LO KWOK KUEN DANWAY v. SECRETARY FOR JUSTICE for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINSITRATIVE REGION

DCCJ 2792/2013

CIVIL ACTION NO. 2792 OF 2013

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DECISION

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1.  This is the plaintiff's application by summons issued on 5 Aug 2015 under sections 63(1) and 63A(2) of the District Court Ordinance (Cap 336), and Order 58 Rule 2 of RDC (Cap 336H), for leave to appeal my judgment given on 13 July 2015, dismissing the Plaintiff's claims for his declaratory reliefs sought. In this application, the plaintiff seeks an order that the said judgment be set aside, and that judgment be entered in terms of said declaratory reliefs, to the effect that he is released from all bankruptcy debts (including the subject debts for costs otherwise payable to the Hong Kong Government), upon the discharge of his bankruptcy on 14 December 2009 by virtue of section 30A of Cap 6, and that the Government is not entitled to rely on section 31(2)(a) of the Pension Benefits Ordinance (Cap 99) to apply his pension benefits to satisfy the subject debts.

Section 63(1) Cap 336 – leave to appeal to the court of appeal

2.  Section 63(1) Cap 336 states, inter alia, that subject to certain other provisions (which do not apply to the case before me), an appeal can, with leave of a judge, be made to the court of appeal from every judgment of a judge in any civil matter. The thresholds to be met for leave to appeal are provided for in Section 3A(2) as follows:

"Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that – (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard."

3.  The test for "reasonable prospect of success" is not controversial. Irrespective of whether it differs from the old "real prospect of success" test prior to the legislative change in April 2009, as adopted from Smith v Cosworth Casting Process Limited [1997] 1 WLR 1538, it is now settled that by "reasonable prospect of success" (which is also the formulation for leave to appeal from a High Court judgment under section 14AA(4) High Court Ordinance (Cap 4)), it is meant that an appeal needs to have a prospect of success that is more than fanciful, but which does not need to be shown to be probable, as per Le Pichon JA in para 17 of SMSK v KL [2009] 4 HKLRD 125, but has to be more than arguable, as per Chu J (as she then was) in para 19 of Wynn Resorts (Macau) SA v Mong Henry (unrep HCA 192/2009).   

Ground 1(a)(i) – the Government was an unsecured creditor or claimed to be such

4.  In ground 1(a) of the draft notice of appeal attached to the summons, the plaintiff asserts, inter alia, that a flaw lies in this court's conclusion that after the discharge of the plaintiff's bankruptcy, the defendant still retains the right to statutory deductions or set offs under section 31(2) of Cap 99. It is said that I have overlooked the fact that by virtue of the bankruptcy petition as well as the proof of debt, the Government was an unsecured creditor in respect of the subject debts, or claimed to be so. However, that is not the case. On the contrary, Mr Koo, the plaintiff's counsel, has ignored paras 22(2) and (3) of the judgment where the petition and the proof of debt, both of which described the Government as an unsecured creditor, were specifically considered in arriving at the conclusion. In para 27, I have specifically held that his contention that the Government was an unsecured creditor, is misconceived in that under the non-alienation provision of section 28 of Cap 99, the cessation and restoration of pension benefits are mandatory, and are not rights that anyone can surrender or waive. The benefits are in effect treated as so sacrosanct for the pensioner's own benefit and protection, that they cannot possibly be made part of the bankrupt's estate for the general body of creditors, notwithstanding that they are otherwise properties within the meaning of the Bankruptcy Ordinance as choses or things in action. In other words, it has already been held against the plaintiff that the Government cannot possibly become an unsecured creditor because the underlying pension benefits of the plaintiff are non-alienable (and a fortiori un-surrenderable), however it claims to have such a status in the petition and the proof of debt.

Ground 1(a)(ii) – the Government admitted that it was an unsecured creditor

5.  The plaintiff's ground 1(a)(ii) is that the Government has nevertheless pleaded an admission that it was an unsecured creditor, and that this admission has been overlooked in my judgment. However, the judgment does not need to refer to this admission because it was not disputed that such an admission had been made (in para 3 of the re-amended defence). What was hotly debated was whether the Government's status as an unsecured creditor is legally permissible. So whether the admission was made or not made, it would not have made any difference to my view that neither the plaintiff's pension benefits nor the defendant's statutory deductions thereof are surrenderable, because given the common ground that the section 28 Cap 99 benefits are inalienable, it must follow, ipso facto, that the section 31 Cap 99 deductions from such inalienable benefits are also un-surrenderable.

