RE CHEUNG SIU HUNG CINDY

[English Translation – 英譯本]

CACV 382/2024, [2025] HKCA 597

On Appeal From [2024] HKCFI 2193

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 382 OF 2024

(ON APPEAL FROM HCB NO 2775 OF 2023)

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JUDGMENT

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Hon Cheung JA giving the Judgment of the Court:

I. The Appeal

1.  Ms Cheung Siu Hung Cindy (“Ms Cheung”) filed a petition for a bankruptcy order on 17 May 2023 on the ground that she was unable to repay her debts. She owed a total of $522,388 to 8 unsecured creditors. On 27 June 2023, the Court of First Instance of the High Court made a bankruptcy order against Ms Cheung and appointed the Official Receiver as trustee of the estate of Ms Cheung. On 23 February 2024, Mr Huen Ho Yin and Ms Huen Yuen Fun (“Trustees”) were appointed by the court as trustees of the estate of Ms Cheung.

2.  Ms Cheung claimed that she had been defrauded, resulting in a loss of approximately $1,398,000, and that the Trustees refused to let her commence legal action on her own to recover the said sum (“the Decision”). Ms Cheung issued the summonses dated 18 April 2024 (“18/4/24 Summons”) and 9 May 2024 (“9/5/24 Summons”) respectively under the Bankruptcy Ordinance (Cap 6), applying to the court for reversing the Decision to let her initiate legal proceedings by herself to recover her losses, and for approving the replacement of Trustees. Deputy High Court Judge (“DHCJ”) Kent Yee dismissed both summonses. Ms Cheung now appeals against the judgment.

II. Background of the case

3.  The Trustees told Ms Cheung that the legal action she wished to pursue to recover the defrauded sum involved considerations of costs. At Ms Cheung’s request, the Trustees wrote to her creditors on 14 September 2023, 17 November 2023 and 17 January 2024 respectively, enquiring whether they were willing to provide funding for her to commence litigation, but no reply was received. The police notified the Trustees that the sum concerned had been deposited into 6 different accounts. The Trustees wrote to the account holders, demanding the return of the respective sums. Apart from one letter that was returned, the Trustees did not receive any response.

4.  Subsequently, the Trustees further advised Ms Cheung as follows:

1) As 5 of the account holders had reported addresses outside Hong Kong, there might be issues involving the service of legal documents out of the jurisdiction, which would incur additional legal costs.

2) Even if Ms Cheung obtained a judgment eventually, she might encounter difficulties in enforcing it.

3) The Legal Aid Department had refused to grant legal aid on the ground that “the chance of recovering the sum is relatively slim”.

4) There was no substantive evidence showing that the losses could be recovered.

5) No creditor was willing to fund the legal action.

6) After weighing the pros and cons, the Trustees indicated that they would not bring legal action on behalf of the Bankrupt.

5.  On 10 February 2024, Ms Cheung asked the Trustees whether they could provide her with guidance or free assistance in bringing legal action. On 14 February 2024, the Trustees replied to Ms Cheung, reiterating that they would not bring legal action on her behalf.

6.  Prior to issuing the two said summonses, Ms Cheung had taken out a summons on 18 March 2024 (“18/3/24 Summons”) under section 83 of the Bankruptcy Ordinance, applying for reversing the Decision on other grounds. However, it was dismissed by Master M Leung on 3 April 2024.

7.  On 13 April 2024, Ms Cheung informed the Trustees that she could find a friend to pay for the legal costs required for her legal action. However, Ms Cheung later clarified that her friend was only willing to pay for the filing fees and part of the miscellaneous expenses.

III. DHCJ Yee’s finding

8.  DHCJ Yee stated that Ms Cheung’s 18/4/24 Summons was issued pursuant to section 83 of the Bankruptcy Ordinance. Section 83 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.”

9.  DHCJ Yee applied the interpretation of section 83 by Chu JA (as she then was) in Re Tang Tim Chue alias Tang Tim Chu (A Bankrupt) [2023] 2 HKLRD 1298:

“15. If the Bankrupt wishes to apply under section 83 for reversing the decision of the Official Receiver, namely, that she would not proceed with the action in HCA 1123/2020 as a provisional trustee or allow the Bankrupt to proceed with the case, and for leave of the court to proceed with the litigation, he must first prove that he has been “aggrieved” by the decision of the Official Receiver. A well-established legal principle is that unless a bankrupt can prove that his estate would have had a surplus after paying all the debts but for the decision of the Official Receiver, he will not be regarded as “aggrieved” by the decision of the Official Receiver…

…

19. Even if the Bankrupt had locus standi to make this application, he would still be required to show that the Official Receiver’s decision was perverse, clearly wrong or utterly unreasonable and absurd; that is to say, no reasonable trustee would have so acted, and only then would the court interfere with and reverse her decision; and such jurisdiction would have to be cautiously exercised....”

10.  DHCJ Yee found that Ms Cheung failed to meet the requirements of section 83 of the Bankruptcy Ordinance. Even if she successfully obtained a judgment in her proposed action, the likelihood that she could recover the sum concerned would be extremely slim. This was because, based on Ms Cheung’s Statement of Affairs, there would be no surplus after repaying all the debts even if her estate was fully recovered. Therefore, Ms Cheung could not be regarded as a person aggrieved by the Decision. In addition, even if Ms Cheung were an aggrieved person, she still failed to satisfy the second requirement under section 83, namely, that she could not show that the Decision was perverse, clearly wrong, utterly unreasonable and absurd. DHCJ Yee found that the Decision was reasonable and rational, as it ensured that Ms Cheung’s assets would not be burdened with unnecessary legal costs and expenses while safeguarding the creditors from suffering loss due to futile legal action.

