RE YIP WAN FUNG

HCB 6783/2019

[2021] HKCFI 3610

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS

NO 6783 OF 2019

_______________

_______________

_______________

JUDGMENT

_______________

Introduction

1.  This is an application of Madam Yip Wan Fung (“Madam Yip”) to annul the bankruptcy order made against her on 13 May 2020 (the “Bankruptcy Order”) relying on section 33(1)(a) of the Bankruptcy Ordinance (Cap 6) (the “Ordinance”).

Procedural history

2.  The Bankruptcy Order was granted pursuant to a bankruptcy petition (the “Petition”) issued on 4 November 2019.

3.  The Petition was issued by the Petitioner in respect of a debt of $10,774,373.21 (the “Debt”) arising from a director and officer indemnity policy (the “Policy”).

4.  On 15 July 2019, the Petitioner through its solicitors issued a statutory demand (the “SD”) to Madam Yip demanding payment of the Debt. The Petitioner put the following addresses in the SD as the addresses of Madam Yip:

(1) Unit 1401, Bank of East Asia Harbour View Centre, No 56 Gloucester Road, Wanchai, Hong Kong (the “BEA Address”); and

(2) Flat A, 35/F, Tower 7, The Leighton Hill, 2B Broadwood Road, Hong Kong (the “Leighton Hill Address”).

5.  On 6 August 2019, the SD was served to Madam Yip personally at Regent Centre in Central.

6.  On 4 November 2019, the Petitioner issued the Petition.

7.  In the Petition, the Petitioner only put the BEA Address as Madam Yip’s address.

8.  On 4 and 8 November 2019, the Petitioner’s solicitors attempted to effect personal service of the Petition on Madam Yip at the BEA Address without success.

9.  On 26 November 2019, the Petitioner’s solicitors attempted to serve the Petition on Madam Yip at the BEA Address after sending an appointment letter to Madam Yip at the BEA Address on 19 November 2019. The attempt was again unsuccessful.

10.  On 4 December 2019, the Petitioner filed the 2^nd Affirmation of Ho Kin Fung (the “Sub-Service Affirmation”) to apply for an order for substituted service of the Petition on Madam Yip by advertisement and sending the Petition to the BEA Address by ordinary post (the “Sub-Service Order”). On 23 December 2019, the court granted the Sub-Service Order to the Petitioner.

11.  The Petition was then served to Madam Yip in accordance with the Sub-Service Order. The Petition was first heard on 8 January 2020 (the “January Hearing”). Madam Yip did not attend the January Hearing. The hearing was adjourned to 5 February 2020 which was further adjourned due to the General Adjournment Period caused by the Covid-19 pandemic in early 2020. The hearing was subsequently restored for 13 May 2020 (the “May Hearing”). Madam Yip did not attend the May Hearing and the Bankruptcy Order was granted against her.

12.  On 5 June 2020, Leung & Lau (“L&L”) filed a notice to act for Madam Yip.

13.  On 17 August 2020, L&L took out an application for Madam Yip to annul the Bankruptcy Order under section 33 of the Ordinance on the ground that the Bankruptcy Order ought not to have been made (the “Application”).

14.  Madam Yip submitted that there was a bona fide dispute in relation to the Debt. Thus, under section 33(1)(a) of the Ordinance, the Bankruptcy Order should not have been made in the first place (the “Merits Ground”).

15.  Madam Yip contended that the Petitioner had failed to disclose to the court other means of communication with her in obtaining the Sub-Service Order (the “Non-Disclosure Ground”). As such, the Sub-Service Order was obtained by material non-disclosure and ought to be set aside. So as the Bankruptcy Order which was obtained relying on service pursuant to the Sub-Service Order.

16.  Madam Yip further contended that she had not received the notice of hearing for the May Hearing and was not aware of the hearing of the Petition being restored for 13 May 2020. Madam Yip’s case is that if she had been duly notified of the May Hearing, she would have attended the May Hearing and contested the Petition (the “Notice of Hearing Ground”).

17.  Madam Yip filed her first affirmation on 17 August 2020 (“Yip’s 1^st Affirmation”) in support of the Application.

18.  The Petitioner filed the affidavit of Wong Yuen Hang, Kelly and the 5^th Affirmation of Ho Kin Fung (“Ho’s Affirmation”) both on 20 November 2020 in opposition.

19.  Madam Yip filed her second affirmation (“Yip’s 2^nd Affirmation”) on 18 December 2020 in reply.

20.  Madam Yip testified at the hearing of the Application and the Petitioner only called Ho Kin Fung (“Mr Ho”) to testify at the hearing.

The legal principles

21.  Section 33(1)(a) of the Ordinance provides that:

“(1) The court may annul a bankruptcy order if it at any time appears to the court that –

(a) on any grounds existing at the time the order was made, the order ought not to have been made”.

22.  In determining an application to annul a bankruptcy order under section 33(1)(a) of the Ordinance, the court shall first see if there were grounds on which a bankruptcy order ought not to have been made at the material time when it was made, with the applicant bearing the burden of proving the existence of such grounds. Second, even if such grounds existed, the court still has a discretion as to whether to grant an annulment, after carefully considering the interests of the creditor, the debtor and the public, bearing in mind that a bankruptcy order is to be annulled only in exceptional circumstances. (See Kam Hung Cheung v Bank of China (Hong Kong) Ltd [2009] 3 HKLRD 597 at 600-601)

23.  The Court of Appeal in the Kam Hung Cheung case (supra) further endorsed the following views of Carlye Chu J (as she then was) expressed in Re Kam Hung Cheung [2008] 5 HKLRD 487 at 492:

“25. 又倘若一名破產人對破產令所涉債項有所爭議，他必須提供強而有力的表面證據以顯示他的爭議是基於真實和有力的理由。而如果破產令所涉債項是一項判決債務，法庭一般不會重新考慮對所涉債項的爭議：見Re Kwong Ngai Ping, ex p Chinachem Finance Co Ltd (unrep., HCB 9447/2003, [2004] HKEC 471) 第24段。

26. 此外，倘破產令是在破產人缺席下頒發，又或是破產令所涉的得直判令是基於破產人沒有給予抗辯通知書，則破產人必須就其缺席或沒有給予抗辯通知書給予合理可信的解釋：Re Luk Tsun Yin [2000] 1 HKC 744, 777 及Re Ng Chi Wo, ex p Aigun Export Ltd (unrep, HCB 2819/2003, [2004] HKEC 921) 。”

The Merits Ground

24.  Under the Policy, the Petitioner advanced various legal costs to Madam Yip in defending two criminal prosecutions against her in the District Court, namely DCCC 960/2007 and DCCC 551/2008, which were subsequently consolidated (the “Action”). On 16 September 2010, Madam Yip was convicted in the Action for offences involving dishonesty and fraudulent conduct (the “DC Decision”).