Ground 1(b)(i) – the Government has surrendered  its security

6.  In ground 1(b)(i), it is said that the court has overlooked "the facts" or the "legal principles" that the Government "can surrender the security" to become an unsecured creditor by its presentation of the bankruptcy petition, "even though the pension benefits would not (as a result of the Government's surrender) become part of the bankrupt's estate, by virtue of the non-alienation statutory provisions of Cap 99 or otherwise". Before dealing with the question as to what is meant by the "facts" or "legal principles" which this court has purportedly overlooked, I already have great difficulty in making cogent sense of the underlying premise that the Government can somehow "surrender" its security even though pension benefits "would not (as a result of the Government's surrender) became part of the bankrupt's estate by virtue of the non-alienation provision of" section 28 of Cap 99. Given that here, the plaintiff accepts that pension benefits "would not" become the bankrupt's estate, I cannot possible see how it can be said, in the same breath, that the Government's security can be surrendered. To say that a security can be "surrendered" in the context of bankruptcy, it can only mean that the security is surrendered to the bankrupt's estate for the benefit of the general body of creditors. The language used in the Notes to the Proof of Debt General Form, Form 46A, makes this very clear in the following terms:

"If you fail to disclose your security, you may be deemed to have surrendered that security for the general benefit of the creditors."

Further, under the Bankruptcy Rules (Cap 6A), the root word "surrender" appears only in section 99I, which provides that for the purpose of voting in creditors' meetings, a secured creditor shall, unless he surrenders his security, state in his proof of debt the particulars of his security, and shall be entitled to vote only in respect of the balance due to him after deducting the value of his security, and if he votes in respect of his whole debt, he shall be deemed to have surrendered his security unless the court on application is satisfied that the omission has arisen from inadvertence. So the context makes it clear that "surrender" must mean surrender of security to the bankrupt's estate for the benefit of the general body of creditors. The word also appears in the Bankruptcy Ordinance only once, in section 71A, in cases of extortionate credit transactions. Section 71A(4)(d) effectively provides that in such cases, the court may make an order requiring any person to surrender to the trustee any property held by him as security. Similarly, the context makes it clear that surrender can only mean surrender to the trustee for the benefit of the general body of creditors. It is therefore a self-contradiction to say, as counsel for the plaintiff does here under this ground, that even if the pensioner's pension benefits and the Government's right to make statutory deductions are non-alienable, the Government's secured rights can still somehow be "surrendered".  

Alternative construction of ground 1(b)(i) – the Government has waived  its security

7.  Perhaps, what could have been argued on the plaintiff's behalf, although not articulated as such under ground 1(b)(i), is that notwithstanding that a pensioner's pension benefits are non-alienable from him and hence un-surrenderable by the Government, its statutory right of deductions to set off outstanding debts is nevertheless "surrendered" in the idiosyncratic sense that it has been waived by the Government's election of an inconsistent right. To be fair to the plaintiff, waiver indeed has been mentioned in paras 4A(c) and 8 of the re-amended reply, even though as a cause of action for his declaratory reliefs, it has not been pleaded in the statement of claim proper. However, if a waiver were the sense meant by a "surrender", then the plaintiff's far more respectable argument ought to have been formulated along the following lines instead: notwithstanding that the plaintiff's pension benefits are inalienable and therefore can never be vested in the trustee to form the bankrupt's estate, the Government's statutory right of deductions from such inalienable pension rights, though un-surrenderable to the estate, has nevertheless been waived by the Government, in that by presenting the bankruptcy petition as an unsecured creditor, it had waived its security, irrespective of whether its status was a deliberate election or an inadvertent act. Such a conjectured ground 1(b)(i), if advocated, would have changed the complexion of the plaintiff's application entirely, for it would have clothed the plaintiff's unintelligible proposition with at least the respectability of an intelligible argument.

