RE LAU MING

IN THE HIGH COURT OF JUSTICE

IN BANKRUPTCY

NO. B367 OF 1986

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JUDGMENT

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1. This is an application by the debtor to set aside an amended bankruptcy notice that was filed on the 6th May 1986. The original bankruptcy notice was filed on the 25th April 1986 but was subsequently amended to correct the name of the petitioning creditor in the endorsement.

2. The amended bankruptcy notice is based upon two judgment debts obtained by the petitioner in the same action in 1982. The first judgment dated the 30th July 1982 is for the sum of $102,400 and the second dated the 16th October 1982 is for the sum of $47,809.29 with interest. It appears that the petitioning creditor was granted an order on the 13th July 1982 to enter summary judgment under Order 14 for part of the claim which led to the first judgment but the debtor was granted leave to defend in respect of the balance of the petitioner's claim. However, as the debtor did not file a defence, the petitioner entered the second judgment.

3. An affirmation of service of the amended bankruptcy notice has been filed on behalf of the petitioner which says that a copy of the notice was sent by post to the debtor on the 6th May 1986. By Rule 48 of the Bankruptcy Rules, a bankruptcy notice shall be served and service proved in the same manner as for the service of a creditor's petition. A creditor's petition may be served by Rule 59 in the same manner as a writ of summons. Accordingly, where postal service is effected, service is deemed to be effected unless the contrary is shown on the seventh day after the date of posting pursuant to the provisions of Order 10 rule 1(3)(a) of the Rules of the Supreme Court. However, the debtor denies that he has been served with the amended bankruptcy notice.

4. Miss Wong, counsel for the debtor argued three grounds in support of the application. First the amended bankruptcy notice is invalid and incurably bad as it is founded on two judgments, second the amended bankruptcy notice misstates the correct amount that is due to the petitioner, and third the amended bankruptcy notice has not been served.

5. At an earlier hearing on the 23rd June 1986, I granted leave to the petitioner to cross-examine the debtor on his affirmations which will necessarily relate to the matter of service. I heard the submissions of both counsel on the issues raised by Miss Wong, but Mr Leong who appeared for the petitioner did not apply to cross-examine the debtor until I was about to adjourn the application for the purpose of reserving judgment. With the consent of the parties, it was then agreed that I should make a ruling on the other issues. The question of misstatement is interlinked with that of service, so that I am now only concerned with the first submission that the amended bankruptcy notice is invalid by reason of it being based upon two judgment debts.

6. The issue of a bankruptcy notice is governed by section 4 of the Bankruptcy Ordinance which provides -

"4.         A bankruptcy notice under this Ordinance shall be issued to a judgment creditor, or creditor who has obtained a final order, by the Registrar on the filing of a request for that purpose, and shall be in the prescribed form, and shall require the debtor to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order, or to secure or compound for it to the satisfaction of the creditor or the court, and shall state the consequences of non-compliance with the notice, and shall be served in the prescribed manner:

 

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7. Miss Wong cited In Re Low Ex ante The Argentine Gold Fields, Limited⁽¹⁾ and In Re O.C.S. (A Debtor) Ex parte The Debor⁽²⁾ for her proposition that a bankruptcy notice can only be founded on one judgment debt. Lord Esher, M.R. in his judgment in In Re Low⁽¹⁾ considered that the words of the corresponding S. 4(1) of the Bankruptcy Act 1883 should be construed literally for if two or more judgments could be included in one notice, the section could have been expressed in terms to that effect. Mr. Leong counters this argument by submitting that the judgments arise from the same action so that the instant case can be distinguished from the earlier authorities for there is only one sum due to the petitioner. Accordingly no injustice or embarrassment has been suffered by the debtor. However, although I have some sympathy with the petitioner I am unable to agree, for I do not consider that it makes any difference whether the judgments are obtained in the same action or in separate actions. Whether or not the debtor has suffered injustice is irrelevant to this issue.

8. In my judgment, the words of the section must be interpreted literally. The commission of are act of bankruptcy is still a serious matter with penal consequences. Another reason that was adverted to by Lord Esher M.R. in In Re Low⁽¹⁾ for coming to his decision which I respectfully adopt, is the debtor's right to satisfy one of the judgment debts or to raise a counterclaim, set-off or cross demand to it. As a result the defect cannot be treated as merely formal so that it cannot be cured by amendment. I am therefore satisfied that the amended bankruptcy notice must be set aside on the grounds that it is founded on two judgment debts. Costs will be to the debtor.

(1)    [1891] 1 Q.B.147
(2)    [1904] 2 K.B. 161