by Mr Gilbert against the petitioning creditor and Prague Enterprises as a charge against properties owned by them.

11. It is unnecessary for me to go into those applications, but it is material to refer to the second exhibit to an affidavit dated 18 November 1999 filed by Mr Hancock who represents the debtor's estate. The exhibit marked TJH-2 is also an affidavit of Mr Hancock. It is dated 11 April 1997. The relevant part of the 1997 affidavit commences with paragraph 9. There is set out in detail the award made in favour of Mr Gilbert, interest on the award, the amount awarded by way of costs as well as interest thereon. As at 11 April 1997 the total amount stood at $1.9 million. At paragraph 13 of his 1997 affidavit, Mr Hancock stated that against the amount due to Mr Gilbert had to be set off the sums due to the petitioning creditor. There followed a calculation of the amounts owing to the petitioning creditor under the judgment obtained in the Kowloon Lands Tribunal. As at 11 April 1997, the total amount stood at $495,337.53. It is therefore clear that the amount awarded to Mr Gilbert under HCA 2200/1985, together with costs, far exceeded the amount of the debt underlying the petition.

12. I should mention that there are other proceedings between the parties that are still on-going : HCA 8740/1992 and HCA 7220/1994. Those proceedings, however, are irrelevant for the purposes of the present petition because the debt underlying the petition is confined to the judgment debt obtained by the petitioning creditor from the Kowloon Land Tribunal action in 1986.

13. The evidence is clear and unchallenged that the amount awarded under HCA 2200/1985 far exceeded the debt underlying the petition. There is plainly no merit in the petition. Even if there were merit, the long delay would be a consideration to which the court would have regard in the exercise of its discretion. It is wholly unsatisfactory that a bankruptcy petition should be allowed to remain in abeyance for this length of time. No satisfactory explanation has been provided to the court for the delay. Indeed, the court has had considerable difficulty in trying to make sense of the voluminous (and irrelevant) evidence that has been filed.

14. In all the circumstances, the only appropriate order is to dismiss the petition, and I do so. I also award costs to the debtor.