8.  However, I cannot find anything in counsel's submissions to fairly interpret ground 1(b)(i) as meaning a waiver in the sense as set out above. Counsel has not indicated what "facts" he has in mind as giving rise to a waiver (or a surrender as meant by him) of a statutory right to deduct pensions to set off an antecedent debt, or that there are "legal principles" which he has identified, and the application of which results in such a waiver (or a surrender as meant by him) as a legal consequence. My attention has not been brought to any authority relating to these hypotheses. I therefore cannot accept that ground 1(b)(i) gives rise to any "reasonable prospect of success" –  the requisite threshold that an applicant for leave to appeal must ordinarily overcome under section 63A Cap 336, as canvassed in paras 2 and 3 above. But for the sake of completeness, even if counsel had advanced the principles relating to waiver or the like, along the lines argued above, I would still have no doubt that the reasonable prospect of success test could not have been satisfied.

9.  Discussions of the modern treatment of waiver, as the learned authors of the 4^th edition of Spencer-Bower's 'The Law Relating to Estoppel by Representation' have said at XIII 1.18, often begins with the Australian case of Craine v Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 (HCA), where Isaacs J said, at p 327:

"Waiver is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions ... It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has "approbated" so as to prevent him from "reprobating" – in English terms, whether he has elected to get some advantage to which he would not otherwise have been entitled, so as to deny to him a later election to the contrary … First of all, the law of estoppel looks chiefly at the situation of the person relying on the estoppel; next, as a consequence of the first, the knowledge of the person sought to be estopped is immaterial; thirdly, as a further consequence, it is not essential that the person sought to be estopped should have acted with any intention to deceive; fourthly, conduct short of positive acts, is sufficient."   

10.  In Kammins v Ballroom Co Ltd v Zenith Investments Ltd [1971] AC 850, Lord Diplock considered circumstances similar to those described by Issacs J but characterized them as an election rather than a waiver. At pp 882H-883, he said:

""Waiver" is a word which is sometimes used loosely to describe a number of different legal grounds on which a person may be debarred from asserting a substantive right which he once possessed or from raising a particular defence to a claim against him which would otherwise be available to him. We are not concerned in the instant appeal with the first type of waiver. That arises in a situation where is person is entitled to alternative rights inconsistent with one another. If he has knowledge of the facts which give rise in law to these alternative rights and acts in a manner which is consistent only with his having chosen to rely on one of them, the law holds him to his choice even thought he was unaware that this would be the legal consequence of what he did. He is sometimes said to have "waived" the alternative right, as for instance a right to forfeit a lease or to rescind a contract of sale for wrongful repudiation or breach of condition; but this is better categorized as "election" rather than as "waiver"."

11.  The passage of Isaacs J quoted above in para 9 in a slightly longer form was also referred to in the 3^rd (1977) edition of Spencer-Bower and Turner, and which was in turn referred to with approval by Lord Scarman in China National Foreign Trade Transportation Corporation v Evlogia Shipping Co SA [1970] 1 WLR 1018, where his lordship said, at 1034F:

"A distinguished Australian judge has described waiver as "a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions": Isaacs J. in Craine v. Colonial Mutual Fire Insurance Co. Ltd. (1920) C.L.R. 305, 236. Sir Alexander Turner, in his outstanding third edition (1977) of Spencer Bower and Turner, Estoppel by Representation, comments (at pp.319-320) upon the passage in the judgment of Isaacs J. from which I have quoted:

"The truth is, perhaps that whereas a fairly successful attempt may be made to state with precision what is meant by 'estoppel' and by 'election,' the term 'waiver' when used in a similar connotation is not capable of exact definition in the light of the authorities. Possibly it may be regarded as usefully describing an end-result; but its application to the process by which that result is brought about is almost invariably attended with ambiguity as to the essential nature of that process.""

12.  Hence counsel for the plaintiff could have advocated waiver or election, which would have better served the plaintiff's cause, since  unlike the usual run of promissory estoppels, it does not appear to be over fact-sensitive, and does not depend on the subjective state of mind of the Government or its knowledge, so long as, in Lord Diplock's parlance,  "he has knowledge of the facts which give rise in law to these alternative rights and acts in a manner which is consistent only with his having chosen to rely on one of them, .. even though he was unaware that this would be the legal consequence of what he did." Arguably, the Government's mere knowledge of the fact of some future contingent pension rights as well as the fact that it has claimed to be an unsecured creditor in presenting the petition might have sufficed.

