RE TANG YAT CHEUNG

HCB 5436/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5436 OF 2014

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DECISION

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1.  This is the bankrupt’s application to review his trustees’ decision made on 26 July 2015 allowing him a monthly sum of $13,250 as living expenses for him and his family.

2.  The bankrupt was a logistics manager.  He petitioned for his own bankruptcy. A bankruptcy order was made against him on 26 August 2014.  According to his statement of affairs, he owed various banks and finance companies a total debt of about $518,000.  Mr Wong Ka Sek and Mr Wong Ka Lam King were jointly and severally appointed as his trustees in bankruptcy at the general meeting of creditors held on 21 November 2014. 

3.  On 16 July 2015, the trustees’ staff interviewed the bankrupt to assess his monthly income and expenses.  He is married.  His wife is working as a secretary earning $17,000 a month.  They are living in a flat owned by his wife.  He informed the trustees’ staff that he had used to earn $13,000 a month but had just started a new employment since July earning $25,000 a month.  The trustees assessed his average monthly income and expenses at $13,000 and $11,350 respectively from 26 August 2014 to 25 July 2015 and thereafter at $25,000 and $13,250 respectively.  He signed consents dated 16 July 2015 agreeing that the above figures were his income and expenses during the relevant periods and undertaking to contribute $1,000 to pay his debts with effect from 26 August 2014 and $10,500 with effect from 26 July 2015.

4.  In late January 2017, the bankrupt requested for a review of his monthly expenses.  He attended an interview at the office of the trustees on 9 February 2017 to present his case.  He claimed that the expenses allowed were not enough as he had to dine out with his clients.  He said he had to bear all family expenses.  However, he failed to produce any documents in support.  The trustees were of the opinion that the expenses allowed were reasonable and that his wife should also share the living expenses.  They refused to revise the expenses allowed but promised to reassess his monthly expenses if there is any change of circumstances and to consider any reasonable ad hoc expenses upon provision of sufficient proof.

5.  On 15 May 2017, the bankrupt made the present application to review the trustees’ decision.

6.  At the hearing, the bankrupt repeated what he had told the trustees. Again he produced no proof that the expenses allowed were inadequate.  He asserted that all along he had kept his bankruptcy secret from his wife and he had to bear all family expenses.  He wanted he and his wife to continue their lives the way they were as before.

7.  I have examined the expenses allowed by the trustees.  The trustees assessed his expenses before 26 July 2015 at $11,350, but increased them to $13,250 thereafter, giving him an extra allowance of $1,900 in view of his new employment.  Looking at the expenses allowed after 26 July 2015, I cannot say that they are unreasonable. 

8.  The trustees have allowed him the following expenses:

Internet fee	$158
Gas/Electricity/Water	$200/$300/$49
Management fee	$583
Personal mobile phone charge	$100

These allowances accord with my understanding of the normal household expenses for a family of two.  If the actual expenses are indeed higher or much higher, the bankrupt could have easily produced documentary evidence in support and the trustees would have revised the expenses accordingly, but he did not.

9.  The trustees assessed his meal, travelling, medical and miscellaneous expenses at $3,000, $1,860, $1,000 and $1,000, respectively.  These allowance may not be regarded as generous, but are in my view adequate and not unreasonable.

10.  The trustees also allowed him rent in the sum of $4,500, despite that he is living rent free in his wife’s accommodation.  That would have allowed him to contribute to his wife’s mortgage repayment, if any, or provided him something to give to his wife as a loving gesture from a dutiful husband for sharing in her flat.

11.  On the whole, I consider the trustees’ approach of the trustees unreproachable.  They promised to reassess the allowance and to consider any reasonable ad hoc expenses on production of documentary evidence. In my view, the allowance is reasonable for a person who has a financial burden to bear.  But, in all fairness to the bankrupt, the allowance may not be as generous as a person of his income would like to be restrained from spending.  However, if one unfortunately becomes a bankrupt, when managing his financial affairs, he must bear in mind the principle that one must be just before generous. He has not been prudent in managing his financial affairs which landed him in bankruptcy.  By reason of the bankruptcy proceedings, his debts are forgiven.  He is allowed to begin his financial affairs afresh, while his creditors are made to suffer for his impecuniosity.  But all that the law requires of him is to subject himself to some discipline in his financial management for a few years, pay what he can reasonably afford to pay like a responsible adult and to instill in himself a sense of responsibility in his financial affairs so that he would not fall again.  If he is to be allowed to keep and spend all his income and to contribute only a nominal amount to repay his debt, it would be unjust to his creditors.  Hence, I consider the expenses assessed by the trustees reasonable.

12.  However, in the present case, the bankrupt has found a new employment which almost doubled his past income.  He should be encouraged to take a more positive attitude in life by being allowed to keep some of the fruits of his effort.  While the trustees have allowed him $1,900, I think there is room for further increase as the position of the creditors has improved in the past two years as a result of his effort.  I would therefore revise his monthly allowance to $16,000, but only with immediate effect.  To increase beyond that level would be unjust to the creditors.