11.  DHCJ Yee further pointed out that Ms Cheung’s 9/5/24 summons was issued pursuant to section 96 of the Bankruptcy Ordinance. Section 96 provides as follows:

“(2) If the court is of opinion—

(a) that a trustee, other than the Official Receiver, is guilty of misconduct or fails to perform his duties under this Ordinance; or

(b) that his trusteeship is being needlessly protracted without any probable advantage to the creditors; or

(c) that he is by reason of lunacy or continued sickness or absence incapable of performing his duties; or

(d) that his connexion with or relation to the bankrupt or his estate or any particular creditor might make it difficult for him to act with impartiality in the interest of the creditors generally; or

(e) that the interests of the creditors require it,

the court may remove him from his office and appoint another person in his place.”

12.  DHCJ Yee cited Barma JA’s rulings in Re Lee Siu Fung Siegfried [2021] 5 HKLRD 627, paragraphs 29 and 34: not every person who is within the bankruptcy process has standing to make an application to remove a trustee, and the only persons who have a legitimate interest to remove a trustee are the creditors. The applicant’s legitimate interest is an indispensable requirement for the application. Even if there is misconduct on the part of the trustee, the applicant must prove his or her legitimate interest to initiate court proceedings under section 96 of the Bankruptcy Ordinance. DHCJ Yee also ruled that even if Ms Cheung had a legitimate interest, he did not think that she could successfully prove her allegation of misconduct against the Trustees.

13.  DHCJ Yee was of the view that none of the allegations against the Trustees made by Ms Cheung before him were supported by substantive evidence, and therefore he could not accept that there was any misconduct on the part of the Trustees. He did not consider the medical documents submitted by Ms Cheung in relation to her mental condition to be relevant to her application.

IV. Grounds of Appeal

14.  According to Ms Cheung’s notice of appeal dated 19 September 2024 and her skeleton argument filed on 22 May 2025, her grounds of appeal can be summarised as follows:

1) DHCJ Yee was “biased” in favour of the Trustees, did not handle her summons application “fairly and justly”, and even “shielded” the Trustees;

2) there might be “relationship of interests” and “friendly relationship” between DHCJ Yee and the Trustees;

3) the Trustees “defrauded” and “abused power to threaten and extort” her;

4) whether or not her property would have a surplus after repaying the debts had nothing to do with the Trustees;

5) DHCJ Yee erred in finding that her chance of recovering the relevant losses was slim;

6) DHCJ Yee erred in finding that her mental condition had nothing to do with the Trustees; and

7) DHCJ Yee failed to give sufficient consideration to the various arguments she raised.

15.  During this appeal hearing, Ms Cheung requested that we allow her to obtain her medical records concerning her emotional issues from the “Hospital Authority” for our consideration.

V. Our View

1) Grounds 1 and 2

16.  We are of the view that the allegations against DHCJ Yee in Grounds 1 and 2 above are supported by no evidence at all. Ms Cheung claimed that DHCJ Yee had thanked the parties for their assistance. We consider that this is merely a gesture of courtesy and cannot support her allegations.

2) Ground 3

17.  We accept the submissions of Mr Leung, counsel for the Trustees. Ms Cheung misinterpreted the intention and implication of the Trustees’ indication of the need to charge legal costs (including the alleged $150,000). The Trustees are persons managing Ms Cheung’s estate, and their responsibilities include protecting the interests of the creditors, and not allowing Ms Cheung’s remaining assets to be improperly used or depleted. As practitioners of a law firm, they must first clearly explain to Ms Cheung the potential costs arising from the legal services she requests, including the sum of $150,000 mentioned by Ms Cheung, before providing the requested legal services. They explained to Ms Cheung that the legal action would incur costs and the impracticability of instituting legal proceedings, and advised Ms Cheung against acting recklessly.

18.  Ms Cheung’s allegation that the Trustees “defrauded”, “threatened” or “extorted” her has no factual basis at all. Therefore, Ground 3 is inconsistent with the facts of the matter.

3) Grounds 4 and 5

19.  In our view, DHCJ Yee’s interpretation of the relevant law and his finding on Ms Cheung’s chance of successfully recovering the defrauded amount are entirely accurate and correct.

4) Grounds 6 and 7

20.  We reject Ms Cheung’s request mentioned in paragraph 15 above. If an appellant wishes the Court of Appeal to admit new documents that were not submitted at trial, he or she must make an application before the hearing of the appeal takes place, with reasons in support. Ms Cheung alleged at trial that the Trustees’ actions caused her emotional trauma, which required treatment. She should have submitted the relevant medical reports at the trial or submitted the relevant documents to make an application before the hearing of this appeal. In any event, we agree with DHCJ Yee’s finding that Ms Cheung’s mental condition was irrelevant to her applications by the two summonses. This type of application does not include any claims for mental injuries.

21.  DHCJ Yee has disposed of the other issues raised by Ms Cheung. She has no basis to support her Ground 7.

VI. Conclusions

22.  We dismiss Ms Cheung’s appeal and order that Ms Cheung shall pay the costs of this appeal, which are to be assessed summarily. The Trustees shall submit the bill of costs within 10 days, and Ms Cheung may submit her reasons for objection within 10 days upon receipt of the bill. The costs will then be taxed by this court on paper.

Translated by the Court Language Section of the Judiciary and vetted by Ms Jenny Chung, Solicitor.