RE JORA SISI OMAR

HCB 8127/2016

[2023] HKCFI 1668

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 8127 OF 2016

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BETWEEN

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D E C I S I O N

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A. INTRODUCTION

1.  This is an application by the Bankrupt to reverse or modify the decision of the Official Receiver and Trustee in Bankruptcy (“ORT”) refusing to consent to the Bankrupt’s continuation of an action. The background is as follows.

2.  The Bankrupt’s late father (“Father”), who was a civil servant, was a registered member of the United Co-Operative Building Society Ltd (“the Society”), having the right to exclusive possession of a property known as 3/F, 170 Sai Wan Ho Street, Hong Kong (“the Property”) in his lifetime. In law, ownership of the Property was vested in the Society, who was the lessor and the Father the lessee. According to by-laws of the Co-operative Societies Ordinance, Cap 33, nominations may be made to pass on the membership to “a beneficial successor”, being a spouse or descendant of the Father and living with him at the time of his death. The Society has since been dissolved in March 1998 and the Property has to be distributed.

3.  There were 2 nominations purporting to pass membership or ownership of the Property. The first one was made by the Father in 1960 to nominate Madam Harmidar Ng Yuk Omar (“Madam Ng”), and Madam Ng was purportedly registered as a member after the death of Father in 1977. The next one was made by Madam Ng in 1979 to nominate Ms Jora Harmidar Omar (“JHO”). Madam Ng passed away in 1988.

4.  On 26 July 2011, the Bankrupt commenced an action in HCAP 19/2011 against JHO (“Probate Action”). The Bankrupt claimed that both nominations were invalid because the by-laws were not met:

(1) The Islamic marriage celebrated between the Father and Madam Ng on 19 April 1944, as claimed by JHO, was invalid; and

(2) The adoption of JHO by the Father and Madam Ng in 1960 was invalid as well.

She sought declarations accordingly in the Probate Action.

5.  The Bankrupt also claimed that in 1954, the Father and one Madam Wong celebrated a modern Chinese marriage in Hong Kong. The Bankrupt and her 2 siblings were born out of that marriage. She sought an order that she be granted letters of administration of the estate of the Father and a declaration that the 3 natural children born of the Father and Madam Wong are legitimate and entitled to succeed to the estate of the Deceased, which should consist of the Property.

6.  JHO denied the Bankrupt’s claim. JHO disputed, amongst others, the Bankrupt’s status to challenge the Islamic marriage and the adoption; asserted that JHO was the sole successor and heir to Madam Ng’s estate and alleged that the Bankrupt and her siblings were born out of the extra-marital affair of the Father and Madam Wong. JHO counterclaimed for revocation of the licence to the Bankrupt to occupy the Property, delivery of vacant possession and mesne profits.

7.  The Bankrupt disputes JHO’s case, claiming that it was a combination of fraud, concealment and mistake.

8.  The Bankrupt had been on legal aid in the Probate Action since 2014 but the legal aid certificate was discharged on 11 December 2019. The Reasons for Refusal were given on 21 February 2020 (“the Reasons for Refusal”) which, in turn, was based on counsel’s advice dated 4 July 2019 (“2019 Advice”). The Bankrupt’s appeal against the discharge to the Registrar of the High Court was dismissed on 14 August 2020.

9.  Meanwhile, upon a creditor’s petition presented by JHO, a bankruptcy order was made against the Bankrupt on 9 September 2019 (“the Bankruptcy Order”). The petitioning debt was founded on an order for costs against the Bankrupt in the Probate Action. Pursuant to the order of Registrar Kwang dated 20 January 2020, ORT became the trustee of the property of the Bankrupt.

10.  As the Probate Action involved a claim relating to the Bankrupt’s property, the cause of action became vested in the ORT on the making of the Bankruptcy Order by operation of section 58 of the Bankruptcy Ordinance, Cap 6 (“BO”).

