CHEN CHERYL DEANNA FORMERLY KNOWN AS CHERYL DEANNA CHEN OR CHEN MEI YIN DEANNA OR CHEN MEI YIN CHERYL v. CHEN PAK YIN STELLA

HCMP 1061/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1061 OF 2017

(ON AN INTENDED APPEAL FROM HCB NO 3082 OF 2016)

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J U D G M E N T

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Hon Poon JA (giving the Judgment of the Court) :

1.  By a summons dated 8 May 2017, the debtor applied for leave to appeal out of time the costs order made by G Lam J (“the Judge”) on 9 March 2017.  Having considered the written materials before the court, we take the view that the application can be disposed of without an oral hearing. We now hand down our judgment.

INTRODUCTION

2.  On 28 April 2016, the petitioner presented a bankruptcy petition against the debtor based on various judgment debts.  The outstanding indebtedness of the debtor at the time of the presentation of the bankruptcy petition amounted to $61,704.46.  According to the petitioner, the petition was based on the statutory demand personally served upon the debtor on 18 March 2016.

3.  Between May and August 2016, the debtor made a number of repayments to the petitioner, the last of which was made on 23 August 2016.  According to the calculation of the petitioner’s then solicitors, the debtor’s indebtedness was reduced to $9,446.46 as of 30 August 2016.

4.  On 26 September 2016, the Judge heard the bankruptcy petition and dismissed it on the ground that the outstanding indebtedness owed by the debtor fell below the statutory threshold. He then adjourned the question of costs for argument as the debtor contended that the statutory demand had not been validly served upon her.

5.  The Judge eventually heard the question of costs on 28 February 2017.  He handed down his decision on costs on 9 March 2017.  He attached no weight to the affirmation made by the debtor’s son dated 14 October 2016 and the petitioner’s reply affidavit.[1] He preferred the evidence given by the petitioner’s service processor (where it was deposed that the debtor was informed of the purpose of nature of the statutory demand) to the debtor’s evidence (where the debtor said she refused to receive it and the service processor left it on the ground in front of her).[2]  In essence, he found that the debtor’s evidence was inconsistent and unbelievable.[3]  He found that the requirements for personal service had been met.  The service of the statutory demand was therefore valid.[4]  Accordingly, he found that the petitioner’s bankruptcy petition would have been successful had no belated repayment been made.[5]  Hence, the petitioner should be entitled to costs from 28 April 2016 to 23 August 2016.  The Court made no order as to costs for the period between 23 August 2016 and 26 September 2016.[6]  He also made a costs order nisi that the debtor should pay the petitioner’s costs after 26 September 2016 but excluding the costs of and relating to the petitioner’s  4th – 8th affidavits.[7]

6.  At the hearing of the petitioner’s summons concerning the costs of her 4^th and 5^th affidavits, the Judge also considered the debtor’s purported application (by way of affirmation dated 24 March 2017) for leave to appeal against the decision on costs.  In the decision dated 12 May 2017, the Judge held that no inter partes application was made by the debtor for leave to appeal.  Even treating her affirmation dated 24 March 2017 as the application proper, the application was one day late.  Accordingly, he had no jurisdiction to deal with it.  The Court dismissed the application on the ground of want of jurisdiction.[8]  In any event, he found that the application was unmeritorious since it basically challenged his factual findings without any promising basis.[9]

DISCUSSION

7.  The principles governing the Court’s approach in an application for leave to appeal out of time are well-settled :

“ [19] The legal principles regarding an application to extend time for an appeal are well established. In the exercise of its discretion, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party if the application is granted. Where the delay is substantial and not wholly excusable, the applicant must show a real prospect of success on the merits, not merely a reasonable prospect of success. In other words, he would need to demonstrate a strongly arguable case.”

See Tang Chai On v. Tang Sing Ki [2016] 5 HKLRD 104.

8.  The Judge’s decision on costs was handed down on 9 March 2017.  Pursuant to O59 r.2B(1)(b), of the Rules of the High Court, Cap 4A, any application for leave to appeal must be made to the Judge on or before 23 March 2017.  The debtor did not file a summons for that purpose.  Her purported application for leave to appeal was by way of her affirmation filed on 24 March 2017.  She took out the present summons on 8 May 2017, which is more than 6 weeks after the prescribed time limit.  Even assuming that she could take out the present summons before the Court of Appeal without first applying properly to the Judge, the delay of 6 weeks is substantial.

9.  The debtor explained the delay in her letter to the Court dated 8 May 2017.  She said that apparently under a miscomprehension of law, she intended to ask for leave to appeal against the decision on costs by her affirmation dated 24 March 2017.  She explained that she had to handle the taxation proceedings (it appears that there was a hearing on 11 April 2016) and to take care of her disable son.  On an unspecified date (presumably sometime after the making of her affirmation on 24 March 2017), the debtor was informed that she needed to make application to the Court of Appeal for an extension of time for appeal.  However, it was not until 5 May 2017 when she obtained the “proper” form for the application.  The debtor then took out the present summons on 8 May 2017.

