RE FONG SO HO

HCB 5653/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCYPROCEEDINGS NO. 5653 OF 2008

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J U D G M E N T

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1.  This was the hearing of a bankruptcy petition presented on 11 July 2008 by the Secretary for Justice against Fong So Ho.  The petition is based on a judgment debt of HK$127,144.89 (consisting of the principal amount plus interest thereon), pursuant to a judgment of the District Court in DCCJ 4708 of 2004 dated 31 January 2005.  A statutory demand was served on the Debtor by advertisement in a local newspaper on 3 April 2008, but went unanswered, and Mr Fong is accordingly deemed to be unable to pay his debts.

2.  The petition was opposed by Mr Fong.  In the Notice of Opposition which he filed in these proceedings, he identified two grounds for resisting the petition.  These were:-

(1) He was not aware of the service of the statutory demand, and was not physically present within Hong Kong at the time the advertisement was published.

(2) He disputes the validity of the underlying judgment debt.

3.  The first point can be dealt with quite briefly.  It was not expanded upon in the evidence filed by Mr Fong in opposition to the petition.  In any event, it does not appear to have any merit.  There is nothing in the Bankruptcy Ordinance (Cap. 6) that requires a debtor to be physically present in Hong Kong on the date of service of a statutory demand, and it is not necessary for him to be here on that date (see Re Damnerncharnwanit [2000] 1 HKC 579).

4.  On the contrary, all that is required of the creditor is to do all that is reasonable for the purpose of bringing the statutory demand to the attention of the debtor, pursuant to rule 46(2) of the Bankruptcy Rules.  What is reasonable is to be determined by reference to the information available, actually or constructively, to the creditor at the time that he attempts to serve the statutory demand (Re Pang Mei Lan May [2005] 1 HKC 319).

5.  In the present case, the petitioner has, I think taken all reasonable steps to bring the statutory demand to Mr Fong’s attention, having made two personal visits to his last known and usual address, made enquiries with members of his family and the security guard, left letters seeking to make an appointment with him for the purpose of service at that address, and when all of those steps led nowhere, placing an advertisement in a local newspaper.  Importantly there is no suggestion, nor any basis for suggesting, that the Creditor was or should have been aware that Mr Fong might not be in Hong Kong.  Absent any such suggestion, it seems to me that all other reasonable avenues for effecting personal service having been exhausted, service by advertisement in a local newspaper will amount to taking the necessary reasonable steps.

6.  The first ground of opposition therefore fails.

7.  Turning to the second ground of opposition, it should be made clear at the outset that where a petition is based on a judgment debt, the court, exercising its bankruptcy jurisdiction, will not generally enquire into the validity of the judgment, in the absence of evidence of fraud, collusion or miscarriage of justice.  In general, the most that a judgment debtor can expect in an appropriate case would be to be given an opportunity to try to have the judgment set aside, in the case of a default judgment, or to seek to obtain a stay of execution pending appeal.

8.  In this case, Mr Fong contended that he had important evidence which he had not been able to place before the District Court before its judgment against him was given.  In order to understand the supposed relevance of this evidence, it is necessary to set out the somewhat complicated background to these proceedings.

9.  This begins in 1995, with an action that Mr Fong brought in relation to a dishonoured cheque.  This was HCA 9421/1995.  Some time after commencing the proceedings, on 15 October 1997, he applied for legal aid.  In connection with his application for legal aid, Mr Fong signed two documents relating to his financial situation, in which it was stated that he was living in public housing, for which he was paying rent of HK$1,111 per month.  Mr Fong’s application for legal aid was in due course approved.

10.  In fact, the statements as to where he was living, and the rent he was paying, was inaccurate.  Mr Fong and his wife had in fact been living in a Home Ownership flat since May 1997, when his wife had acquired it in exchange for the public housing unit in which they used to live.  Instead of paying rent, Mr Fong and his wife had from then on to pay a mortgage of HK$7,000 per month.

11.  This came to the attention of the Legal Aid Department, which decided, in July 2000, to withdraw the legal aid which it had granted to Mr Fong.  Mr Fong appealed against the withdrawal of legal aid, but on 11 September 2000, the Registrar of the High Court dismissed his appeal.

12.  In 2002, the Department of Justice launched criminal proceedings against Mr Fong for deception, arising out of the misstatements in the information he had provided to the Legal Aid Department.  These proceedings were STCC 173/2002.  On 8 May 2002, Mr Fong was found not guilty of the charge, which was dismissed.  Mr Fong’s case was that he had informed the Legal Aid Department of the correct position, and that the errors were due to a mistake on the part of a clerk in the Department who had helped him fill out the forms.  It would appear from the transcript of these proceedings (this was the evidence which Mr Fong said was of great importance) that the magistrate was not satisfied beyond reasonable doubt that the error was due to any dishonest intention on Mr Fong’s part.

13.  The next step was that on 7 September 2004, the Department of Justice issued proceedings (DCCJ 4708/2004) against Mr Fong in the District Court.  These were the proceedings in which the judgment debt which is the basis of the petition arose.  The claim was based on the debt arising in respect of the costs which had been expended by the Legal Aid Department on Mr Fong’s behalf in HCA 9421/1995.  Upon the revocation of the legal aid granted to Mr Fong, he was, pursuant to the provisions of the Legal Aid Regulations (Cap. 91A) deemed never to have been granted legal aid (Regulation 9(1)), and the amount of the costs paid on his behalf became recoverable from him as a debt (Regulation 9(5)).

