XCHRX RE TO CHUCK LAI

HCB849/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO.849 OF 1995

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D E C I S I O N

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Application to remit fees

1. The applicant is a bankrupt. He applies under section 114(2) of the Bankruptcy Ordinance ("the Ordinance") to remit part of the fees charged by the Official Receiver.

Facts

2. The applicant was adjudged bankrupt on 27 December 1995. His indebtedness was $976,254.88. He paid $4,000 per month to the Official Receiver for repayment purposes.

3. In November 1998, the applicant received a retirement fund, having applied for early retirement from the Civil Service, of about $1.6 million. This sum was paid directly to the Official Receiver. The Official Receiver charged the applicant a fee of $290,391.86. The fee was calculated according to the Bankruptcy (Fees and Percentages) Order on the realized assets of the applicant which included the retirement fund.

4. The parties had in fact reached a compromise in which the fee was substantially reduced. The Official Receiver, however, after the compromise, changed his position when he realized that he had no power to enter into the compromise because the fees were prescribed by statute.

Section 114 of the Ordinance

5. Section 114(1) of the Ordinance provides that the Chief Justice, with the approval of the Legislative Council, may by order prescribe a scale of fees and percentage to be charged for and in respect of proceedings under the Ordinance, see discussion in Lam Kam Sing v. The Trustee of the Estate and Bankrupt and Another [1989] 2 HKC 352. There is no provision in the Ordinance for the Official Receiver to waive the fees. In my view, the Official Receiver has no power to compromise on the fees. This is clearly an unsatisfactory situation and should be looked into so that the Official Receiver may be given the power in appropriate cases to compromise on fees.

Discretion to remit fees

6. What remains is this : the compromise cannot be enforced. However, section 114(2) does give the power to the court to remit the fees. A wide discretion is being given : the fees may be remitted either absolutely or in such terms as it may think fit.

7. In this case, the estate of the applicant was administered summarily. The applicant had been discharging his obligations diligently by the monthly payment of $4,000. Having paid off the debt and the Official Receiver's fees, he would only have a saving of about $285,000 which is the balance of his retirement fund and a monthly pension of $9,600. He has to maintain himself, his mother and an eleven-year-old daughter who is now living in Thailand. He is divorced and is now 56 years old.

8. As indicated in the compromise, the Official Receiver was prepared to accept a flat fee of $100,000. The rough estimate of the Official Receiver's actual costs in the conduct of this case is about $60,000 to $65,000. The Official Receiver is now taking a neutral stance in this application.

Application granted

9. Having considered all the circumstances of this case and also the fact that the applicant should be given a fresh start, I will order that out of the sum of $290,391.86, the Official Receiver is entitled to $100,000 as his fees. Accordingly, the application is granted. There is no order as to costs.

10. I will grant leave to publish this decision.