10.  This Court has repeatedly said before that ignorance of law is generally not an excuse for delay.  More importantly, by her own admission, the debtor was aware of the incorrect procedure well before she took out the present summons.  She ought to have rectified the mistake there and then.  Yet she chose to wait until she obtained the “proper” form for the application.  In such circumstances, the delay is inexcusable.

11.  Since the delay was both substantive and inexcusable, the debtor must demonstrate a strongly arguable case before an extension of time to appeal could be granted.

12.  Since the debtor has not submitted any draft Notice of Appeal, we can only discern the intended grounds of the debtor’s appeal in her affirmation filed on 8 May 2017 in support of the present application.  It appears that the debtor is making the following complaints about the decision on costs :

(a)  Due to the petitioner’s own faults, the bankruptcy petition needed to be amended and re-amended.  The debtor was therefore entitled to the costs of the amendment and re-amendment;[10]

(b)  The petitioner should have informed the Judge at the hearings on 26 August 2016 and 7 September 2016 about the partial settlement of the petitioning debts, so that the bankruptcy petition could have been dismissed on that occasions;[11]

(c)  The Judge erred in preferring the evidence of petitioner’s service processor to the affirmation of the debtor’s son as the former was unsafe;[12]

(d)  The Judge erred in finding that the statutory demand was duly served “at the entrance on Ground Floor, Pacific Place, Queensway, Hong Kong”;[13] and

(e)  The Judge erred in finding that the petitioner had encountered difficulties in serving the statutory demand.[14]

13.  In relation to (a), it is clear that the costs previously awarded by Master M Wong dated 25 May 2016 (for the amendment of the bankruptcy petition) and by Master Au-Yeung dated 7 September 2016 (for the re-amendment) were not disturbed by the Judge’s costs work : see, §20 and footnote 9 of the decision on costs.

14.  In relation to (b), it made no difference for the petitioner to inform the Judge about the partial settlement of the petitioning debts at the hearings before the Masters because a Master sitting in bankruptcy jurisdiction has no power to dismiss a bankruptcy petition in any event : see ss.99(3) & 99A(2) of the Bankruptcy Ordinance (Cap. 6).  The matter must be adjourned before the Judge for dismissal.

15.  The remaining complaints relate to the Judge’s findings of fact on the service of the statutory demand and the way he exercised his discretion on costs.  On findings of fact, the debtor has failed to show that the Judge has made any error that can enable the Court of Appeal to intervene.  Further, it is well settled that costs are generally matters for the first instance judge and the Court of Appeal will not intervene with the judge’s exercise of his discretion as to costs unless in very exceptional circumstances: Ho Shu Kwong v. Chiang Chun Yuan [2002] 3 HKLRD 419; Hung Fung Enterprises Holdings Ltd. v. Agricultural Bank of China [2012] 3 HKLRD 679; Poon Ching Man v. Lam Hoi Pun [2016] 3 HKLRD 815.  The debtor has failed to satisfy us that there is any basis to disturb the Judge’s exercise of discretion in making the costs order as he did.

16.  Accordingly, the debtor is not able to demonstrate that there is a strongly arguable case for the intended appeal.

DISPOSITION

17.  For these reasons, we refuse to grant an extension of time to the debtor to appeal against the Decision on Costs.  The debtor’s summons dated 8 May 2017 is dismissed accordingly.

18.  The costs of this application should follow the event.  They are to be paid by the debtor to the petitioner.

19.  In her statements of costs, the petitioner asks for her costs in the sum of HK$31,128.  We find the petitioner’s costs excessive.  Particularly, she stated that it took her 70 hours in drafting her affidavit dated 25 May 2017, 11.5 hours in drafting her 4-page bundle index, 4 hours in drafting and delivering her 1-page letter to the Court, a total of 8.25 hours in drafting and swearing two affidavits of service, and 30 hours in drafting the statement of costs.  On a broad brush approach, we only allow 20 hours for her to conduct and prepare this application.  Accordingly, the petitioner’s costs allowed are $4,000.00 (i.e., 20 hours x $200/hour).

20.  The disbursements in the total sum of $928 (i.e., $755 + $134 + $35 + $4) are allowed in full.

21.  Accordingly, we summarily assess the petitioner’s cost at $4,928.00 and order the debtor to pay the petitioner the costs so assessed forthwith.

22.  Finally, as the debtor’s application is totally unmeritorious we make an order, pursuant to O.59, r.2A(8) of the Rules of the High Court, Cap 4A, that no party may request our determination to be reconsidered at an oral hearing inter partes.

[1] §§3-5 of the Decision on Costs

[2] §§7-9 of the Decision on Costs

[3] §§10-13 of the Decision on Costs

[4] §§14-15 of the Decision on Costs

[5] §§17-18 of the Decision on Costs

[6] §21 of the Decision on Costs

[7] §22 of the Decision on Costs

[8] §§10-13 of the Decision dated 12 May 2017

[9] §14 of the Decision dated 12 May 2017

[10] §§1-7, 13-19 of the Affirmation of Chen Cheryl Deanna

[11] §§9-10 of the Affirmation of Chen Cheryl Deanna

[12] §§22-27 of the Affirmation of Chen Cheryl Deanna

[13] §§28-29 of the Affirmation of Chen Cheryl Deanna

[14] §§31-41 of the Affirmation of Chen Cheryl Deanna