14.  Mr Fong filed a Defence, but failed to put in an affidavit in opposition when the Department of Justice applied for summary judgment.  Nor did he produce any of the documents from the criminal proceedings against him.  On 31 January 2005, Master Roy Yu gave summary judgment against him.

15.  Mr Fong appealed against this decision, and his appeal was heard on 18 February 2005 by Judge H C Wong.  From her judgment, it is clear that Mr Fong had referred to the unsuccessful criminal proceedings against him, and indicated that he sought an adjournment in order (among other things) to allow him to obtain a copy of the relevant documents from those proceedings to place before the court.  For the reasons which she gave, the learned judge refused the adjournment sought, and went on to dismiss the appeal, giving detailed reasons for rejecting Mr Fong’s defence.  In the course of her reasons (in particular, paragraphs 6 and 8), she indicated that in any event the fact of his acquittal of the criminal charges was not really relevant, as the standard of proof in those proceedings, which required the charge to be proved beyond reasonable doubt, was very different from the civil standard of a balance of probabilities.

16.  Thereafter, Mr Fong applied unsuccessfully to Judge Wong on 23 March 2005 for leave to appeal against her decision.  He then lodged an application for leave to appeal to the Court of Appeal (HCMP 447/2005).  Although it seems that Mr Fong had by this time obtained the documents from the criminal proceedings and placed them before the Court of Appeal, on 14 June 2005, the Court of Appeal refused him leave to appeal, for the reasons appearing in their Judgment of that date.  Undaunted, Mr Fong sought leave to appeal to the Court of Final Appeal.  This, too, was refused by the Court of Appeal on 2 December 2005.

17.  The applications for leave to appeal referred to in the previous paragraph did not come to light until relatively late in these proceedings.  At the initial hearings of the petition, Mr Fong indicated that he had not previously provided Judge Wong with the documents from STC 173/2002.

18.  In those circumstances, I adjourned these proceedings to allow Mr Fong an opportunity to see whether the District Court judgment against him, on which the petition was based, could be set aside or otherwise reopened, or perhaps made the subject of an appeal out of time.

19.  However, at this time, Mr Fong did not disclose that he had sought leave to appeal from Judge Wong’s decision, both from the judge and from the Court of Appeal.  As those applications would have been made ex parte it does not seem that the petitioner was aware of them either.

20.  On 5 December 2008, Mr Fong made an application in the District Court proceedings to set aside the judgment against him.  That application was heard by Judge Wong on 19 December 2008, who refused it on the basis that as judgment had been given and her order sealed, she had no further jurisdiction to deal with the matter.  As a result of the application, however, Mr Fong’s earlier unsuccessful attempts to appeal the judgment came to light.

21.  In these circumstances, it is now quite clear that Mr Fong had in fact already pursued every avenue that was possibly open to him to overturn the District Court judgment against him, and has failed in his attempts to do so for reasons which have been fully explained at every stage.  That being the case, those proceedings have clearly been finally determined against him, and there is no basis on which this court, exercising its bankruptcy jurisdiction, can interfere with or ignore that judgment, on the basis of which Mr Fong is clearly indebted to the petitioner.

22.  At the hearing on 17 March 2009, Mr Fong sought a further adjournment on the basis that he was appealing in judicial review proceedings which he had brought.  I declined to order any further adjournment.  It transpires that these latest proceedings related to an attempt by Mr Fong to seek leave (in HCAL 16/2009) to judicially review and set aside Judge H C Wong’s order of 18 February 2005.  As the correct mode of challenge to a judicial decision is by way of appeal (a route which had, in any event already been exhausted), it is not surprising that Fung J dismissed the application on 17 February 2009, or that an appeal against his order was dismissed by the Court of Appeal on 13 May 2009 (CACV 42/2009).  An application by Mr Fong to seek leave to appeal to the Court of Final Appeal was dismissed on 25 June 2009.

23.  Finally, at the end of the hearing, Mr Fong said that he had a further document which he wished to place before the court, this being a letter from the Official Receiver.  He was permitted to do so, and submitted the document by fax after the hearing.  However, the letter was simply one in which the Official Receiver sought to be excused from attending the substantive hearing of the petition, and had no bearing on the merits of the petition.

24.  In the circumstances, it is quite clear that Mr Fong is indebted to the petitioner as alleged in the petition.

25.  I would add that, in any event, the evidence that Mr Fong submitted was crucial was something that had been raised in the District Court proceedings, and although Judge Wong declined to allow Mr Fong to adduce such evidence, for what would appear to be perfectly good reasons, he does appear to have brought such evidence to the attention of the Court of Appeal in his 2005 appeal.

26.  Moreover, it is plain that that evidence could have made no difference to the outcome of the District Court action.  This is because the fact that Mr Fong had been acquitted in the criminal proceedings would not affect the fact that his legal aid had been revoked.  His liability to repay the costs incurred on his behalf by the Legal Aid Department arose as a result of the revocation, against which he had appealed unsuccessfully, and in respect of which he had no further recourse.  Thus, regardless of the outcome of the criminal proceedings, he was and remains liable to repay the amount of those costs, and it was this liability that gave rise to the judgment which formed the petition debt.

27.  For all of these reasons, I am satisfied that there can be no dispute as to Mr Fong’s liability to the petitioner, and I shall therefore make the usual bankruptcy order, with costs, against him.