XCHRX CHOI SZE FAI v. PRETTY FULL DEVELOPMENT LTD. AND OTHERS

HCA10132/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.10132 OF 1998

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J U D G M E N T

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1. The Plaintiff is an undischarged bankrupt. The action is brought by him in respect of a property in Thailand he bought from the 1st Defendant ("the Property"). According to him, the 2nd to the 6th Defendants are the past and present shareholders and directors of the 1st Defendant.

2. The Defendants applied to strike out the action on the ground that it is frivolous, vexatious or an abuse of the process of the Court in that prior to the issuance of the writ, the Plaintiff had already been adjudged bankrupt. Alternatively, they asked for the action to be stayed on the ground that the Plaintiff is an undischarged bankrupt and the action was commenced without the knowledge or consent of the Official Receiver. The Master struck out the action. The Plaintiff now appeals.

3. As far as proceedings by a bankrupt is concerned the position is clear. Under s.58 of the Bankruptcy Ordinance, the property of the bankrupt is vested in the trustees of bankruptcy. All rights of action which relate directly to property comprised in the bankrupt's estate pass to the trustee. ..... Where the right of action has passed to the trustee, if the bankrupt brings an action upon it, it may be dismissed as frivolous or vexatious or the trustee may intervene and be joined or substituted as plaintiff. : Halsbury Laws of England, 4th Edition, Vol.3 (2), para. 424.

4. The exception is in respect of actions relating to the bankrupt's personal injury, personal inconvenience or damage to reputation. None of which applies to this case. The present action is not proceeded by the Official Receiver.

5. The only real objection raised by the Plaintiff to the application is that in 1994, one Mr Lam Lai Kuen ("Mr Lam") lent him money and he agreed "...to use my interest in the said Property (including my chose in action in the said 40% purchase price in the sum of HK$381,333.00) as part payment for settling my said 1994's Debt owed to Lam ('My said 1994's Agreement with Lam'). ..."

6. The Plaintiff stated in a letter to the Official Receiver on 29th December 1998 that the chose of action or interest relating to the Property was wholly vested in Mr Lam. Mr Lam confirmed that this is so. He also said that the transfer was not formalized.

7. In my view, there are two aspects to the submission. First, if the Plaintiff had actually divested his rights without more, it would provide no defence to the Defendants' application to strike out. The principle is clear : a person may not be a plaintiff unless he has an interest, either vested or contingent in the subject matter of the action; a commercial, as distinct from a legal interest is not sufficient (Atkin's Court Form 1994 Issue Vol.30, p.6 and Re I G Farbebubdystrie A G Agreement [1943] 2 All E R 525). If the Plaintiff had actually transferred his interest, then his claim is obviously unsustainable. If he is merely suing as an attoney for Mr Lam, then he should sue in the name of the principal : para.6/1/110 of Supreme Court Practice 1999.

8. The second aspect is that the Plaintiff is holding his interest in the Property on trust for Mr Lam, notwithstanding the transfer. The Plaintiff who appears in person submits that he is entitled to sue as a trustee. According to O.15, r.14, any proceeding may be brought by the trustee without joining the beneficiary. It is also clear that trust property held by the bankrupt is not his property within the meaning of the Bankruptcy Ordinance : para.417 of Halsbury.

9. The case of trust has not been pleaded in the Amended Statement of Claim or raised in the affidavits, nor was it raised before the Master. However, instead of striking out the Amended Statement of Claim on this ground, I would allow the Plaintiff to further amend the Statement of Claim so that the issue of trust can be properly pleaded and raised. I do not think that the defect in pleading is not capable of being remedied.

10. Accordingly, I would allow the appeal and allow the Plaintiff to re-amend the Amended Statement of Claim within ten days.