DAVID C. BUXBAUM v. SAMUEL-ROZENBAUM HK LTD

CACV141/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 141 OF 2005

(ON APPEAL FROM HCB 7637 OF 2004 )

______________________

------------------------------------

REASONS FOR JUDGMENT

-------------------------------------

Hon.  Rogers V-P:

1.  I agree with the reasons for judgment of Yuen JA.

Hon. Le Pichon JA:

2. I agree with the Reasons given by Yuen JA.

Hon Yuen JA:

3.  This was an appeal by Mr Buxbaum ("the debtor") from an  order made by Kwan J on 12 April 2005 in which he was adjudicated bankrupt on a petition presented by Samuel-Rozenbaum HK Ltd ("the petitioner") and the Official Receiver was constituted receiver of his estate.

4.  At the conclusion of the hearing of this appeal on 3 May 2006, we dismissed the appeal and indicated that the reasons for dismissal would be reduced to writing and handed down.  My reasons are as follows.

Issue

5.  Before the judge, the debtor had raised a number of arguments but   on appeal, the sole issue addressed was "whether ... the petitioner gave the debtor notice of the pending proceedings pursuant to the requirements of law".

Background

6.  Before I consider the debtor's arguments, it may be helpful to refer briefly to the background of the matter. 

7.  The debtor is an American lawyer.  He was a partner of a firm of American lawyers by the name of Brand Farrar Buxbaum LLP ("BFB") which had rendered legal services to clients whom the firm had thought were "Samuel-Rozenbaum Diamond Ltd" and "Samuel- Rozenbaum Diamond (1992) Ltd".

8.  BFB issued proceedings in HCA 5191/1998 against "Samuel- Rozenbaum Diamond Ltd" and "Samuel-Rozenbaum Diamond (1992) Ltd" for unpaid fees. 

9.  BFB obtained default judgment against "Samuel-Rozenbaum Diamond Ltd" and "Samuel-Rozenbaum Diamond (1992) Ltd" in 2000.

10.  BFB sought to levy execution by causing certain diamonds to be seized in Hong Kong in 2002.  The diamonds were claimed by the petitioner and interpleader proceedings were commenced.  It was later conceded by BFB that the diamonds belonged to the petitioner and various costs orders were made against BFB.  BFB's net costs liability to the petitioner came to nearly $800,000.

11.  The petitioner then sought to levy execution on the costs orders by presenting bankruptcy proceedings against the debtor.  This   involved of course the service of a statutory demand followed by a petition.  It is in this regard that this appeal has been brought.  The debtor says that the judge was wrong to have found that he had been served with these documents.

Hearing before the judge

12.  At the hearing before the judge, the debtor gave oral evidence, as    did Mr Yuen Man Yung and Ms Yuen Yin Wah, who were the process servers for the statutory demand and the bankruptcy petition respectively.  They were cross-examined. 

Judge's findings

13.  In respect of service of the statutory demand, the judge found that after a previous unsuccessful attempt to serve the debtor, Mr Yuen had at about 7:50 pm on 2 July 2004 (Friday) approached the debtor after he left the Ohel Leah Synagogue ("the Synagogue") and   offered the statutory demand to the debtor, saying to him in English "Mr Buxbaum, this is a statutory demand for you".  He held the document against the debtor's chest but the debtor did not take it    and continued to walk away.  Eventually the document dropped to  the ground and the debtor kicked it away.

14.  A week later, the petitioner's solicitors wrote to the debtor's solicitors in the High Court Action informing them of the date, time and place of service and enclosing a copy of the statutory demand.       

15.  In respect of service of the petition, the judge found that Ms Yuen  had at about 7:38 pm on 13 August 2004 (also a Friday) approached the debtor after he left the Synagogue and offered the petition to the debtor, saying to him in English "Mr Buxbaum, this is a bankruptcy petition for you".  She held the document against the debtor's chest but the debtor did not take it and continued to walk away.    Eventually the document dropped to the ground.

16.  The next day, the petitioner's solicitors wrote to the debtor's solicitors in the High Court Action informing them of the date, time and place of service and enclosing a copy of the petition.