13.  However, be that as it may, I take the view that even if counsel had adopted this ground on the plaintiff's behalf, the appeal could have any reasonable prospect of success, for I am minded that irrespective of the difficulty of defining a waiver by election for general application, whether as a defence, or even as a claim, one fundamental requisite common to all waivers is that the elected position otherwise inconsistent with the abandoned position must relate to a recognizable right pursued by the estopped party, and not a spurious one. In Zhang v Shanghai Wool and Jute Textile Co Ltd [2006] VSCA 133, (2006) 201 FLR 278, Chernov JA rendering a decision of the court of appeal of Victoria, said at para 14:

".. the learned authors of The Law of Waiver, Variation and Estoppel  [1] say that the elements that are common to all wavier "in the true sense of the word" are:

1. an unequivocal representation by X either by words or conduct that it will forgo certain rights;

2. X makes that representation when it is aware of the facts that give rise to the rights which are being forgone, of the right to forgo those rights and the connection between the two.

…

It is true that waiver by election may be established by demonstrating that the party in question had elected to pursue a substantive right that is inconsistent with that which it is now seeking to press. As Laws JL said in Oliver Ashworth, [2] "[c]ommon law waiver, or waiver by election … proceeds upon the premise that the party said to be fixed by the waiver must have possessed two or more substantive but inconsistent rights". And in Verwayen[,] Brennan J [3] noted that "[e]lection consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights".

14.  On our facts, contrary to the situations contemplated in the quoted passages above, the elected position pursued by the Government at the time of its bankruptcy petition, and which is inconsistent with the security being abandoned or waived, must be a genuine "substantive right", not a misconceived one perceived to be surrenderable when it is inalienable. Since I have already held without reservation that the Government's statutory deductions are inalienable and un-surrenderable, there are no inconsistent rights in place which the Government can be said to have ever pursued. The plaintiff would have turned any doctrine of waiver on its head if it were ever inflated out of all recognition to suggest that the defendant could have abandoned a statutory inalienable security by adopting a misconceived right which cannot possibly be recognized by the law.

Ground 1(c)(i) – the plaintiff is discharged from bankruptcy

15.  Ground 1(c)(i) is one which, to my mind, has again exposed the demerit in the plaintiff's application. In a nutshell, the point is that "even if" the Government was permitted to withdraw its proof of debt, such withdrawal "could not alter" the "past events" that the Government was "not a secured creditor" in respect of the subject debts, given that the plaintiff was "discharged from bankruptcy" and "therefore[,] the Plaintiff has since been released from the subject debts". I cannot find any intelligibility in this string of jumbled semantics. If the Government really had succeeded in withdrawing the proof of debt (for example, where the plaintiff unsuccessfully challenged the defendant's contention of inadvertence in respect of its initial unsecured creditor status), then surely, the Government's rectified status as a secured creditor would have been vindicated, and it would no longer be possible for the plaintiff to still pick faults with the defendant for being an unsecured creditor. That being the obvious case, his discharge from bankruptcy, however absolute and devastating in effect against all unsecured creditors, would obviously have no impact on the Government's new found status as a secured creditor, and its security. I therefore cannot make coherent sense of this mismatch of legal precepts at all.

Ground 1(c)(ii) – the plaintiff is  prejudiced

16.  In ground 1(c)(ii), the plaintiff contends that the court has overlooked the prejudice that would have been inflicted on the plaintiff "if the Government was permitted to withdraw the Proof of Debt on the first day of trial hearing". However, I obviously cannot entertain this irrelevant and hypothetical scenario contemplated by counsel by his invoking the conditional "if". The fact remains that the District Court has never given any permission to the defendant to withdraw any proof of debt at trial. As explained in paras 30 to 31 of the judgment, the fact remains that the defendant had rightly made an application to withdraw the application, for the District Court has no bankruptcy jurisdiction to deal with it. I therefore dismiss this hypothetical ground for being surprisingly frivolous.

Ground 2 –  surrendered pension benefits cannot vest in the official receiver

17.  In ground 2, the plaintiff contends that this court ought to have held that "if the Government had surrendered the security" – again deploying the conditional "if" – it would not cause the pension benefits to be vested in the official receiver at all, by virtue of:

(1) the non-alienation statutory provisions of section 28 Cap 99; and

(2) the fact that pension benefits do not constitute a "thing in action".

18.  Before scrutinizing this ground, I should mention at the outset that one aspect of this hypothetical ground flatly contradicts another conditional in para 5(c) of  Mr Koo's opening submission at trial, where it has been submitted that if, for the sake of argument:

"the plaintiff's right to pension forms part of the bankruptcy estate, only the trustee (but not the Government) shall have locus to apply the same for satisfaction of the Debts".