11.  There were 2 relevant decisions of the ORT, ie (i) refusal to give consent or to assign the right of action for the Bankrupt to continue the Probate Action; and (ii) consent under section 12(1) BO that leave be granted to JHO to apply for striking out of the pleadings of the Bankrupt in the Probate Action and to proceed with the counterclaim (collectively, “the ORT Decisions”). The Decisions had been conveyed to the Bankrupt and the Court on various dates.

12.  On 26 August 2022, upon the application of JHO with leave of the Court, Master J Wong granted an order striking out the Bankrupt’s pleadings in the Probate Action and entered judgment on the counterclaim (“Master J Wong’s Decision”).

13.  On 18 November 2022, the Bankrupt took out the present summons seeking to reverse or modify the ORT’s decision under section 83 of the BO. Although the ORT’s decision was not specified in the summons, it was clear during the Bankrupt’s submission that she felt aggrieved by both of the ORT Decisions.

14.  The intention of the summons is to enable the Bankrupt to appeal against Master J Wong’s Decision and carry on with the Probate Action.

B. LEGAL PRINCIPLES

15.  Section 83 BO provides that:

“If the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the trustee, he may apply to the court, and the court may confirm, reverse or modify the act or decision complained of, and make such order in the premises as it thinks just.”

16.  The Bankrupt submits that she has a meritorious case in the Probate Action. Subsequent to this hearing, she lodged and served (with my permission) the pleadings in the Probate Action and the 2019 Advice.

17.  She claimed that counsel had “knowingly contradicted” his earlier advice dated 24 December 2013 given to the DLA (“the 2013 Advice”) and his previous submission for an interlocutory hearing on 1 June 2016 “to demerit” the Bankrupt’s case. She submitted that the 2019 Advice was a “fake” and “concocted” advice.

18.  On the other hand, the ORT submits that the Bankrupt does not have locus standi to apply for relief under section 83 BO. Even if she does, the ORT Decisions were not perverse or clearly wrong or utterly unreasonable and absurd that no reasonable trustee would so act.

C. LACK OF LOCUS STANDI

19.  A bankrupt cannot be regarded as a person aggrieved by an act or decision of the trustee unless he can show that he would be entitled to a surplus but for the trustee’s act or decision: Re a Debtor, ex parte The Debtor v Dodwell (The Trustee) [1949] 1 Ch 236, 240-241, Harman J:

“… The point, of course, can only arise where the bankrupt can show that there is, or will, or might (but for the trustee’s action or inaction), be a surplus in the trustee’s hands after satisfying in full all the claims of the creditors. Where, as in the vast majority of cases, the estate is insolvent, the bankrupt has clearly no interest in it, and it matters not to him how it is administered, but the bankrupt has a statutory right to any surplus under s. 69 of the Act, and is, therefore, clearly concerned to increase, if he can, its amount. …”

20.  In this case, the Bankrupt’s estate is insolvent. The Bankrupt is unemployed and has been unable to make any contribution to the estate.

21.  On the bases of the pleadings in the Probate Action, Reasons for Refusal and dismissal of the appeal to the Registrar, ORT considered that the Bankrupt has failed to show that she would be entitled to succeed in the Probate Action and hence entitled to a surplus but for the ORT Decisions.

22.  Accordingly, I agree with the ORT that the Bankrupt lacks locus standi to seek relief under section 83 BO. On this ground alone, the summons ought to be dismissed.

D. DECISIONS NOT PERVERSE, WRONG, UNREASONABLE OR ABSURD

D1. Legal principles

23.  In Re Ho Suet Hung (A Bankrupt) [2021] HKCU 6232, [2022] 1 HKLRD 233, [2021] HKCFI 3836, §17, Linda Chan J held:

“It is well established that in considering an appeal against any act or decision of the trustee under s.83 of the BO, the Court would only interfere if it is shown that the trustee’s act or decision was perverse or clearly wrong (Re Tyndall (1977) 30 FLR 6, at 10) or was utterly unreasonable and absurd that no reasonable trustee would so act (Re Chew Kean Kor [1957] 23 MLJ 34, following Sear v Lawson (1880) 15 ChD 426; Re Chung Kau [2004] 1 HKLRD C3, HCB 581/2003, 5 February 2004, at §13, per DHCJ Poon (as he then was)).”

