XCHRX RE SUI SEE CHUN

1997, No. B827

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY

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J U D G M E N T

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1. This is an appeal against the order of Mr Registrar Betts of 26th November 1997 when he ordered that Mr Sui See Chun's ("the Debtor"/"Appellant") application to set aside the Bankruptcy Notice be dismissed and that the costs of the application, including reserved costs, be to the Bar Council ("Judgment Creditor"/"Respondent"). A useful chronology of relevant events was provided by counsel for the Respondent, Mr Ronald Tang, and that chronology is attached to the back of this judgment.

2. The history of the matter is that the Debtor, a practicing barrister, was found guilty of three complaints of professional misconduct by a Barrister's Disciplinary Tribunal and ordered to pay the Creditor's costs on an indemnity basis. These costs were taxed and allowed at the sum of $291,654.20. The Appellant appealed against the decision of the Barrister's Disciplinary Tribunal and this appeal was struck out by the Court of Appeal on 10th January 1997. His appeal to the Privy Council against the decision of the Court of Appeal was dismissed on 10th April 1997. On 16th June 1997, the Respondent/Creditor issued a bankruptcy notice to the Appellant who was the Debtor.

3. The Appellant filed an affidavit pursuant to the Bankruptcy Rules, which affidavit was treated under the Rules as an application to set aside the bankruptcy notice. On 26th November 1997, Mr Registrar Betts dismissed that application. On 13th December 1997, the Respondent issued a bankruptcy petition which, I am told, will be heard on 18th March 1998.

4. The Appellant, who appeared in person, basically advanced three grounds of appeal. The first was that the Respondent was not a person entitled to enforce the order for costs because the legal representative of the Respondent, who happened to be Mr Ronald Tang, made a false statement to the Court of Appeal on the hearing of the appeal against the finding of the Disciplinary Tribunal and caused the Notice of Appeal of the Appellant to be struck out. The Appellant informed me that he had petitioned the Chief Executive to ask the Chief Executive to refer the case to the Court of Final Appeal. In view of that, the Appellant asked me to adjourn this appeal until such time as his petition to the Chief Executive could be considered. This application for adjournment was opposed by Mr Tang, and I declined the application.

5. In support of his first ground, the Appellant referred me to the judgment of the Court of Appeal which was delivered by the Court on 10th January 1997, and where Mayo JA mentioned that the Court accepted a statement made by Mr Tang that the Respondent did not know until shortly before the application that leave had not been obtained. It is not clear what is meant by "the application", but in the judgment of Liu JA, it was said that the Respondent was unaware of the fact that the Notice of Appeal had been lodged by the Appellant out of time and without leave. Liu JA said that the Respondent was unaware of that situation until shortly before the oversight was drawn to the attention of "this Court", differently constituted. I am informed by the Appellant that that differently constituted Court of Appeal sat on 25th October 1996.

6. The Appellant was trying to make the point that by telling the Court that the Respondent was unaware of the Notice of Appeal being filed without leave until shortly before the hearing before the Court of Appeal, on either 25th October 1996 or 10th January 1997, Mr Tang had stated a falsity which caused the Notice of Appeal to be struck out. I do not agree that that was the reason because looking at the judgment of the Court of Appeal, it is quite clear that all three judges decided that the Notice of Appeal should be struck out because it was filed out of time and also because, despite the invitation by the Court to the Appellant for him to apply for leave to file the Notice out of time, the Appellant declined to do so. The Court clearly was not influenced by what Mr Tang said about when the Respondent first became aware of the fact that the Notice was filed out of time without leave.

7. The second ground advanced by the Appellant was that he had a claim against the Respondent which was equal to, or which exceeded the sum claimed by the Respondent against the Appellant. The history of this is that the Appellant first issued a writ on 28th March 1996 against the Respondent claiming damages in respect of three complaints of professional misconduct laid by the Respondent against the Appellant of which the Appellant was subsequently acquitted by another Disciplinary Tribunal. The writ in that action was never served, but on 1st May 1997, the Appellant issued another writ against the Respondent for the same claim. This other writ was discontinued by the Appellant on 3rd October 1997 before the Respondent's application to strike out the statement of claim was heard. On 25th November 1997, one day before the Appellant appeared before Mr Registrar Betts, he issued another writ in HCA12707 of 1997 against the Respondent to claim damages for malicious prosecution and conspiracy, again in respect of the disciplinary charges of which he was acquitted.

8. In that action, the Appellant's claim against the Respondent is for an injunction and exemplary damages totalling a sum not in excess of $70,000,000. Mr Tang, in relation to this claim, had drawn my attention to the fact that in the two affidavits sworn by the Appellant, the Appellant referred to the action which was subsequently discontinued. Mr Tang made the point that there was no affidavit before the Court which mentioned the third writ of summons. Mr Tang submitted that under the Bankruptcy Rules, an affidavit has to be filed by the Appellant before the Court can consider whether the Appellant in fact has a claim against the Creditor which exceeds the Creditor's claim. Mr Tang referred to rr. 45 and 46 of the Bankruptcy Rules to support the proposition that the affidavit has to be sworn. The Appellant, in reply to that, submitted that there was no such requirement and that all the rules said was that if an affidavit was sworn, then the affidavit can be treated as an application to set aside the bankruptcy notice. In any event, the Appellant submitted that the filing of an affidavit was only a formality and that the Court could consider the claim which the Court was aware of. He submitted that Mr Registrar Betts was aware of this claim because in the agreed bundle submitted to him, there was included the statement of claim in the latest action against the Respondent. For the reason that this claim was before Mr Registrar Betts and now before me, the Appellant asked me to consider the claim.