17.  The judge was satisfied that the petitioner had "done all that was reasonable for the purposes of bringing the statutory demand to the debtor's attention, by effecting service of this document on the  debtor on 2 July 2004 in the manner as described by the process servers and by writing to the debtor's solicitors on 9 July 2004"  (para. 33).  In respect of service of the petition, the judge was also satisfied that Ms Yuen "had told the debtor of the nature of the document she wished to serve on him, that the debtor had refused to accept service, and that she had left it as nearly in his possession or control as she could" (para. 34).

Appeal

(1) Judge's findings not to be interfered with

18.  The first argument raised by the debtor was essentially that the    judge was wrong to prefer the evidence of the process servers to his evidence.  He argued that although the judge was prepared to make certain inferences in favour of the process servers, she had not made the same type of inference in favour of himself.

19.  An appellate court should be very slow to interfere with findings of fact.  As Lord Hoffmann said in Biogen Inc v Medeva plc [1997]  RPC 1 and repeated in Piglowska v Piglowski [1999] 1 WLR 1360:

“The need for appellate caution in reversing the trial judge's evaluation   of the facts is based upon much more solid grounds than professional courtesy.  It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impressions which was made upon him by the primary evidence.  His

expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance .... of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation”.  (Emphasis added).         

To this, Bokhary PJ added in Ting Kwok Keung v Tam Dick Yuen  [2002] 1 HKC 601:  

“Where the judgment turns on an issue of fact, the Court of Appeal must have regard to the nature of that issue of fact.  And it must have regard to the advantages enjoyed by a trial judge who received the evidence on

such an issue at first-hand, in other words, in whose presence the whole

of the evidence unfolded in its living state.  Such advantages can be, as Lord Shaw of Dunfermline put it in Clarke v Edinburgh Tramways at p.36, ‘sometimes broad and sometimes subtle'.  The question for the Court of Appeal is whether, even though it does not enjoy the    advantages enjoyed by the trial judge who received the evidence at first- hand, it is nevertheless satisfied that his conclusion on the facts is

 plainly wrong.  The Court of Appeal should intervene if so satisfied.  But if not so satisfied, the Court of Appeal should defer to the trial judge's conclusion even if in some doubt as to its correctness”.  (Emphasis added).  

20.  In my view, that the judge was prepared to draw certain inferences from the evidence and not others does not show that her conclusion on the facts was plainly wrong.

(2) Nature of certain individuals irrelevant to issue

21.  The debtor's second argument was that the judge did not take into consideration the nature of "Samuel-Rozenbaum Diamond Ltd" and the petitioner, who the debtor has described as "perjurers, defamers and attempted extortionists".  The debtor has referred this court to passages in judgments in legal proceedings in which the court has been critical of certain individuals associated with "Samuel- Rozenbaum Diamond Ltd" and the petitioner.

22.  However the fact of the matter is that the debtor does not dispute his liability to the petitioner.  As the petitioner is a separate legal entity and the court has not been asked to lift the corporate veil, it is  difficult to see how the conduct of individuals (whether acting for themselves or for other entities) is relevant to the issue on this appeal.

(3) Compliance with r.46(2) Bankruptcy Rules

23.  The debtor's third argument was that in effecting service as I have  described in paras 13-14, the petitioner had failed to comply with  rule 46(2) Bankruptcy Rules which is to "do all that is reasonable    for the purpose of bringing the statutory demand to the debtor's attention". 

24.  The debtor says that as he is known to the petitioner to be a person    of the Jewish faith and as the process server's acts occurred on the Sabbath, the petitioner knew or should have known that he could    not accept the document as persons of the Jewish faith were prohibited by their religion from carrying anything on the Sabbath.

25.  I would pause first to consider the purpose of rule 46(2).  It is obviously to make the debtor aware that a creditor was making a statutory demand on him, so that the debtor could decide e.g.  whether to comply with the demand for payment, or to apply to    court to set it aside. 

26.  The focus of the rule is expressly on "bringing the statutory demand to the debtor's attention".  There is nothing in the rules that makes acceptance or physical receipt of the document by the debtor a condition to the validity of the process. 