25.  Madam Yip appealed against the DC Decision to the Court of Appeal in CACC 353/2010. Her said appeal was dismissed by the Court of Appeal on 7 March 2013. Madam Yip sought to appeal further to the Court of Final Appeal. Her application for leave to appeal to the Court of Final Appeal in FAMC 12/2013 was dismissed by the Appeal Committee of the Court of Final Appeal on 20 March 2014 (the “CFA Decision”). By then, Madam Yip had exhausted all possible appeals and her convictions became final.

26.  Madam Yip contended that since delivery of the DC Decision on 16 September 2010, the Petitioner took no formal legal action against her to recover the Debt until the issuance of the Petition on 4 November 2019. By then, the Petitioner’s claim for the Debt, if any, had already been time barred under the Limitation Ordinance (Cap 347). Madam Yip submitted that as such, she had a bona fide dispute in relation to the Debt.

27.  The Petitioner contended that time for the Petitioner to claim against Madam Yip for the Debt did not start to run until 20 March 2014 when the CFA Decision was issued. Thus, the Petition issued on 4 November 2019 was within time for the purpose of the Limitation Ordinance.

28.  The issue for the Merits Ground is whether the time for the Petitioner to claim against Madam Yip for the Debt started to run from the date of the DC Decision or the CFA Decision (the “Issue”).

29.  Before I discuss the parties’ respective cases on the Merits Ground, I shall set out some provisions of the Policy to the extent relevant to the Issue. They are as follows:

(1) Subject to the terms and conditions of the Policy, the insurer shall advance defense costs resulting from any claim before its final resolution. (Clause 1)

(2) Claim means any criminal prosecution brought against an insured. (Clause 2.2(iii))

(3) Defense costs means reasonable and necessary fees, costs and expenses incurred with the written consent of the insurer resulting solely from the investigation, adjustment, defense and appeal of any claim but shall not include the salary of any insured. (Clause 2.5)

(4) Loss means damages, judgments, settlements and defense costs. (Clause 2.12)

(5) No liability means a final judgment of no liability obtained after trial in favor of all insureds, after the exhaustion of all appeals. (Clause 2.13(ii))

(6) The insurer shall not be liable to make any payment for loss in connection with any claim made against the insured arising out of, based upon or attributable for the committing in fact of any dishonest or fraudulent act. These exceptions shall only apply if it is established through a judgment, or any other final adjudication adverse to the insured, or any admission by the insured that the relevant conduct did in fact occur. (Clause 3.1(iii))

(7) The insurer shall advance to the insured defense costs under all insurance covers under the Policy before the final disposition of the claim. The advance payments by the insurer shall be repaid to the insurer by the insured in event and to the extent that the insured shall not be entitled to payment of the loss under the terms and conditions of the Policy. (Clause 5.6)

30.  The parties have no disputes that the Debt was the defence costs advanced by the Petitioner to Madam Yip under the Policy to defend the Action. The parties also have no disputes that the exclusion referred to in Clause 3.1(iii) of the Policy applied to this case and subject to the dispute on the Issue, Madam Yip has to repay the Debt to the Petitioner under Clause 5.6 of the Policy. As stipulated in Clause 3.1(iii), the exclusion shall only apply if it is established through a judgment. The Issue is whether the DC Decision or the CFA Decision was the “judgment” for the purpose of Clause 3.1(iii) of the Policy. Madam Yip contended that the DC Decision was the “judgment”. The Petitioner contended that it was the CFA Decision.

Madam Yip’s case on the Issue

31.  Mr Lai for Madam Yip submitted that under the Policy, the cause of action for the Petitioner to claim the Debt from Madam Yip arouse on 16 September 2010 when the DC Decision was issued which was almost 9 years before the service of the SD. As such, the Petitioner was already debarred by virtue of section 4(1)(a) of the Limitation Ordinance.

32.  Mr Lai submitted that the effect of Clauses 5.6 and 3.1 of the Policy was that once a judgment found Madam Yip had committed a dishonest act, then pursuant to Clause 3.1 of the Policy Madam Yip was no longer entitled to any payment under the Policy and pursuant to Clause 5.6 of the Policy she would be under an obligation to pay back to the Petitioner any defence costs advanced to her.

33.  Mr Lai submitted that the Debt was no longer recoverable because the DC Decision constituted a “judgment” under Clause 3.1 of the Policy. Accordingly, the Petitioner’s entitlement to restitution arose on 16 September 2010. Given that the SD was only served to Madam Yip on 6 August 2019 exceeding the 6-year limitation period and was thus barred under section 4(1)(a) of the Limitation Ordinance, the Debt was no longer recoverable.

34.  Mr Lai distinguished “judgment” in Clause 3.1 from “final judgment after the exhaustion of all appeals” in Clause 2.13. He submitted that where the Policy simply used the word “judgment” (without reference to a judgment after the exhaustion of all appeals), it was plain that the word “judgment” means “a judgment” and not “a judgment after the exhaustion of all appeals”.

The Petitioner’s case on the Issue

35.  Mr Man for the Petitioner submitted that Clauses 1 and 5.6 of the Policy provided that the Petitioner should advance to Madam Yip the “defenses costs” which was defined to include the legal costs for appeal before the final resolution or disposition of the claim.

36.  Mr Man further submitted that the purpose and object of the Policy was to provide Madam Yip cover for all legal costs of any claim made against her including those resulting from appeal subject to the ceiling amount stipulated in the Policy. He submitted that the expression “before the final disposition of the claim” in Clause 5.6 and the expression “before its final resolution” in Clause 1 had to mean the final non-appealable conclusion of the legal proceedings, given that legal costs for appeals were covered by the Policy.

37.  Mr Man submitted that Clause 3.1 was an exclusion which provided that the Petitioner should not be liable to make any payment for “Loss” (which was defined to include “defense costs”) when it arose out of the dishonest or fraudulent act of Madam Yip and that such act was established through a judgment or any other final adjudication adverse to Madam Yip.

