RE LAU YAT MING TRADING AS HONG KONG PACKETS CORPORATION A JUDGMENT DEBTOR

IN THE SUPREME COURT OF HONG KONG

IN BANKRUPTCY

___________

___________

JUDGMENT

___________

1. This is an application by the debtor to set aside a bankruptcy notice issued by the Bank of Communications (the judgment creditor) on the 10th April 1986 and served on the 9th August 1986.

2. The notice claimed payment of the sum of $345,266.95 with interest and costs in respect of a judgment obtained by the judgment creditor on the 17th February 1982 as amended by an order made on the 27th March 1986.  The bankruptcy notice was amended by an order of the 22nd July 1986, but only as to the debtor's address. A bankruptcy petition was presented on the 14th October 186 based upon the debtor's failure to comply with the bankruptcy notice. A motion, to set aside the bankruptcy notice was filed on the 13th November 1986.

3. The only ground that has been argued by Miss Wong who appeared for the debtor is that the notice did not set out the correct amount claimed by the judgment creditor although the amount of the debt was not challenged. It is common ground that the debtor paid $2,100 into his account with the judgment creditor on the 31st May 1985 which account remained dormant until the credit was set off by the judgment creditor on the 26th September 1986 together with some interest that had accrued. Miss Wong submitted that when the debtor paid that sum into his account it should have been deducted from the amount claimed in the bankruptcy notice. As the claim did not correctly reflect the amount due, she contends that the notice was invalid.

4. In support of her submission Miss Wong cited In re Child ⁽¹⁾ as authority for the proposition that where part of a judgment debt has been paid, the creditor is not entitled to serve a bankruptcy notice in respect of the whole amount of the debt for execution could not be issued for the part which has been paid. She also referred to Re John Charles Murray and Anr. ⁽²⁾ and James v. Amsterdam Bank ⁽³⁾, where In re Child ⁽¹⁾ was followed. Miss Wong also placed reliance on In re Miller ⁽⁴⁾ where creditors recovered a judgment against a debtor in the county court, and it was ordered that the full amount of the judgment debt should be paid on a day specified. However, before the day named in the judgment for payment of the debt, the debtor paid into Court a sum in part satisfaction. The judgment creditors repudiated the payment and issued a bankruptcy notice requiring the debtor to pay the judgment debt in full without making any allowance for the payment into Court. It was held that after the payment into court, execution could not issue for the full amount of the judgment but only for the balance after giving credit for the amount paid into Court and consequently the bankruptcy notice was held to be invalid.

5. Miss Wong submitted that the $2,100 credited to the debtor's account should have been appropriated by the judgment creditor, before the issue of the bankruptcy notice. However, Miss Wong was unable to point to any evidence which shows that the sum paid into the account was paid by the debtor to the judgment creditor for the purpose of discharging part of his indebtedness. It is apparent that until the 26th September 1986, the amount credited to his account was always available to the debtor who could, had he so wished, withdrawn it at any time, The judgment creditor was in effect a debtor for this amount. The authorities that were cited by Miss Wong whilst correctly setting out the law, do not have any relevance to the instant case. There was no evidence that the judgment creditor had repudiated payment of this sum as arose in In re Miller.  The judgment creditor merely failed to take any steps to exercise its right of set off until some time after the issue of the bankruptcy notice. The amount claimed at the time of the issue of the bankruptcy notice was therefore correct. Accordingly the application to set aside the bankruptcy notice is dismissed with costs.

(1)    [1892] 2 Q.B. 77

(2)    [1959] Australian Bankruptcy Cases 152

(3)    [1986] 1 W.L.R. 1278

(4)    [1912] 3 K.B. 1