RE WONG YUNG EX PARTE YEUNG YU

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

IN BANKRUPTCY NOS. B971 & B972 OF 1985

____________

___________

JUDGMENT

___________

1. I have before me applications by Wong Yung and Ng Wai Ping (the applicants) who are the administrates of the estate of Ng Chun deceased to set aside bankruptcy notices issued against them on the 3rd December 1985, which were served respectively on the 10th December 1985 and the 11th December 1985.

2. The bankruptcy notices are based upon a judgment obtained by the petitioner dated the 24th September 1985 against the estate of the deceased for the sum of $491,146.56 interest and costs.

3. At the outset I drew the attention of Mr McCormick who appeared for the petitioner to Section 112(8) of the Bankruptcy Ordinance, which provides inter alia that service on the legal personal representative of a deceased debtor shall in the event of an order for administration being made be deemed to be equivalent to notice of an act of bankruptcy. However, Mr McCormick responded by submitting that the administrates in this case have rendered themselves personally liable by virtue of their conduct. In particular, Mr McCormick referred to an affirmation made by Wong Yung on the 30th January 1985 in the action in which judgment was obtained by the petitioner who admits that assets of the estate have been sold and transferred out of the jurisdiction. I have also been told that Mareva injunctions and prohibition orders have been made against the applicants. Mr McCormick therefore invited me to draw inferences from the evidence that the applicants are personally liable under the judgment as a result of their commission of a breach of trust. In support of his submission Mr McCormick cited Taylor v. Taylor (1870) Equity Cases Vol. X where it was held that executors had committed a breach of trust in paying a legacy without providing for a liability attaching to a testator's estate at the time of his death in respect of some shares. Accordingly payment of the amount of the legacy was ordered to be made to the official liquidator. However, that case determined the liability of the executors after a finding of a breach of trust. No such finding has been made in the instant case. Mr McCormick also prayed in aid Section 32(1) of the Trustee Ordinance, Cap. 29 which provides:

"32. (1)    A trustee shall be chargeable only for money and securities actually received by him notwithstanding his signing any receipt for the sake of conformity, and shall be answerable and accountable only for his own acts, receipts, neglects, or defaults, and not for those of any other trustee, or of any banker, broker, or other person with whom any trust money or securities may be deposited, nor for the insufficiency or deficiency of any securities, nor for any other loss, unless the same happens through his own wilful default. "

A bankruptcy notice is based upon a final judgment debt or order and requires the debtor to make compliance within seven days otherwise he will be deemed to have committed an act of bankruptcy. The bankruptcy notices in the instant case are based upon a judgment obtained against the deceased's estate and not against the applicants in their personal capacities. Even if a breach of trust has been committed by the applicants no liability can be attached to them unless and until it has been established by a final judgment or order. In any event if a breach of trust is proved the applicants can only be held responsible for such loss that arises as a result of their wilful default.

4. The submission that inferences can be drawn from the affirmation of Wong Yung to support a finding of personal liability by the applicants and to substitute them as the debtors for the judgment debt of the estate is wholly misconceived. Accordingly the applications to set aside are granted with costs against the petitioner. Pursuant to Rule 49 of the Bankruptcy Rules it is declared that no act of bankruptcy has been committed by the applicants.