38.  He submitted that Clauses 1 and 5.6 were subject to Clause 3.1 and given the clear meaning of “final resolution” in Clause 1 and “final disposition” in Clause 5.6, there was no reason why the expression “any other final adjudication” in Clause 3.1 should be interpreted differently. He further submitted that the meaning of “any other final adjudication” coloured the word “judgment” in Clause 3.1, such that “judgment” should be interpreted to mean a “final judgment obtained after the appeal process is exhausted”. In the case before me it should be the CFA Decision.

Discussion and Ruling on the Issue

39.  In Re Leung Cherng Jiunn (debtor) [2016] 1 HKLRD 850, the Court of Appeal held in [27] of the judgment that the threshold test for establishing a bona fide dispute on a debt on substantial grounds to resist a bankruptcy petition would require a higher standard of proof when compared with the threshold test for showing a fair probability of establishing a bona fide defence for obtaining leave to defend a civil action in the context of an application for summary judgment under order 14 rule 3 of the Rules of the High Court (the “RHC”). Kawn JA further pointed out in [27(4)] of the judgment that:

“Notwithstanding this difference [in the threshold tests], it is fair to say that the threshold tests in both situations are broadly similar, as noted in the two recent English authorities. If a petition is dismissed on the basis there is a bona fide dispute on substantial grounds, it would be most unlikely that summary judgment could be obtained. Most probably, the defendant would be given leave to defend, whether unconditionally, or with conditions imposed if his defence is regarded as shadowy. Conversely, where a defendant has obtained leave to defend, unconditionally or with conditions, it would be most unlikely that a petition would be granted. See Markham v Karsten at [45]. The statements of Rogers J in ISC Computer at 183E – F did not suggest otherwise.”

40.  As Ng J pointed out in [11] of Re Soetrisno Farida [2019] HKCFI 2756:

“It is well-established that in order to successfully oppose a Petition, a debtor has to show a bona fide dispute to the debt on substantial grounds, by sufficiently precise evidence which is believable, and must establish that he actually has a defence of substance, not just a fair probability of one: Re Wong Lo Fung unrep, HCB 1864/2013, 29 August 2014 at [25] - [26].” (Original italic)

41.  In this case, the parties do not have much factual dispute. The Issue is a matter of contract construction.

42.  Mr Man submitted that in contract interpretation each suggested interpretation should be checked against the provisions of the contract and its commercial consequences should also be investigated. He referred to Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) 23 HKCFAR 487 when the Court of Final Appeal pointed out in [44] of the judgment that “where there are conflicting interpretations, account should be taken of the natural and ordinary meaning of the provision in question, the purpose of the contract and of the provision, other relevant provisions, the facts and circumstances known or assumed by the parties at the time that the contract was executed, the quality of the drafting of the instrument, and commercial common sense.”

43.  The whole purpose of the Policy was to provide insurance cover to the insured. Clause 1 of the Policy set out the insurance cover which was for the insurer to advance defence costs resulting from any claim before its final resolution. The provisions of the Policy have to be read in such context.

44.  The definition of “defense costs” included costs incurred for appeal of any claim and the cover was until “final resolution” of the claim, of course, subject to the ceiling coverage.

45.  Mr Lai tried to draw a distinction between “judgment” in Clause 3.1 and “final judgment after the exhaustion of all appeals” in Clause 2.13.

46.  Clause 3.1 referred to “judgment” or “any other final adjudication”. In Clause 3.1, “judgment” was one type of “final adjudication” and there were “other final adjudication”. Clause 2.13 defined the term “no liability” for the application of retention money provision. According to Clause 2.13, “no liability” under the Policy could only be determined by a judgment. As there are judgments at different levels of courts, Clause 2.13 had to specify that the relevant judgment was a “final judgment”. Whereas in Clause 3.1, the word “judgment” was used in the context as one type of “final adjudication”. It was not necessary to qualify the “judgment” by way of “final judgment” in Clause 3.1.

47.  Bearing in mind the cover of the Policy as set out in Clause 1 and taking into account the reference to “any other final adjudication” in the same Clause 3.1, the plain and obvious meaning of the word “judgment” in Clause 3.1 must be “judgment in the nature of final adjudication”. In the case before me, the judgment in the nature of final adjudication can only be the CFA Decision.

48.  I agree with Mr Man that it would be wholly unreasonable that an appealable, non-final “judgment” of the court would disentitled the insured from cover of the Policy pursuant to Clause 3.1, but an appealable, non-final “adjudication” would not trigger the exclusion under Clause 3.1. I have no doubt that the words “judgment, or any other final adjudication” have to be read together and interpreted in the context of the cover of the Policy.

49.  Mr Man rightly pointed out that the interpretation contended by Madam Yip would yield the commercially unreasonable and bizarre consequences that the defence costs would have to be paid and re-paid back and forth depending on different judicial rulings. Mr Man put forward the following illustration in [32] of his opening submissions:

“(1) Assume that an insured under the D&O Policy was convicted for fraud, and assume that he appeals and the appeal is pending:-

(a) He would have to repay the legal costs advanced by the insurer for the trial, by reason of the exclusion under Clause 3.1 and the 2^nd sentence of Clause 5.6.

(b) He would also not be entitled to the advancement of legal costs for the appeal, because the Clause 3.1 exclusion would render the insurer not liable to make any payment for the loss (defined to include “Defence costs”) of the insured, and the obligation to advance defence costs under Clause 1 is “subject to the terms and conditions of this policy”.

(2) However, assume that the appellate court later reverses the trial court’s decision and orders a re-trial, the insurer would have to refund the advancement repaid by the insured, pay the costs of the appeal incurred by the insured, and resume advancement for the re-trial.

(3) Assume that on re-trial, the insured is also found guilty but he once again appeals and the appeal is pending, the insured would not be entitled to advancement of defence costs for the 2^nd appeal, and would have to refund the defence costs advanced by the insurer for the 1^st trial, the 1^st appeal and the re-trial. But all these could be reversed again if the insured succeeds in his 2^nd appeal.” (Original underline and italic)

50.  Mr Man submitted that the aforesaid consequence resulting from Madam Yip’s construction was highly unattractive and could not have been intended by the parties. I agree.

51.  Mr Lai also recognized that under Clause 5.6 of the Policy, the Petitioner was under an obligation to fund Madam Yip’s “defense costs”, which was defined to include the costs of appeal, before the “final disposition of the claim”. Madam Yip’s construction (if accepted) would lead to a scenario when Madam Yip would be under an obligation to repay to the Petitioner the legal costs hitherto advanced to Madam Yip but the Petitioner would still be under an obligation to advance legal costs to Madam Yip insofar as the appeal was concerned.

