RE SUEN KIN NING

HCB8042/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 8042 OF 2009

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D E C I S I O N

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1.  At the end of the day, I have come to the view that there should be an element of remission of the fees in this case. In my view, and as both parties accept, the discretion of the court to order remission, is stated in wide and almost unfettered terms in section 114 of the Bankruptcy Ordinance.

2.  Both of the only two previous recorded decisions cases in which the question of remission of the fees payable has been gone the subject of a reasoned decision, into with any reasoning given, were cases in which the bankrupt would have been left with very little in the way of assets after scale fees had been charged. 

3.  In those circumstances, having regard to the bankrupt’s personal financial position and his commitments going forward, in terms of the need to support himself and his family, the court was obviously sympathetic to the bankrupt by reason of the very considerable financial hardship that would be caused to him. 

4.  However, that said, I would accept Mr Chan’s submission that it is not the case that the discretion of the court under section 114, is so limited or circumscribed that it is available to bankrupts only in cases where the bankrupt is able to establish the existence of financial hardship of a magnitude or of a scale that would leave him in a state of near destitution. 

5.  It seems to me that each case has to be considered on the basis of its own facts and I think it is relevant to take into account the amount of the scale fees to be charged, and to compare it, in a case where the scale fees to be charged are extremely substantial, with the amount of work that has actually been done by the Official Receiver in the given case.

6.  This is an extremely unusual case.  The amount of work done had been very little, no doubt because the bankrupt has been co-operative and has very substantial assets which were readily realisable.  In those circumstances, it does seem to me that the disparity between the scale fees and actual time costs of the magnitude that exists in this case is, of itself, a ground for the court to exercise its discretion to order some degree of remission. 

7.  I think that this can also be put in terms of hardship in that, although it is not hardship of the sort that was found in the two other cases in which hardship was constituted by the near destitution of the bankrupt, if the scale fees had been charged, I would regard it as a real hardship for a very substantial amount of money in absolute terms (as is the case here where the scale fees would produce a fee of some $2.1 million) to be charged to a person  in circumstances where the actual work done had been very, very substantially less. 

8.  Although one cannot establish any necessary or direct relationship between the scale fees and the work done (and it would, I think, be wrong to try to circumscribe the court’s discretion which it should exercise on a case by case basis by reference to any formula) it does seem to me that in the present case, there would be hardship to the bankrupt in having to pay the fees in the amount called for on the basis of the scale fees.

9.  Taking into account the bankrupt’s financial position (which appears to be reasonably healthy) it seems to me that although a reasonably substantial remission is called for, it is not the case that the remission need necessarily be in the general proportion that was adopted in the other cases, given that the bankrupt’s financial position here is substantially better than that of bankrupts in the two other cases that have been considered.  It seems to me that a remission of the scale fees to the extent of $1.5 million would provide a substantial enough remission, and at the same time, provide a reasonable balance between the prima facie entitlement of the Official Receiver to receive fees on the scale fee basis and the hardship that would be caused to the bankrupt, if that basis were to be applied in its full rigour. 

10.  Mr Chan submitted that the court should take into account the fact that the bankruptcy order ought perhaps never to have been made.  Although I can see some force in his submissions as to the quality of the service of the statutory demand in this case, as it would seem that the creditor could have done more (without any great difficulty) to establish the whereabouts of the bankrupt, or to find a way of contacting him, it seems to me that it would be unsatisfactory for the court, in a case where the bankrupt has elected to pursue an annulment under section 33(1)(b) to embark upon a consideration of whether or not an application under section 33(1)(a) ( if one had been brought) would have been successful.  It seems to me unsatisfactory, where there has been no proper argument as to the matter, that the court should try to rule on such a point on a hypothetical, or one-sided basis. 

11.  It also seems to me that where the bankrupt does not pursue an annulment under section 33(1)(a) but simply seeks to pay all of his debts under section 33(1)(b), it does not really lie in his mouth to suggest that he could have succeeded under section 33(1)(a) on the basis that the bankruptcy order ought never to have been made.  It seems to me that by choosing to pursue section 33(1)(b), he should be treated as effectively accepting that the bankruptcy order was properly made, and submitting that he is in fact in a position to meet all of his obligations under the bankruptcy. 

12.  For that reason, I would have been disinclined to have regarded the submission by Mr Chan to the effect that service in this case was not properly effected, as providing a reason why the scale fee should be remitted, if it were not otherwise have been a case in which remission should be ordered in the exercise of the court’s discretion.

13.  For basically those reasons, I will order a remission to the extent of HK$1.5 million.