CHOY BING WING v. OFFICIAL RECEIVER

CACV 1233/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1233 OF 2001

(ON APPEAL FROM HCB 242 OF 1992)

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J U D G M E N T

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Hon Woo JA (giving the judgment of the Court):

Introduction

1. This is an appeal against the order of Kwan J of 7 June 2001 which dismissed the applicant's appeal against the ruling of Master B Kwan made on 22 May 2001 that leave to appeal against the order of Yuen J (as she then was) made on 2 May 2001 is necessary. The order of Yuen J was a costs order.

2. The applicant seeks in the alternative that where leave is necessary, such leave be granted by this Court forthwith, and that Yuen J's costs order be set aside in its entirety for want of jurisdiction and/or discretion.

Background

3. On 13 December 2000, the applicant applied by way of notice of motion pursuant to section 84 of the Bankruptcy Ordinance, Cap 6 for an order that the respondent disclosed to the applicant and to the court all the relevant documents connected with the sale of the entire shareholding in Alljean Investment Limited owned by the bankrupt and that there be an enquiry by the court of the respondent's conduct over the said sale after such disclosure.

4. On 15 February 2001, Yuen J refused the applicant's application and made an order nisi as to costs against him.

5. On 5 March 2001, the applicant applied to vary the order nisi as to costs. The application was dismissed by Yuen J on 2 May 2001. That application and order of dismissal related to costs only.

6. On 4 May 2001, the applicant filed a Notice of Appeal against Yuen J's costs order of 2 May 2001. On 22 May 2001, Master Kwan, as the Registrar of Civil Appeals, made a ruling that the Notice of Appeal was invalid because no leave to appeal had been obtained beforehand.

7. On 23 May 2001, the applicant appealed against Master Kwan's ruling. On 7 June 2001, Kwan J dismissed the applicant's appeal with costs.

8. This is the appeal against Kwan J's decision.

Issues in the appeal

9. The main issue in this appeal is whether the decisions of Master Kwan and Kwan J are correct that leave is required to appeal against Yuen J's costs order of 2 May 2001. Alternatively, if we decide that leave is required, we are asked to grant leave for the applicant to pursue his appeal against Yuen J's costs order. That involves a second issue, whether Yuen J had jurisdiction or discretion in making the costs order. The thrust of the applicant's contention is that Yuen J had no jurisdiction to make the costs order in the proceedings brought by him under section 84 of the Bankruptcy Ordinance. Other than that, he does not contend that if Yuen J had the required jurisdiction, she had erred in exercising that jurisdiction or her discretion in making the costs order.

10. Section 14(3)(e) of the High Court Ordinance, Cap 4 provides as follows:

"14. Appeals in civil matters

(1) Subject to subsection (3), an appeal shall lie as of right to the Court of Appeal from every judgment or order of the Court of First Instance in any civil cause or matter.

(3) No appeal shall lie -

(e) without the leave of the court or tribunal in question or of the Court of Appeal, from an order of the Court of First Instance or any other court or tribunal made with the consent of the parties or relating only to costs which are by law left to the discretion of the court or tribunal."

11. It is therefore clear that if Yuen J's costs order related only to costs which are by law left to discretion of the court no appeal shall lie without the leave of the court or this Court. This involves the second issue whether Yuen J had jurisdiction or discretion to make the costs order of 2 May 2001.

12. The third and fourth grounds of appeal in the Notice of Appeal are directed at this issue.

13. Yuen J held that section 84 of the Bankruptcy Ordinance, Cap 6, though derived from section 81 of the English Bankruptcy Act 1914, was different from that section 81. She said:

"... it is clear that when s.84 of the BO was enacted in Hong Kong, important changes were made which have ramifications on the course open to a creditor when he is dissatisfied with a trustee in bankruptcy, which in turn has costs implications."

14. Later on in her judgment, Yuen J set out the changes from section 81 of the Bankruptcy Act that had been made in section 84 of the Bankruptcy Ordinance. She then concluded:

"In my view, it is clear from the above changes that in so modifying s.81 BA, the legislature here has turned a complaint from what was originally an administrative procedure in England undertaken by a government arm into legal proceedings undertaken in Court."

"That is not the situation with a complaint under s.84 BO. A hearing is definite and assumed. The trustee is served with the notice, so it cannot be an ex parte hearing. All inter partes hearings have costs implications for both parties, and so it would be surprising if the court hearing it had no jurisdiction to award costs."

"It is therefore clear from the true construction of s.84 that the court has jurisdiction to award costs against a complainant applicant. It would be surprising if that were not so, because the scope of persons who can complain under s.84 is unrestricted and a hearing is unavoidable, whatever the grounds of the complaint. It cannot be right that a trustee would invariably have to bear the costs personally, or that the estate would have to do so."