It is therefore abundantly clear that at trial, a valid point has been made on the plaintiff's behalf that only the trustee in bankruptcy (as opposed to the Government) could apply "the pension benefits", if at all, for the benefit of the Government as the one and only creditor. But as I have already observed in para 28 of the judgment, this subtlety in respect of locus is useless to the plaintiff, insofar as his declaratory reliefs for discharge from bankruptcy are concerned. In the hypothetical scenario contemplated, the plaintiff would not only be unable to be released from his subject debts under section 32 of Cap 6, he would be much worse off than where he presently stands. This is so because whereas under section 31 Cap 99, he only now stands to lose 25% of his pension benefits to the Government as a direct payee, in the conjectured scenario, he stands to lose all of his pension benefits to the Government as the ultimate and the one and only creditor-beneficiary through the helping hand of the trustee in bankruptcy as a collector of the bankrupt's estate. This is so whether the pension benefits are payable in one lot, or periodically in monthly instalments (which applies in the instant case).

19.  Perhaps, to avert this 4-fold aggravated prejudice as elucidated in para 28 of the judgment, it is now realized and submitted on the plaintiff's behalf, in ground 2, that "if the Government had surrendered the security", the "pension benefits" would still not vest in the official receiver or trustee after all, because of (a) the non-alienation provision under section 28 of Cap 99, and (b) in any event, pension benefits do not amount to a thing in action, and therefore, can never form part of the bankrupt's estate.

20.  Two preliminary observations ought to be immediately apparently from this ground. Firstly, counsel refrains from enlightening the bench to whom the Government would have "surrendered the security", had they not been surrendered to the official receiver of all people. As I have explained in para 6 above, it is intelligible to assert that the security could be "surrendered" to someone other than the trustee in bankrupt.

21.  Secondly (leaving aside the issue in respect of choses or things in action for the time being), the remainder of ground 2  effectively rebuts the plaintiff's own bare claim that he has been absolutely discharged from his indebtedness to the Government under bankruptcy law, for it also effectively contains a self-defeating admission that by virtue of the non-alienation provisions of Cap 99, his pension benefits cannot vest in the official receiver. But if they do not vest in the official receiver, how can it be said, I ask here rhetorically, that a discharge from bankruptcy (no matter how complete, thorough, or unqualified) against non-creditors, can somehow impact on a secured creditor's security, by way of a nebulous surrender to an anonymous entity. No authority has been submitted to me to support such a novelty, and I am therefore, in no position to accept what appears at once to be an unpalatable proposition.

Ground 3 – the plaintiff's pension benefits are not things in action

22.  In ground 3, the plaintiff contends more fundamentally that pension benefits are not things in action, and therefore, cannot possibly amount to properties within the scope of a bankrupt's estate. He then reasons that since pension benefits do not fall into the estate, they obviously cannot vest in the official receiver or any trustee for the benefit of any unsecured creditor, and the 4 fold prejudice will therefore never arise. This inference per se is unassailable enough. However, no authority has been submitted to support the startling assertion that pension rights are not things in action. After a lengthy discourse between the bench and the bar as to the legal authority in support, Mr Koo attempted to construct an argument from first principles, that since neither the Pension Benefits Ordinance nor the Bankruptcy Ordinance expressly contains a provision that defines pension benefits under Cap 99 as things in action or properties within the meaning of section 2 of the Bankruptcy Ordinance, and since there is no ratio decidendi in any Hong Kong decided case directly on this point, then the better view is that pension benefits are not things in action, and are not properties within its scope of a bankrupt's estate. But when further pressed as to what pension benefits might be if they were not things in action, he was no longer able to offer the court any further assistance. In these circumstances, I have no doubt that the submission has no intellectual integrity. If his contention is correct, then it would have meant that nothing short of an express provision in Cap 6 and/or Cap 99 to subsume pension benefits under a thing in action would suffice. It would also fly in the face of the careful reasoning of Kwan J (as she then was) in paras 13 to 18 of Ng Shiu Fan [2008] 813 (a case dealing with provident fund benefits). In that case, her ladyship held that Mr Ng's legal right to be paid the provident fund benefits upon the cessation of his employment as a teacher, as provided for in rule 13 of the Subsidized Schools Provident Fund Rules (Cap 279D), was an immediate chose in action, and constituted "property" under section 2 of Cap 6, and that in the absence of a non-alienation provision, that right formed part of his estate. Mr Koo's eccentric interpretation of pension benefits as some unidentified object other than choses in action would have amounted to an audacious criticism of the learned judge's reasoning as being fallacious without offering his reasons therefor. I therefore have no difficulty in dismissing ground 3 as unarguable.  

