RE CHRISTOPHER JAMES LYNCH

HCB 6949/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 6949 OF 2003

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D E C I S I O N

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Introduction

1. The petition herein was presented on 11 April 2003 in respect of a debt owed by the Debtor ("the Debtor") pursuant to the judgment entered against him in the District Court on 11 September 2002. The Petitioner was the Debtor's solicitor in his matrimonial proceedings. The judgment debt was in the amount of $149,157.36, being professional fees due to the Petitioner in respect of the matrimonial proceedings, interest and costs in the District Court action. A Statutory Demand dated 30 October 2002 was duly served on the Debtor personally on 7 November 2002. The Debtor failed to comply with the Statutory Demand, nor did he apply to set aside the Statutory Demand.

2. The grounds for opposing the petition as stated in his Notice of Intention to Oppose the Petition are: (1) the petition and the amended petition are both defective and do not comply with the rules of the Court; (2) the debt was not payable immediately; (3) the Petitioner has unreasonably refused his offers to pay the debt and (4) at the time of the transaction the Petitioner was fully aware of the facts and matters surrounding the transaction. The Debtor was unable to particularise his first ground of opposition. In fact, I consider the petition is in order. The Debtor did not dispute the judgment debt which was an unsecured debt. Thus, in effect, he was contesting the petition on the grounds that the fees which formed the subject matter of the judgment debt was not payable immediately given the circumstances under which the debt was incurred and that he had made offers to settle the debt which had been unreasonably refused by the Petitioner.

Whether the debt was payable immediately

3. The Debtor argued that the Petitioner being his solicitor in the matrimonial proceedings knew his financial conditions were such that he could not pay the fees forthwith and hence the debt was not immediately payable. He said at the time the Petitioner told him to arrange for counsel's fees only and that he should not worry about the solicitor's fees. I do not think those comforting words could be treated as an indefinite postponement of his liability to pay the fees. Taken at the highest, these words meant that payment may be deferred till the end of the matrimonial proceedings. Indeed, the Debtor admitted that there was no agreement as to how long the payment may be delayed. The forbearance by the Petitioner must have ended by the time recovery action was instituted in the District Court. The debt has now been adjudged by the District Court. It is for a liquidated sum and is due and payable immediately. The judgment debt remained unsatisfied despite a lapse of 10 months. Obviously, the Debtor was unable to pay the debt.

The Debtor's offers and the Petitioner's refusal

4. The Debtor said he made a number of offers to settle or compound for the debt. The latest offer was made in October 2002 when he offered to pay $20,000 after three months and thereafter a monthly instalment of $10,000. That was refused by the Petitioner and he made no further offers since. Today, the Debtor renewed a similar offer, i.e. $20,000 after three months and $10,000 monthly thereafter. Nine months have lapsed since the judgment was entered into. Apparently, if the Debtor was telling the truth, his financial condition has not been improved. He was unable to make a better offer or to make an initial payment. If the offer represented what he could genuinely afford, it was unrealistic and not unreasonably refused. It would be in his and his creditors' common interest that the Bankruptcy Order be issued.

Other considerations

5. The Debtor says that the Petitioner has been harassing him with legal proceedings in the District Court including seeking an order for oral examination and threatening committal for contempt. These are the usual tools for enforcement of a judgment open to any judgment creditor. I do not think they constitute a bar to the petition.

Conclusion

6. In the circumstances, I find that the petition is in order and there are no valid grounds before me to show why the Bankruptcy Order should not be made. Accordingly, I make the usual Bankruptcy Order with costs.