27.  So the question is whether the statutory demand had been   adequately brought to the debtor's attention.  On the judge's   findings of fact, the process server had told the debtor that he had a statutory demand for him and he had held the document out to him.   It is not suggested by the debtor that he did not know what a   statutory demand was.  As for the contents of the statutory demand, they were made known to him when the petitioner's solicitors sent a letter to his solicitors shortly thereafter, enclosing a copy. 

28.  Even though the debtor said he had not instructed those solicitors    for the purpose of the bankruptcy proceedings, he had obviously received the petitioner's solicitors' letter, as a copy of this letter was enclosed in a letter dated 27 July 2004 from Rabbi Zadok of the Synagogue to the Law Society complaining about service of legal documents on the debtor on the Sabbath.  This also shows that the debtor's allegation in para. 34 of his skeleton argument that before the bankruptcy order, he "knew nothing of their contents, had no knowledge of any return dates, etc" is incorrect.

29.  So the result is that the statutory demand had been brought to the debtor's attention.  No question has been raised on computation of time. 

30.  I pause here to record that the debtor has also argued that the judge should have permitted him to adduce the evidence of Rabbi Mordechai Avtzon given on affirmation made on 7 April 2005 and filed on 9 April 2005, shortly before the hearing before the judge on 12 April 2005. 

31.  Previously the debtor had relied on the letter of Rabbi Zadok and another letter from Rabbi Avtzon exhibited to his affirmation.    These letters did not state that persons of the Jewish faith were prohibited from carrying any documents on their person, as alleged by the debtor.  Rabbi Zadok's letter of complaint to the Law Society dated 27 July 2004 said only that a person of the Jewish faith is "prohibited for [sic] carrying, transmitting business of the like, on  the Sabbath ..."  Rabbi Avtzon's letter  of complaint to the Law Society dated 3 August 2004 said only that a Jewish person "is prohibited from conducting any type of work related matters on that day [the Sabbath]".

32.  The debtor's application before the judge was to adduce the affirmation from Rabbi Avtzon which went further than those   letters. 

33.  The judge, in the exercise of her discretion, refused leave to accept that affirmation.  That is an exercise of the judge's discretion and generally an appellate court does not interfere unless it is shown that in the exercise of that discretion, an error of principle has been committed.  None has been shown.

34.  But in any event, there is nothing in the rules that requires   acceptance of the document by the person being served.  Even if Rabbi Avtzon's affirmation had been accepted in support of the assertion that the debtor's faith prohibited him from receiving the document on the Sabbath, the process server had informed the   debtor at the time of the nature of the document he was trying to    give him and the debtor was shortly thereafter made aware of the contents of the document from the copy sent by the petitioner's solicitors.

35.  Therefore, although the process server's acts on the Sabbath may have been disrespectful or insensitive, there can be no doubt but that the statutory demand had been brought to the debtor's attention and the purpose of rule 46(2) was met.

36.  As for service of the petition, rule 59 Bankruptcy Rules requires   only its delivery to the debtor.  The debtor has not advanced any specific arguments on service of this document in his skeleton argument. 

(4)     No effect on religious freedom

37.  I then come to the debtor's fourth argument, which is based on    Order 65 rule 10 of the Rules of the High Court which provides that no process shall be served or executed within the jurisdiction on a Sunday except, in case of urgency, with the leave of the court.  The debtor argues that if a person of the Jewish religion is forced to  accept legal documents on the Jewish Sabbath, then the rights to manifest one's religion in public would be circumscribed, contrary   to the International Covenant on Civil and Political Rights and the Hong Kong Bill of Rights, and would amount to discrimination.

38.  In my view, there is nothing in Order 65 rule 10 that indicates that   the rule was enacted for or has the effect of favouring Christians (such that Jewish persons are discriminated against by not having a similar rule for the Sabbath).  Order 65 rule 10 applies to all persons in Hong Kong, whether they be Christian, Jewish, Buddhist, Taoist, agnostic or atheist, and it applies to all litigants: plaintiffs or defendants, appellants or respondents, individuals or corporate entities.  I do not see any discrimination or effect on the right of Jewish persons to practise their religion.  Whether there has been proper service in each case of course depends on the facts of the individual case.

Order

39.  For these reasons, I dismissed the appeal with costs to follow the event.