Ground 4 – estoppel ought to be dealt with

23.  In ground 4, the plaintiff contends that this court has erred in declining to deal with the issue of estoppel on the erroneous observation that he has not pleaded estoppel when in fact he has (in para 8 of the re-amended reply). But I declined to deal with estoppel not because para 8 was overlooked, but because I did not regard estoppel as being properly pleaded as a cause of action. It is trite law that generally, a plaintiff must not put forward in reply a new cause of action which is not raised in the writ or the statement of claim. Order 18 rule 10(1) of RDC (Cap 336H) specifically provides that:

"A party shall not in any pleading make any allegation of fact, or raise any new ground of claim, inconsistent with a previous pleading of his."

24.  The effect of this rule, in the context of a reply, has been explained by the learned editors of Hong Kong Civil Procedure 2016 Vol 1 at 18/3/2 and 18/10/1 respectively, as follows:

"… a plaintiff must not put forward in his reply a new cause of action which is not raised either in the writ or the statement of claim. If the plaintiff after seeing the defence, finds it necessary to rely on a cause of action which has not been raised in the writ or statement of claim, normally the proper way is to amend the writ and the statement of claim".

"The rule against departure means that a party's second pleading must not contradict his first: and the effect of the rule is to prevent a plaintiff from setting up in his reply a new claim which is inconsistent with the cause of action alleged in the statement of claim"

25.  In the context of an estoppel pleaded as a defence under O 18 r 8 RHC, the editors also commented in para 18/8/11, that:

"Estoppel must be specifically pleaded, unless there is no opportunity to do so",

Although this rule does not relate to estoppel as a claim but a defence, the principle must equally apply to a claim. In the case before me, the defendant had, at various points at trial, taken issue with the plaintiff for not having pleaded estoppel properly. However, Mr Koo chose not to take up the opportunity to do so, and was content simply to rely on an averment in para 8 of the re-amended reply, that the defendant was estopped from exercising its statutory rights.

26.  In Wing Hang Bank Ltd v Chrystal Jet International Ltd & Others [2005] 2 HKLRD 795, at pp.799 and 800, Ma, CJHC (as he then was), reiterated the following relevant principles about pleadings and evidence:

"In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party … has been obtained."

"What is set out above as acceptable practice will be all the more emphasized when the civil justice reforms in Hong Kong take shape. The object is not to invite prolixity in pleadings but to achieve what has always been the position: to fairly inform the other side and the Court of a party's case, identifying the issues and the true extent of the dispute between the parties."

27.  In the same vein, it has been said that estoppel is also a rule of evidence whereby a party in certain circumstances is not allowed to allege or prove a fact by reason of his representations or conduct. See, for example, the old one-volume 13^th edition of  Bullen & Leake & Jacobs, Precedents of Pleadings, Section 34, p 1145.

28.  Leaving aside the question whether estoppel is available as a shield or a sword, for the plaintiff to let the defendant know what the live issues are and the true extent of the dispute, he is expected to make the following 3 important averments in pleadings (or otherwise allegations in evidence), given the nature of his claim:

(1) a representation has been made by the defendant;

(2) reliance on it has been placed by him; and

(3) as a result, in reliance of the representation, he has acted to his detriment.

29.  The kind of estoppel applicable to the dispute between the present parties is, unlike the plea of waiver, far more fact-sensitive in that the plaintiff has to satisfy the court of all the above propositions as a matter of evidence. In the case before me, not only have the averments not been pleaded or otherwise alleged to enable the defendant to know what to rebut at trial, one cannot help but wonder what could possibly have amounted to the Government's representation by conduct – that it would abandon reliance on its statutory right of deductions under section 31 of Cap 99. And if such a plea or allegation had been made, and evidence given in examination in chief – that the Government's presentation of the bankruptcy petition amounted to such a representation – a court will still have to be satisfied that in fact Mr Danway Lo had himself relied on it, and had acted upon it his detriment. One of the ways in which these facts can be proven, is for him to say, for example, that:

(1) he had some notions of the Government's right to some statutory deductions of his pension benefits;

(2) he had understood that the Government abandoned it by the institution of a bankruptcy petition against him as an unsecured creditor; and

(3) he had acted to his detriment in reliance of the representation, for example, by committing to a mortgage, or to sending his children to an expensive international school.