52.  Mr Lai submitted that the aforesaid problem could be dealt with by reading an implied term into Clause 5.6 to exclude costs in relation to an outstanding appeal from the obligation of the insured to repay advance legal costs.

53.  Mr Man submitted that the aforesaid proposition of Mr Lai was without merits. He referred to Mark & Spencer plc v BNP Paribas Securities Services Trust Co-(Jersey) Limited [2016] AC 742 to submit that the test of implying a term was one of necessity, ie whether, without the implied term, the contract would lack commercial or practical coherence; or whether it was necessary to imply the term so as to make the contract work. Mr Man contended that the necessity test was not satisfied in this case as the Policy could perfectly work without the implied term proposed by Mr Lai. I again agree.

54.  Furthermore, the implied term suggested by Mr Lai still did not address the problems demonstrated by the illustration proposed by Mr Man. Mr Lai submitted that the problem illustrated by Mr Man did not need to happen in practice as the Petitioner could choose to recover funds already advanced to Madam Yip at first instance, whilst advancing additional funds for any further appeals.

55.  According to Mr Lai’s solution, if the cover under the Policy had not been exhausted, Madam Yip would have to repay the defence costs incurred in the District Court to the Petitioner and at the same time the Petitioner would have to fund Madam Yip’s costs for her appeal. Such interpretation was stated in [11] of Yip’s 1^st Affirmation as follows:

“I have been advised and verily believed that on the proper construction of the Indemnity Policy, once it is established through a judgment that I have committed a fraudulent or dishonest act, I shall be under an obligation to repay the relevant defence costs previously paid on my behalf by the Respondent. This is despite that the Respondent would still be under an obligation to fund the remainder of the defence costs in relation to any appeal (i.e. in the event that the coverage limit under the Indemnity Policy had not been exceeded yet).”

56.  Madam Yip’s suggested interpretation also did not address the payment problems anticipated by Mr Man, ie the defence costs having to be paid and repaid back-and-forth depending different judicial rulings. The interpretation contended by Madam Yip makes little commercial sense.

57.  Mr Lai further submitted that the practical problems suggested by Mr Man were further limited due to the coverage limit under the Policy as in the present case when the coverage limit of the Policy was already exceeded after the Action in the District Court and the Petitioner had no further obligation to fund Madam Yip’s appeal.

58.  Mr Man rightly pointed out that we were here construing the contractual provisions of the Policy generally based on the factual matrix prevailing at the time of the contract but not on ex post facto facts of this particular case. I agree with Mr Man that Mr Lai’s aforesaid contention was a bad argument.

59.  Mr Lai submitted that as a matter of commercial rationale, Madam Yip’s construction of the Policy would give the Petitioner more power and the flexibility to decide whether to claw back the funds advanced in relation to costs at first instance when there was a pending appeal. Mr Lai’s answer to the problem was based on speculation on the insurer’s attitude in handling its claw back rights under the Policy. A contract construction relying on speculation on a contractual party’s attitude is far from an acceptable construction.

60.  Mr Lai further submitted that the Petitioner’s interpretation would lead to the absurd consequence that legal costs advanced could never be recovered on the ground that any first instance judgment could potentially be appealed and there could always be appeals out of time and/or setting aside of a judgment due to fraud.

61.  Clause 2.13 provided that the judgment was final after the exhaustion of all appeals. Mr Man submitted that the appeal process should be regarded as exhausted when the party had not made an appeal within the procedurally stipulated timeframe, or when the relevant judgment was not appealable. I agree.

62.  Mr Lai also submitted that with the Petitioner’s construction of Clause 3.1 of the Policy, the Petitioner’s entitlement to recovery of legal costs advanced would depend on whether an appeal was taken out by either party, with the limitation period being varied accordingly. He contended that this militated against the certainty and commerciality of the Policy.

63.  I have some difficulties to follow the logic of the aforesaid submission of Mr Lai. As Mr Man rightly pointed out in [40(2)] of his opening submissions that: “There is nothing uncertain or uncommercial for the limitation period being varied according to whether an appeal was being taken out. There would be no difficulty to compute the date on which the limitation period expires according to different scenarios.” I reject Mr Lai’s aforesaid submission.

64.  There are no disputes that the SD had been served to Madam Yip personally on 6 August 2019. The SD expressly provided that:

“If you dispute the demand in whole or in part you should

• Contact the person or persons (or one of the persons) named in Part B immediately.

If you consider that you have grounds to have this notice set aside or if you do not receive a satisfactory written reply from the person or persons (or one of the persons) named in Part B before the expiration of 18 days after the service you should

• Apply without delay to the Court of First Instance to have the notice set aside.

Remember: You have only 21 days from the date of service on you of this document before the creditor may present a bankruptcy petition.”

65.  Madam Yip knew that if she disputed the Debt, she might apply to the court to set aside the SD. Madam Yip was legally represented at the material times as L&L had issued a letter dated 6 January 2020 to the Petitioner’s solicitors disputing the Debt with reference to the SD. In Yip’s 1^st Affirmation, Madam Yip referred to HCSD 1/2020 when her brother applied to set aside a statutory demand served on him by the Petitioner on similar debt incurred under the Policy ([40] of Yip’s 1^st Affirmation). If she had bona fide dispute to the Debt, she should have applied to set aside the SD latest by 24 August 2019 (ie 18 days after service of the SD on her). No such application had been made even after Madam Yip was aware of the Petition being issued against her. This is inconsistent with her assertions in [12(5)] of Yip’s 1^st Affirmation “that (a) there must be a bona fide dispute on substantial grounds in relation to the Alleged Debt and (b) the Statutory Demand is ineffective and must be set aside.” No explanation had been offered by Madam Yip for her non-action.

66.  For reasons set out above, I do not accept that there is a bona fide dispute in relation to the Debt relying on the limitation issue. The Merits Ground thus fails.

The Non-Disclosure Ground

67.  Madam Yip submitted that the Bankruptcy Order ought to be annulled as the Sub-Service Order was obtained through material non-disclosure.

68.  Madam Yip’s complaint was that the Petitioner had not disclosed to the court the following avenues of contact with Madam Yip when applying for the Sub-Service Order:

(1) Madam Yip was cooperative and engaged for personal service of the SD when she was contacted through the Leighton Hill Address; and

(2) Madam Yip could have been contacted by leaving voicemail message at her phone.

