LEE CHUN WAH, BEN v. KWAN SHIU FAI, FELIX

HCSD 5/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO. 5 OF 2004

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J U D G M E N T

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1. The Applicant was the defendant in High Court Action no. 3148 of 2003.

2. He did not file any notice of intention to defend and judgment in default for the sum of $845,408.90 was entered against him on 5 January 2004. He did not make payment and the Plaintiff in that action served a statutory demand on him on 8 January 2004. He made an application to set aside the statutory demand on 21 January 2004.

3. He said in an affirmation filed on 18 February 2004 that he would apply to set aside the judgment in default in the said High Court Action. However, nothing has been done so far. In fact, the hearing of his application to set aside the statutory demand has been fixed on 30 September 2004. On 14 July 2004, he filed a notice to act in person, thereby dispensing his legal representation.

4. The Respondent, on 21 July 2004, issued a summons seeking to strike out the application to set aside the statutory demand for reasons that the application discloses no reasonable cause of action, is scandalous, frivolous or vexatious or that it prejudices, embarrasses or delays the fair trial of the application or is an abuse of process.

5. In Re Maydwell exparte WFM Motors PTY Limited [1999] 3 HKLRD 325, Le Pichon J (as she then was) in page 334 quoted from Practice Note (Ch D) (Bankruptcy: Statutory Demand: Setting Aside) (No. 1/87) [1987] 1 WLR "Where the statutory demand is based on a judgment or order, the court will not at this stage go behind the judgment or order and inquire into the validity of the debt nor, as a general rule, will it adjourn the application to await the result of an application to set aside the judgment or order." The learned judge said that that practice was obviously sound and ought to be followed.

6. This principle was also followed in Sin Wai Ping and International Bank of Asia Limited, HCSD 27/2002, a judgment of Madam Justice Chu. The learned judge referred to the judgment of Re Maydwell and said that this Court should not in an application to set aside a statutory demand go behind the judgment on which the demand was based, because in an application to set aside a statutory demand, this Court has no right to interfere with or set aside the original judgment, and that in dealing with an application to set aside a statutory demand, this Court is not exercising an appellate jurisdiction. Hence this Court should not go behind the judgment or to consider the issues in dispute in that action.

7. I fully agree with what have been said in these two judgments. Since the Applicant has not taken any step to set aside the judgment in default, there is no basis for the application to set aside the statutory demand. I therefore accede to the Respondent's application and strike out the application to set aside the statutory demand. I also order that costs of the application including costs of today be paid by the Applicant to the Respondent.