30.  However, nothing remotely akin to this tenor of testimony (or a much diluted version thereof) had actually been attempted in examination in chief to supplement what had been critically omitted in the plaintiff's witness statement or testimony, let alone an application for amendment to the pleadings. Unsurprisingly, the defendant has not prepared any evidence to rebut these allegations or the like, through no fault of its own.  

31.  The only averment that is seriously made in ground 4 in support of the purported plea of estoppel is that by the Government's petition to bankrupt the plaintiff, it "had taken full advantages … of the opportunities of full payments for the subject debts out of the bankrupt's estate .. [to] the detriment of the Plaintiff". But this is hardly an implied plea of an uncharacteristically diluted estoppel, for there is no averment of the Government's  representation by conduct, that it would waive its statutory right of deductions. There is no averment that the supposed representation was what Mr Lo had actually understood the Government's bankruptcy petition, per se, to automatically imply. There is no averment that by his reliance on it, he had acted to his detriment financially by incurring certain expenses that he otherwise would have averted. The only  detriment that the plaintiff has addressed under this ground, is not a detriment that flows from any purported representation, but a purported tactical advantage to the Government for having 2 attempts at debt recovery rather than one (eg, by refraining from instituting a bankruptcy petition, and relying singly on section 31 of Cap 99). I therefore have no difficulty in envisaging that had the plea of estoppel been allowed as an amendment to the plaintiff's claim, the plaintiff would have failed to substantiate estoppel at trial with the relevant supporting evidence. In any event, as I have already said in para 29 of the judgment, I have grave reservation in perceiving the defendant's restraint from launching a bankruptcy petition in favour of invoking its statutory right of deduction later, as necessarily a lesser detriment to the plaintiff than an unrestrained bankruptcy petition, due to the aggravated interest of the first approach which the second approach might well avoid.

Section 63A(2) - interest  of justice considerations

32.  The remaining matter that needs resolution is the interest of justice issue under section 63A(2) of the District Court Ordinance Cap 336. As set out in para 2 above, the section effectively provides that leave to appeal shall not be granted unless the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

33.  After hearing the arguments, I have asked both Mr Koo, and counsel for the Defendant, Mr Suen, to assist the court further with written submissions on the interest of justice limb of section 63A(2), in the event that the plaintiff fails to satisfy the court of his "reasonable prospect of success" of his appeal, since little has been written on it in closing submissions.  

34.  In supplementary submissions, Mr Koo cites Lord Woolf's dictum in Smith v Cosworth Casting Ltd [1997] 1 WLR 1539, on the exceptional circumstances where leave can be granted even though the court is not satisfied of the appeal's prospect of success. In the relevant passages, Lord Woolf said:

"2. The court can grant the application even if it is not so satisfied. There can be many reasons for granting leave even if the court is not satisfied that the appeal has any prospect of success. For example, the issue may be one which the court should in the public interest be examined by this court or, to be more specific, this court may take the view that the case raises an issue where the law requires clarifying.

…

5. … the appeal has no realistic prospect of success does not necessarily mean that leave should not have been given."

35.  I take the above message to encompass a typical situation where an appeal does not have any reasonable prospect of success, but because the law requires clarification, an appeal will raise an issue which the court of appeal should examine in the interest of the public. I can envisage that at one extreme, there are cases where, by reason of the society's changing values or circumstances, or where binding authorities have become inconsistently applied, certain issues arising from a leave application ought to be re-examined by a higher court in the interests of justice. However, this type of situation does not apply to the plaintiff's application here, when the really pertinent question is whether an issue raised by this application warrants an area of law to be clarified in the interests of justice.

36.  On the specific question as to when the law needs to be clarified in the interest of justice, counsel for the defendant, Mr Suen, helpfully draws my attention to a commentary in the White Book, where the learned editors have some reservations with Lord Woolf's passage. It has been said in repeated editions thereof, including Hong Kong Civil Procedure 2016, Vol 2, at P4/63A/3 (and at E1/14AA/5), that:

"The theoretical difficulty with the passage just quoted is that if the case raises an issue where the law requires clarifying, then by definition the appeal does have a real prospect of success. Such clarification might operate in favour of the appellant. If the "clarification" cannot affect the outcome of the appeal, then it may be inappropriate to grant permission."