The Leighton Hill Address and the BEA Address

69.  Madam Yip’s case was that in or around July to August 2019, the Petitioner’s solicitors attempted to serve the SD to her at the Leighton Hill Address. The process server left a name card of the Petitioner’s solicitors at the management office of the Leighton Hill Address. She called the number on the name card and contacted the Petitioner’s solicitors to arrange for personal service of the SD to her on 6 August 2019 at Regent Centre. She told the process server (ie Mr Ho) that she could be contacted through the Leighton Hill Address. Madam Yip criticized the Petitioner for failing to disclose the above in the Sub-Service Affirmation. She contended that this was a material non-disclosure.

70.  The Petitioner’s case was that in the telephone conversation between Madam Yip and Mr Ho on 1 August 2020, Madam Yip had told Mr Ho that she did not live at the Leighton Hill Address. Madam Yip told Mr Ho that she was living in Clear Water Bay but she refused to provide her full residential address to Mr Ho. As such, there was no reason for the Petitioner to mention the Leighton Hill Address in the application for the Sub-Service Order.

71.  In the Sub-Service Affirmation, Mr Ho stated in [6] that he had a telephone conversation with Madam Yip on 19 November 2019 as follows:

“[Madam Yip] informed that she would be busy to accept personal service of the Documents [ie the Petition] as mentioned in Appointment Letter [dated 19 November 2019]. She said that she would call me later that day to arrange further appointment to accept personal service of the Documents. I also asked the Debtor was the address shown in the Bankruptcy Petition the valid address for service, the Debtor confirmed to me that the address shown in the Bankruptcy Petition was the valid address for service, I went on to ask the Debtor if she could let me know her residential address for the purpose of effecting personal service of the Documents, the Debtor did not say anything and then hung up.”

72.  On 21 November 2019, Mr Ho had another telephone conversation with Madam Yip. He reported this conversation in [7] of the Sub-Service Affirmation as follows:

“On the Thursday, the 21^st day of November 2019 at about 11:20 a.m., I received a phone call from the Debtor. The Debtor said that she would not be available to accept personal service of the Documents on the date, time and place as mentioned in the Appointment Letter [dated 19 November 2019]. She said that she would call me back for arranging further appointment. I went on to ask if she could receive my firm’s Appointment Letter dated 19^th November 2019, she did not say anything and then hung up the call.”

73.  The Petitioner’s case was that the BEA Address was Madam Yip’s address stated in the originating summons issued against her on 9 March 2018 in HCMP 303/2018 by China Construction Bank (Asia) Corporation Limited. Madam Yip was aware of the fact that the Petitioner was attempting to serve the Petition to her at the BEA Address. She did not tell Mr Ho that the BEA Address was not her service address. Instead she expressly confirmed to Mr Ho that the BEA Address was her address for service.

74.  Madam Yip denied that she had at the telephone conversation of 19 November 2019 confirmed that the BEA Address was a valid address for service to her ([23(1)] of Yip’s 1^st Affirmation). Madam Yip stated in [45] of Yip’s Affirmation that: “I have never once indicated that the BEA Address was the correct address for service” and “I would have never indicated that the BEA Address was the correct address for service.” However, it is also not her evidence that she had ever informed the Petitioner’s solicitors prior to the granting of the Bankruptcy Order that the BEA Address was not her address for service. According to evidence adduced before me, the first time Madam Yip took issue on the BEA Address not being her address for service was in L&L’s letter dated 23 June 2020.

Voicemail service of Madam Yip’s phone number

75.  Madam Yip further submitted that at all material times her mobile number had voicemail service. This was an alternative means of communication to contact her for service of the Petition and should have been disclosed to the court when the Petitioner applied for the Sub-Service Order. Madam Yip produced her mobile phone service application form to show that she had subscribed for voicemail service for the period from 2 July 2018 to 2 July 2020.

76.  The Petitioner’s case was that there was no voicemail function that Mr Ho could use to leave a message with Madam Yip. In [10] of Ho’s Affirmation, Mr Ho stated that:

“I also called [Madam Yip] on 2, 3 and 4 December 2019 to seek to arrange an appointment to effect personal service of the Bankruptcy Petition. However, all of those calls were transferred to an automatic answering system saying that “the number you have dialled was temporarily disconnected, please try again later”. There was no voice mail function that I could use to leave a message with [Madam Yip].”

77.  Mr Ho testified at the hearing that there was no voicemail service when he called Madam Yip’s phone number. It was also Mr Ho’s evidence that the work phone provided by the Petitioner’s solicitors to him did not have the function of sending text messages.

78.  Madam Yip’s evidence in this respect was set out in [16] of Yip’s 2^nd Affirmation as follows:

“I would only add that I have recently made specific inquiry with my service provider. They have confirmed that there was a voice mail function with my mobile number all along. There is now produced and [sic] me marked “YWF-12” a copy of the mobile phone service application form. It clearly states that the plan I signed up, which takes effect from 2 July 2018, includes voice mail service. The voice mail service was part of the plan which I cannot opt out of prematurely without paying compensation. At no point in time have I or the service provider ever stopped the voice mail service.”

79.  Mr Man submitted that the fact that Madam Yip had subscribed for the voicemail function did not mean that the function was set up at the material time.

Discussion and ruling on the Non-Disclosure Ground

80.  There are no disputes that an order for substituted service can be set aside due to material non-disclosure and such principle applies to bankruptcy proceedings. (See 胡少芬 v 葉玉枝 [2019] HKCFI 2329 and FWD Life Insurance Bermuda Ltd v 陳劍輝 (unrep, CACV 116/2012, 4 March 2014)) Two elements involved, namely (1) whether there was non-disclosure; and (2) whether the non-disclosure was material. After these two elements are satisfied, it is still at the discretion of the court whether to set aside the substituted service order.

81.  Mr Ho’s evidence was that Madam Yip’s mobile phone number did not have voicemail service. Madam Yip contended the otherwise. Whether Madam Yip’s mobile phone number had voicemail service is neither here nor there. Even if Madam Yip’s mobile phone number had voicemail service, it might not have been set up at the material times as suggested by Mr Man, the service might be out of order at the material times, or the voicemail box might be full at the material times. To constitute non-disclosure, Mr Ho would have to have the relevant knowledge first. Thus, the relevant question is whether Mr Ho had knowledge of such service available to Madam Yip’s mobile phone number?

82.  No evidence has been adduced before me to show that Mr Ho had such knowledge. It is not the case of Madam Yip that Mr Ho had previously left message to her in her voicemail box. Mr Ho had been attempting to contact Madam Yip by her phone number since 19 November 2019. (See [6] to [8] and [11] of the Sub-Service Affirmation.) If Mr Ho had access to the voicemail of Madam Yip’s mobile phone number, there was no reason why he did not leave any messages to Madam Yip on all these occasions. It simply defies common sense. I do not accept that it is fair to say that Mr Ho should have speculated that such voicemail service should be available to Madam Yip’s mobile phone number when the experience encountered by him was that there was no voicemail service when he called Madam Yip’s mobile phone number.