9. I make no ruling on whether the Bankruptcy Rules in fact require an affidavit to be sworn, which refers to the existing claim, before the Court can consider the claim. This stance by Mr Tang was not subsequently strongly pursued by him because in his later submissions to me, he submitted that for the Court to set aside the Bankruptcy Notice, the Court had to be satisfied that there was a bona fide and genuine counterclaim or set-off against the Creditor. He submitted that the Court need not even consider whether the claim was likely to succeed because in this particular case, he submitted that the claim was misconceived for two reasons : firstly, the Appellant cannot sue the Respondent in a civil case because the Respondent is not incorporated and has no legal existence. The Respondent had status in the disciplinary proceedings and the subsequent appeal only by virtue of s.33 and s.37B(2) of the Legal Practitioners Ordinance. Otherwise, Mr Tang submitted that the Respondent has no legal existence and cannot be sued as a defendant. Mr Tang submitted that if the Respondent should be sued, then the members of that Council for the relevant years which, in this case, are 1993-1994 and 1994-1995, should be named as the defendants. Mr Tang therefore submits that by suing the Respondent itself, the Appellant was suing a person who does not exist in law.

10. The second reason that Mr Tang submits renders the proceedings misconceived is that the Statement of Claim does not disclose a reasonable cause of action. The causes of action that the Appellant relies upon are firstly malicious prosecution and/or conspiracy and secondly, what was described in the writ as "malicious civil proceedings by the Defendants". Mr Tang submitted that malicious prosecution does not apply to disciplinary proceedings which are proceedings that are neither criminal nor civil, and where the standard of proof varies according to the seriousness of the allegation. Mr Tang also submitted that the so-called malicious civil proceedings cause of action would appear to be what was described in Bullen & Leake & Jacob's (page 644) as "abuse of civil process".

11. The existence of this tort was however doubted by the Court in Metal und Rostoff v. Donaldson Inc. [1989]3 WLR 563. In any case, in the Statement of Claim filed by the Appellant, there was no mention of this allegation of abuse of civil process and this particular claim would not appear to be still pursued by the Appellant. The other claim against the Respondent is based upon the tort of conspiracy. What is alleged in the Statement of Claim is that the conduct of the defendants in instituting the disciplinary proceedings "amounted to the tort of conspiracy to do an unlawful act and also to prosecute the plaintiff by using unlawful means and was malicious".

12. As was pointed out by Mr Tang in his submission, no particulars have been alleged in the Statement of Claim as regards who conspired with whom to do what, and in the details of the Statement of Claim, only one person has been mentioned and that is the Vice Chairman of the Bar Council (paragraph 3 of the Statement of Claim). I agree with Mr Tang that the Respondent, as an entity, cannot be sued as a defendant because it does not have legal existence. And I agree with Mr Tang that the Statement of Claim, as filed, shows a case which falls far short of malicious prosecution and/or conspiracy against any person. For this reason, I find that the second ground of appeal as advanced by the Appellant also fails.

13. The third ground of appeal relied on by the Appellant is that the Order which the Respondent is trying to enforce was an order made under the former Colonial Government and is an order which has no contractual basis and so lapses with the change of sovereignty on 1st July 1997.

14. In reply to this ground, Mr Tang relies upon the arguments contained in the further submission submitted by the Respondent and in relation to this, it is submitted that the Basic Law and the Hong Kong Reunification Ordinance, 1997 have made sufficient provisions in respect of the continuity of legal proceedings, the saving of judgments and the carrying on of pending proceedings. Article 160 of the Basic Law provides, inter alia, that-

"Documents, certificates, contracts, and rights and obligations valid under the laws previously in force in Hong Kong shall continue to be valid and be recognized and protected by the Hong Kong Special Administrative Region, provided that they do not contravene this law."

Section 11 of the Hong Kong Reunification Ordinance 1997 provides as follows-

"All acts done by a court, magistracy, statutory tribunal or statutory board before 1st July 1997 shall (subject to any applicable time limits) on and after that date, continue to have effect and, as the case may require, be regarded as acts done by the corresponding court, magistracy, tribunal or board of the HKSAR."

15. Mr Tang also relied on the recent Court of Appeal judgment in HKSAR v. Ma Wai Kwan David and Others [1997]2 HKC 315 where it was held, inter alia, that the intention and wording of the Basic Law was clear and without ambiguity. It was held that there was to be no change in Hong Kong's laws and legal system, except for those which contravene the Basic Law. It was also held that the word 'shall' in Article 160 of the Basic Law could only be used in the mandatory and declaratory sense.

16. I agree with Mr Tang that in the light of these provisions and in the light of what was held in HKSAR v. Ma Wai Kwan David that this third ground of appeal cannot succeed. If one looks at the chronology of events, one can see that in fact all relevant events took place before the hand-over of sovereignty except the Bankruptcy Petition which was issued by the Creditor on 13th December 1997. The Order of the Barrister's Disciplinary Tribunal finding the Appellant guilty of the three complaints and ordering him to pay the Respondent's costs was of course made well before the hand-over, on 7th July 1994, and the Bankruptcy Notice which was issued by the Creditor was done on 16th June 1997.

17. For the reasons mentioned above, I dismiss the Debtor's appeal against the decision of Mr Registrar Betts, with costs to the Respondent. The learned Master gave no reasons for his decision, as he was entitled to do, and this appeal is really by way of a rehearing. For the sake of completeness, I should mention that I have considered whether I should set aside the Bankruptcy Notice for the reason that there is a counterclaim, set-off or cross-demand against the Creditor which equals or exceeds the sum claimed by it. For the same reasons that I have rejected the appeal, particularly ground 2 as advanced by the Appellant, I decline to set aside the Bankruptcy Notice.

(Peter Nguyen)

Judge of the Court of First Instance
High Court