But whatever the difficulty, whether real or theoretical, I am much inclined to resonate the view that if the clarification sought cannot affect the outcome for an appellant, then the grant of leave may well be inappropriate.

37.  Mr Koo further submits that in the instant case, it is in the public interest to have the following issues examined and clarified by the court of appeal:

(1) whether the Government can "surrender or waive" its statutory rights to make deductions from pension payments "to become an unsecured creditor for the purpose of making a claim in bankruptcy proceedings"; and

(2) whether the pension benefits under Cap 99 constitute a "thing in action" in law.

These issues, it has been argued, concern the general public, and in particular, civil servants, and that they impact upon a question of considerable public importance – whether upon a bankrupt's section 30A discharge, the Government can still recover public funds from otherwise indebted civil servants.

38.  However, as I have suggested above, whichever way the issue may be answered, yea or ney, the outcome is cold comfort to the plaintiff because he cannot get a single foot of mileage out of it. Firstly, if a surrender of the Government's security were legally possible in the instant case (assuming that there is nothing intrinsically illogical with the notion that the Government can surrender its security despite the plaintiff's inalienable benefits), the surrendered security, to the extent of 25% of the plaintiff's benefits, would have vested in the trustee in bankruptcy to form part of the bankrupt's estate, in the like manner as I have explained in para 18 above regarding the vesting of 100% of the plaintiff's benefits. It would have effectively given the Government a right of recovery thereof, not as a secured creditor, but as an unsecured creditor via the trustee in bankruptcy, albeit somewhat delayed. In connection with this kind of predicament (where the Government gets a quarter of the plaintiff's periodical pension payments through the trustee), I should add in passing, that counsel for the plaintiff has repeatedly abstained from making any submissions despite repeated invitations from the bench to do so, other than to categorically say that in the first place, the security could not possibly vest in the trustee to form part of the bankrupt's estate. In other words, counsel has repeatedly declined to offer the court the benefit of his intellectual analysis as to the possible legal consequences of the vesting, had the security been surrenderable and surrendered. That being the case, I must take it that he has no answer to the court's view that but for the inalienability of the plaintiff's benefits, the Government's security, if surrendered, would have vested in the official receiver for the Government as the only eventual recipient.

39.  Secondly, if the Government's surrender of its security were legally impossible, then it must follow that the Government is entitled to make the statutory deductions to set off the plaintiff's indebtedness. So whichever way the court of appeal may answer the important question as framed by him, the end result is the same insofar as the plaintiff is concerned – he must fail in his declaratory reliefs that he was discharged from all debts including his indebtedness to the Government.

40.  The only possible question that might otherwise be framed for the court of appeal's resolution is the question whether the Government's conduct amounts to a waiver by election of its statutory right of deductions or set off. But for the reasons I gave in paras 13 to 14 above, the answer is in the negative, and this is not a matter which in my considered judgment, the law needs any clarification by a court of appeal.

41.  As for the plaintiff's second issue (which amounts to a challenge against the commonly accepted notion that pension rights are choses or things in action, and as such, would have fallen within the scope of a bankrupt's estate but for statutory provisions of inalienability), that is not a matter for which there is no highly persuasive and convincing authority. The validity of such dicta has already been elaborated in paras 10 to 13 of the judgment. Further, this court has not been told the reasons why pension rights cannot be choses in action, other than by the obviously flawed reasoning set out and rejected in para 22 above. For this reason, it cannot be right that I grant leave to appeal on the interests of justice ground for a clarification of the 2^nd issue of law.

40. Lastly, I also need to take heed of the fact that the plurality of "interests of justice" must also entail the interest of the successful Government, who should not be lightly deprived of the fruits of its fairly fought victory, and then suffer the additional labours and extra costs of defending a flawed appeal. I therefore remain unconvinced that this application is a suitable or deserving case for leave to appeal to be granted on the interests of justice ground.

Order

41. For all the reasons given above, I dismiss the plaintiff's application for leave to appeal. As costs follow the event, I make a costs order nisi that, costs be to the defendant to be taxed if not agreed, and that the plaintiff's own costs be taxed in accordance with Legal Aid Regulations (Cap 91A). I further order that unless any party makes an application within 14 days for variation thereof, the order be made absolute.