83.  I find that Madam Yip has failed to prove on balance of probabilities that Mr Ho had knowledge (whether actual or constructive) of Madam Yip’s mobile phone number having voicemail service. Without such knowledge, there was no basis for Madam Yip to accuse the Petitioner of non-disclosure of voicemail service of Madam Yip’s mobile phone number. I find Madam Yip fails on this complaint.

84.  There are no disputes that Madam Yip did not residing at the Leighton Hill Address at the material times. Madam Yip’s evidence was that she had informed Mr Ho at a telephone conversation prior to service of the SD to her that she did not reside at the Leighton Hill Address any longer but in Clear Water Bay instead ([20] of Yip’s 1^st Affirmation). As such, personal service of the Petition could not be effected to Madam Yip at the Leighton Hill Address without prior agreed arrangements with Madam Yip. There are also no disputes that service of the SD was effected on Madam Yip after message was left at the Leighton Hill Address and that such event had not been disclosed in the Sub-Service Affirmation. The issue is whether failure to include information on previous events on service of the SD in the Sub-Service Affirmation amounted to material non-disclosure for the purpose of setting aside the Sub-Service Order.

85.  Mr Lai referred to Wiseman v Wiseman [1953] P 79 to submit that there would be material non-disclosure if methods of communication which were reasonably obvious could have been and were not either used or brought to the knowledge of the court. In that case, the English Court of Appeal held that the failure of the applicant husband to disclose to the court when applying for leave to serve a divorce petition by substituted service, that all obvious and reasonable steps to bring to the knowledge of the respondent the existence of the divorce petition had not been taken, had resulted in the wife being deprived of her rights both to defend the petition and to appeal against the decree absolute, the court had jurisdiction to set aside all the proceedings and to remit the petition for rehearing.

86.  In Wiseman v Wiseman, the respondent wife had no knowledge or suspicion of the divorce proceedings until some months after the decree absolute was granted. In the case before me, the Petitioner’s solicitors were in direct communication with Madam Yip by phone and had given her actual notice of the Petition by informing her of the same over the phone during various telephone conversations between Mr Ho and Madam Yip held in November 2019 and by sending a copy of the Petition to L&L on 9 January 2020. Madam Yip had also been informed on 19 November 2019 of the hearing date for the January Hearing ([23(1)] of Yip’s 1^st Affirmation) which she chose not to attend. Madam Yip had not been deprived of her right to defend the Petition. She only chose not to defend. I do not see how Wiseman v Wiseman may assist Madam Yip.

87.  Mr Lai referred to the胡少芬case (supra) to submit that there was material non-disclosure where the applicant did not disclose an alternative address where service could have been effected. In the胡少芬case, the court found that the applicant ought to be aware of another address of the defendant at which service of the writ could be effected. The applicant also failed to inform the court that the applicant had been told by the occupants of the address stated in the writ that the defendant was not known to them. Furthermore, the applicant also did not tell the court that the applicant had previously successfully served the defendant in another action at yet another address. None of the aforesaid features applies to the case before me.

88.  It was not Madam’s Yip’s case that she could be served at the Leighton Hill Address. Putting Madam Yip’s case to the highest, the Leighton Hill Address was only an address where the Petitioner might leave messages to her and such messages could reach her. In this case, Mr Ho had already established a more direct contact with Madam Yip via her mobile phone and Mr Ho had disclosed such contact in the Sub-Service Affirmation. In the Sub-Service Affirmation, Mr Ho had also informed the court that he was told by the occupants of the BEA Address that they did not know Madam Yip. As such, the胡少芬case does not assist Madam Yip.

89.  Mr Lai referred to Re Sung Sze Yin Daniel [2019] HKCFI 2264 to submit that there was material non-disclosure when the applicant did not disclose the facts that (a) the bankrupt was not residing at the last known address stated in the bankruptcy petition, and (b) the existence of alternative means of service which the applicant could have tried before obtaining substituted service.

90.  In the Sung Sze Yin Daniel case, the applicant knew that the debtor was not residing at the address stated in the bankruptcy petition. The applicant had the new address, new mobile phone number and personal e-mail address of the debtor although such information had not been properly undated in the applicant’s corporate records. The applicant failed to disclose the aforesaid information to the court when the applicant applied for a substituted service order.

91.  The Sung Sze Yin Daniel case again does not assist Madam Yip as Madam Yip had not informed the Petitioner of her new address. Furthermore, in the Sub-Service Affirmation Mr Ho had informed the court that he had direct contact with Madam Yip via her mobile phone. Mr Ho also informed the court that when he attempted to serve the Petition to Madam Yip at the BEA Address on 4 and 8 November 2019, he found that the premises was occupied by a company named “SBC Financial Group”. Mr Ho further disclosed that the staff of SBC Financial Group had informed him that she had no idea who Madam Yip was and asked Mr Ho to leave if the person that he was looking for was not there ([3] and [4] of the Sub-Service Affirmation). Mr Ho did inform the court that he had been told that Madam Yip was not known to the occupants of the BEA Address. In the case before me, there was no non-disclosure as in the Sung Sze Yin Daniel case.

92.  The Leighton Hill Address was not an address where service of the Petition could be effected on Madam Yip. It was not another means of service but a contacting point only. Mr Ho had informed the court in [6] of the Sub-Service Affirmation that he had managed to contact Madam Yip directly via her mobile phone number on 19 November 2019. As pointed out above Madam Yip’s case was that the Leighton Hill Address was not her residential address where she could be found for service of the Petition. It was at most a point of contact. As Mr Ho had established direct contact with Madam Yip via her mobile phone number, whether Madam Yip could be contacted indirectly by leaving message at the Leighton Hill Address would not be of much significance.

93.  Mr Man submitted in [8(2)] of his closing submissions that:

“By instructing her solicitors [ie L&L] not to accept service on her behalf, Madam Yip was plainly evading service. Significant effort was made by the [Petitioner] in November 2020 [sic] to make an appointment with Madam Yip for personal service, but after an appointment was made over the phone Madam Yip backed out by alleging that “she was not feeling well”. There is little reason to believe that the position could be improved by contacting Madam Yip through the Leighton Hill Address (which was not her residence), or by leaving her messages in her voicemail box.”