15. Yuen J then continued:

"Finally, rule 32A Bankruptcy Rules provides that the general rule is that the costs of an application to the court which is opposed shall follow the event. Nothing that has been said has persuaded me to deviate from the general rule."

16. The third ground of appeal complains that Yuen J based her discretion or jurisdiction to order costs against the applicant upon a wrong construction and misunderstanding of section 84 of Cap 6 and contends that rule 32A of the Bankruptcy Rules shall not apply to override section 84 of the Ordinance. It is argued that Yuen J's decision that the applicant's application heard by her was judicial in nature is contrary to the Court of Appeal's decision in Li Ngan Shui Brumen v Official Receiver [1995] 1 HKC 133 that section 83 of the Bankruptcy Ordinance is the only judicial remedy in law available to creditors in bankruptcy proceedings.

17. We have to point out that the applicant's asserted effect of the decision of this Court in Li Ngan Shui Brumen is one entirely taken out of context. The court in that case merely stated the effect of section 83 of the Bankruptcy Ordinance as excluding any right of civil action against the Official Receiver other than under that section itself (see p 138F-H of the report). We entirely agree with Yuen J's decision. Section 84 of the Bankruptcy Ordinance was correctly distinguished by her from section 81 of the 1914 Act. She is correct to hold that section 84 of the Ordinance gives rise to judicial proceedings with costs implications, particularly where a court hearing is definite and where the hearing is inter partes. In such circumstances, there is no overriding of section 84 by rule 32A of the Bankruptcy Rules, which must apply to section 84 proceedings. Yuen J had jurisdiction and full discretion in deciding on the matter of costs. The grounds of appeal raised by the applicant to contend the contrary are entirely without merit. Moreover, having considered Yuen J's judgment made on 2 May 2001, we can find no fault in the exercise of her discretion in ordering costs against the applicant.

18. In his oral submissions, the applicant compared the provisions of section 83 and section 84 of the Bankruptcy Ordinance to point out to us that there the words "the court may ... make such order in the premises as it thinks just" in section 83 whereas no similar wording is used in section 84. He also drew our attention to the similar wording used in the Bankruptcy Act 1966 referred to in Gault v Law (1981) 57 FLR 165 at 170 and in Wilson v Commonwealth of Australia [2000] BPIR 207 at 208. We are of the view that these distinctions do not assist the applicant.

19. When questioned why he asked for costs as a relief in his Notice of Motion instituting the proceedings if the court had (as he contended) no jurisdiction to award costs, he said it was a mistake that he had made because he was not a lawyer but the court should know that it was a mistake. He further argued that this mistake should not be taken against him so as to confer jurisdiction on the court to award costs against him. When asked why he should have taken out the Notice of Motion whereby he and the respondent would appear in court for his laying a complaint to the court against the respondent (under section 84(1) of the Bankruptcy Ordinance) and for the court to deal with his complaint in an administrative manner, he replied that he had mistakenly taken out the Notice of Motion. Again he hid behind his not being a lawyer for this mistake and argued that the mistake should not entitle the court to order costs in relation to his complaint. Whatever his excuses, they do not affect our view on jurisdiction, and we can find no justification for him not to be responsible for his own mistakes that had brought the respondent to court.

20. Our decision that Yuen J had jurisdiction in awarding costs also covers the first issue that Yuen J's costs order was one "relating only to costs which are by law left to discretion of the court" as provided for in section 14(3)(e) of the High Court Ordinance. That order did relate only to costs which are by rule 32A left to the discretion of the Judge. Thus, it is correct for Master Kwan and Kwan J both to hold that it is necessary for leave to be obtained first for appealing against Yuen J's order.

21. In the first and second grounds of appeal set out in the Notice of Appeal, the applicant relies on Hellyer v Sheriff of Yorkshire [1975] Ch 16 at 24A-C in support of his contention that Yuen J when making the order for costs against him had erred in "a central point of law", as a result of which no leave at all is necessary to appeal against the order.

22. In Kwan J's judgment dated 7 June 2001, she referred to the decision of this Court in Ho Lee Man v Wong Wai Kai [1993] 1 HKC 183, at 185-6 and 189 and dealt with the reason why Hellyer and Scherer v Counting Instruments Limited [1977] FSR 569, [1986] 1 WLR 615 should not be applied in Hong Kong. The applicant's grounds of appeal do not raise any doubt in our mind that Kwan J's decision is correct. Indeed, like Kwan J, we are bound by Ho Lee Man. Moreover, as said before, Yuen J had jurisdiction and full discretion in making the costs order as she did. There is no error in any point of law, let alone a central point of law as the applicant contends in his grounds of appeal.

Conclusion

23. In the circumstances, the appeal against Kwan J's order must be dismissed. We also make an order nisi that the applicant do bear the costs of this appeal.