24.  The jurisdiction under section 83 BO has to be cautiously exercised: Wan Po Jun Mary Pauline v Au Yeung Yee Man, unreported, HCB 144/2011, 3 May 2013, §8, To J.

25.  It has always been the stance of the ORT that (i) unless the case is meritorious or (ii) there is sufficient funding or indemnity to cover the costs which may be incurred, the ORT will not give consent or assign the right to commence or continue an action to a bankrupt. The stance in (ii) is supported by the decision of the Appeal Committee of the Court of Final Appeal in Dr Vincent Kay Lo Ip v Dr Andrew Kee Suan Koh [2001] HKCU 356, FAMV 8/2001, 24 April 2001.

D2. Merits of the Probate Action

26.  The ORT’s view as set out in §21 above is repeated. I find that to be a reasonable conclusion in view of the materials then placed before the ORT.

27.  The Bankrupt disagrees. She informs this Court that the 2019 Advice gave a view on merits of the claim completely different to that expressed by the same counsel in the 2013 Advice. She went at length in criticizing the 2019 Advice for its wrong conclusions.

28.  I have read both Advices. As they contain analyses of the merits of the Probate Action, which may touch on questions of privilege, I shall not set out the contents of the Advices.

29.  However, for the following reasons, I do not think the existence of the 2019 Advice would change my conclusion:

(1) There is no dispute that the 2019 Advice was not given to the ORT before she made the Decisions. Even if the 2019 Advice were entirely wrong, it could not be used to assess the correctness of the ORT’s Decisions.

(2) The 2019 Advice was prepared after the pleadings on both sides had been substantially amended. (The amendments to the Bankrupt’s pleadings were made pursuant to the 2013 Advice.) It was not surprising that the 2019 Advice was substantially different from the 2013 Advice.

(3) The 2013 Advice and 2019 Advice were prepared for different purposes. The 2013 Advice was to decide whether or not legal aid should be granted (i) to appeal against a decision dated 25 March 2013 under Order 14 and Order 14A; and (ii) to continue the Probate Action itself. Whilst recommending legal aid to continue, that Advice (at §55) expressly stated that further legal aid should be considered upon reassessment of the merits of the claim after a certain stage. On the other hand, the 2019 Advice was to assess the merits of the claim, after the pleadings were substantially amended, with the discovery and expert evidence available, to decide if legal aid should continue. The 2019 Advice analyzed all possible issues raised on the pleadings.

(4) The Director of Legal Aid and the Registrar on appeal had considered the 2019 Advice and the Bankrupt is bound by their decisions that assessed the merits.

(5) Even if I am to re-assess the merits of the claim, I would have come to the same conclusion as the DLA and ORT.

D3. Lack of funding

30.  The bankruptcy estate barely has funds. As of the date of the ORT’s Report dated 30 January 2023, the only asset recovered was a bank balance of HK$8.51. Only one proof of debt claiming a sum of HK$97,560 by Working Family and Student Financial Assistance was filed. The Petitioner has not filed a proof of debt yet. The Bankrupt is unemployed. Legal aid was discharged. There was and is thus lack of sufficient funding or indemnity to the ORT to cover the costs of the Probate Action.

31.  In summary, I am of the view that the ORT’s conclusion on the merits of the claim and lack of funding could not be said to be perverse, clearly wrong, utterly unreasonable or absurd.

E. CONCLUSION

32.  The Bankrupt has failed to prove that she has locus standi to apply for relief under section 83 BO or that the Decisions were perverse, clearly wrong, utterly unreasonable and absurd that no reasonable trustee would so act. Accordingly, the Decisions should be upheld and the summons is dismissed.

33.  Costs of the summons should, on a nisi basis, be to the ORT, summarily assessed and allowed at $32,500.

34.  I thank Ms Chan for her assistance.