94.  Mr Lai also referred to the陳劍輝 case (supra) to contend that there was material non-disclosure when the applicant did not disclose the ability to contact the bankrupt through email or phone. This case does not assist Madam Yip as Mr Ho had disclosed in the Sub-Service Affirmation that he could contact Madam Yip directly via her mobile phone number.

95.  Mr Lai also referred to YY v QY (unrep, FCMC 5263/2012, 11 December 2014) to submit that material non-disclosure would be found if the applicant did not disclose previous successful attempts at contacting the bankrupt. That case is against distinguished from the case before me as Mr Ho had disclosed previous successful contacts with Madam Yip via her mobile phone number.

96.  After considering all circumstances of this case as discussed above, I am of the view that failing to disclose the fact that Madam Yip had responded to the message left at the management office of the Leighton Hill Address did not amount to “material” non-disclosure.

97.  If the Petitioner did not wish to disclose the Leighton Hill Address to the court, the Petitioner would not have included the Leighton Hill Address in the SD. If Madam Yip had not told Mr Ho that she was not residing at the Leighton Hill Address, the Petitioner would not have taken out the Leighton Hill Address when issuing the Petition. In [6] of Ho’s Affirmation, Mr Ho stated that Madam Yip “agreed that the Leighton Hill Address should not be used for service of the Statutory Demand”. At the hearing, Mr Ho withdrew his aforesaid statement. This shows that Mr Ho had some misunderstandings in his communications with Madam Yip on service of documents to the Leighton Hill Address. The taking away of the Leighton Address in the Petition was consistent with such misunderstanding. Such misunderstanding also explained why Mr Ho did not mention the previous events in arranging service of the SD. As the Petitioner had reasons for not including the Leighton Hill Address in the Petition and not mentioning the previous events in arranging service of the SD in the Sub-Service Affirmation, I do not agree that such acts amount to non-disclosure for the purpose of a setting aside application.

98.  Service of originating process is to give notice of the legal proceedings to the defendant or respondent. A copy of the Petition had been provided to L&L, who confirmed by a letter dated 6 January 2020 that they acted for Madam Yip, by fax under cover of the Petitioner’s solicitors’ letter dated 9 January 2020. Madam Yip did not dispute that L&L was acting for her as at 9 January 2020. In fact, in L&L’s letter dated 10 January 2020, L&L advised the Petitioner’s solicitors that they would take instructions from Madam Yip. The heading of L&L’s said letter was “HCB 6783/2019”.

99.  Madam Yip did not dispute that she had actual notice of the Petition as well as the hearing date for the January Hearing. This shows that the alleged non-disclosure could not be “material” as no prejudice had been caused to Madam Yip. Madam Yip had actual notice of the Petition prior to the first hearing date of the Petition. In fact, she also had actual knowledge of the January Hearing being adjourned to 5 February 2020. The alleged non-disclosure in any event had not caused any injustice or unfairness to Madam Yip. As submitted by Mr Man in [8(2)] of his closing submissions: “There is little reason to believe that the position could be improved by contacting Madam Yip through the Leighton Hill Address (which was not her residence), or by leaving her messages in her voicemail box.” I shall not exercise my discretion to set aside the Sub-Service Order in the circumstances of this case especially when Madam Yip has failed the Merits Ground.

The Notice of Hearing Ground

100.  Madam Yip’s case is that she had knowledge of the hearing of the Petition scheduled for 8 January 2020. She was also told by L&L that hearing of the Petition had been adjourned to 5 February 2020. She was aware of the February hearing being further adjourned due to the General Adjourned Period arrangement caused by the Covid-19 pandemic. Madam Yip only takes issue on not receiving notice of hearing for 13 May 2020 (ie the May Hearing) when the Bankruptcy Order was granted. Madam Yip complained that the BEA Address stated in the Petition was not her address and not an address at which she could be contacted. Her case was that documents sent to the BEA Address would not come to her attention or notice.

101.  There are no disputes that Madam Yip had received the SD which stated both the Leighton Hill Address and the BEA Address as her addresses. A copy of the Petition was sent to L&L on 9 January 2020 who acted for Madam Yip until at least 24 January 2020 when L&L was still enquiring with the Petitioner’s solicitors on whether the Petition had been advertised. As such, Madam Yip was fully aware that only the BEA Address was stated as her address in the Petition. However, nowhere in Madam Yip’s evidence did she state that she or L&L had ever informed the Petitioner’s solicitors that the BEA Address was not her address for service.

102.  In such case, Madam Yip should know that all court documents relating to the Petition would be sent to the BEA Address which was her address for service on records in the court files. This was in fact what happened in this case. The Petition was sent to the BEA Address and the notice for the May Hearing was also sent to that address. If the BEA Address was not an appropriate service address for her, Madam Yip should have filed with the court a notice of address for service and served the same to the Petitioner, failing which, Madam Yip should expect that all communications from the court including notices of hearing would be sent to her at the BEA Address.

103.  Madam Yip complained that: “the Respondent’s solicitors must have known that I would be able to receive the notice of the hearing if they have sent the notification of the Petition hearing dates on 5 February 2020 and 13 May 2020 to me to the Leighton Hill address” ([16] of Yip’s 1^st Affirmation) and that: “they [ie the Petitioner’s solicitors] do know that they would be able to contact me on my mobile. It is unreasonable for them not to, at least, call or send me a message to inform me of the re-fixed hearing dates” ([38] of Yip’s 1^st Affirmation).

104.  Knowing that notices of hearing would be sent to her at the BEA Address, Madam Yip chose to keep the BEA Address as her service address on records in the court files, it lies ill in her mouth to complain that the Petitioner’s solicitors did not send notice of hearing to her at an address which was undisputedly not her residential address or notify her of the court hearings by phone or message which are not ordinary modes of service of notice permitted under the RHC. Knowing that her address for service on records in the court file was the BEA Address and doing nothing to rectify the records (if the same was incorrect), Madam Yip can only have herself to blame for not receiving the notice of hearing for the May Hearing.

105.  It is noted that Madam Yip did not attend the January Hearing despite her admission of having actual notice of that hearing. Mr Man pointed out that when cross-examined, Madam Yip put up no credible reason as to why she did not turn up in the January Hearing but would be eager to turn up in the May Hearing.

106.  In cross-examination, Madam Yip said that she was told by Ms Leung of L&L on 2 January 2020 that L&L would handle the January Hearing and thus she did not attend the January Hearing. Madam Yip’s evidence is contradicted by the correspondence exchanged between the Petitioner’s solicitors and L&L in early January 2020. In their fax letter attaching a copy of the Petition to L&L on 9 January 2020, the Petitioner’s solicitors asked L&L, inter alia, “if you could confirm that you have instructions to represent your client [ie Madam Yip] in respect of the Proceedings upon service of the Petition.” L&L relied by a letter dated 10 January 2020 that: “we will take client’s instructions and shall revert once we are in a position to do so. Up to present, we do not have instructions to accept service on behalf of Ms Yip Wan Fung.”

107.  I reject Madam Yip’s evidence and find that she fails to persuade me on balance of probabilities that she would attend the court hearing to dispute the Debt if she were given the opportunity to attend the court hearing ([40] of Yip’s 1^st Affirmation). She did have the opportunity to do so on 8 January 2020. The undisputed fact showed that she did not take up such opportunity.

108.  In the premise, I see no ground for annulling the Bankruptcy Order relying on Madam Yip not receiving the notice of hearing for the May Hearing.

Discretion of the court

109.  If the court does not think that ground(s) for annulling a bankruptcy order existed, it cannot invoke section 33(1)(a) of the Ordinance to annul the bankruptcy order. Even if Madam Yip has proved ground(s) for annulling the Bankruptcy Order, the court still has discretion not to annul the same after considering the interests of the creditor, the debtor and the public bearing in mind that a bankruptcy order is to be annulled only under exceptional circumstances. (See the Kam Hung Cheung case (supra)).

110.  Madam Yip has failed to prove that there were ground(s) to annul the Bankruptcy Order. The Application can be disposed of on that basis.

111.  Furthermore, Madam Yip has adduced no evidence to show that she has the financial abilities to pay the Debt. If the Sub-Service Order is set aside and the Bankruptcy Order is annulled, the Petitioner may simply serve the Petition on Madam Yip again. Given my finding against Madam Yip on the Merits Ground, a bankruptcy order against Madam Li is inevitable.

112.  In the Kam Hung Cheung case (supra), the Court of Appeal stated in para 37 of the judgment that:

“As the English Court of Appeal pointed out in Owo-Samson v Barclays Bank Plc [2003] BPIR 1371, Askew v Peter Dominic [1997] BPIR 163 and Artman v Artman [1996] BPIR 511, the question for the court is: even if the bankruptcy order is annulled, will the debtor be declared bankrupt again? If in the court’s view there is evidence showing that this is unavoidable, the court may exercise its discretion to refuse to annul the bankruptcy order.”

113.  In the circumstances of this case, there is no point for this court to annul the Bankruptcy Order only to require the Petitioner to incur further costs to serve the Petition on Madam Yip again which serves no purpose for justice.

Other matters

114.  In Yip’s 1^st Affirmation, Madam Yip took issue in [14] on no privity of contract between the Petitioner and her. Mr Man submitted that by requesting and receiving the legal costs from the Petitioner in accordance with the Policy, Madam Yip had agreed to be bound by its terms. I agree. Since Mr Lai did not pursue this issue at the hearing, I do not propose to deal with this issue further.

115.  Mr Man informed me that Madam Yip’s brother had previously applied to set aside a statutory demand served to him by the Petitioner in respect of a debt arising out of similar circumstances under the Policy. This should be HCSD 1/2020 referred to in [40] of Yip’s 1^st Affirmation. Mr Man said that in that case, Madam Yip’s brother advanced arguments similar to the Merits Grounds but the arguments were rejected by the learned judge and the setting aside application in that case was dismissed by the court. Mr Man submitted that the court’s decision in that case was binding on me. However, Mr Man was unable to produce the court’s judgment in that case to me as the Petitioner had not been granted leave to cite that decision in open court. As such, the ratio decidendi of that case is unknown to me and I have no basis to accept Mr Man’s aforesaid submissions.

116.  Mr Lai submitted that if the Bankruptcy Order was annulled, the Petitioner had to issue a fresh petition to serve on Madam Yip and the Petitioner would be time barred to issue such fresh petition relying on the Debt even if time started to run from the CFA Decision. With respect, I do not agree. If the Bankruptcy Order is annulled, it will not be necessary for the Petitioner to issue a fresh petition. What will happen is that the Petitioner will have to serve the Petition on Madam Yip again. The Petition was issued within the limitation period counting from the CFA Decision. No issue of limitation will arise.

117.  Madam Yip has to not only annul the Bankruptcy Order but also successfully resist the Petition before the limitation issue for claiming the Debt will arise again. Mr Man informed me that the Petitioner had in fact issued a protective writ in HCA 177/2020 on 6 March 2020 (the “Writ”) and the validity of the same had been extended to 5 September 2022.

118.  As this issue had not previously been taken by the parties, I granted leave at the hearing of 19 August 2021 for the Petitioner to file and serve an affidavit/affirmation to produce a copy of the Writ with leave for the parties to lodge further submissions in respect of the Writ and its renewal. The Petitioner filed the affirmation of Chow Hin Chung on 24 August 2021 exhibiting the Writ. L&L, by their letter dated 3 September 2021, confirmed that Madam Yip had no further submissions to make in respect of the Writ and its renewal.

119.  For reasons set out above, I do not have to consider matters relating to issuance of the Writ and its renewal in disposing of the Application. As such, I say nothing on the Writ and its renewal.

Conclusion and costs

120.  For reasons set out above, I dismiss the Application.

121.  The Petitioner and the Official Receiver & Provisional Trustee (the “OR”) shall have their costs for the Application. If the costs are to be paid from the estate of Madam Yip, it will be the creditors (including the Petitioner) who will bear the costs of the Application. I see no reasons why Madam Yip’s creditors shall bear the costs incurred by the Petitioner and the OR for this futile application of Madam Yip. Such costs shall be borne personally by Madam Yip.

122.  As such, I make a costs order nisi that the costs of the Petitioner for the Application shall be paid by Madam Yip personally to be taxed if not agreed. Such costs to be paid after the unsecured creditors of Madam Yip have been fully repaid or upon the discharge of Madam Yip from bankruptcy whichever the earlier.

123.  As the costs of the OR for the Application are also part of the costs incurred by the OR in the administration of Madam Yip’s estate, such costs shall initially be paid out from the estate of Madam Yip but Madam Yip shall reimburse her estate for such costs after all her unsecured creditors have been fully repaid or upon her discharge from bankruptcy whichever the earlier. I make another costs order nisi to such effect.

124.  The aforesaid costs orders nisi shall become absolute after 14 days from the date of this judgment unless application is received from either party to vary the same within this 14-day period.