Lo Kwok Kuen Danway v. Secretary for Justice for and on behalf of the Government of the Hong Kong Special Administrative Region

HCMP 1426/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1426 OF 2016

(ON AN INTENDED APPEAL FROM DCCJ NO. 2792 OF 2013)

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BETWEEN

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J U D G M E N T

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1.This is the plaintiff’s application for leave to appeal out of time to the Court of Appeal from the judgment of Deputy District Judge Maurice Chan on 13 July 2015. The judge dismissed the plaintiff’s claim for declaratory reliefs to the effect that he is released from all bankruptcy debts (including the subject debts for costs otherwise payable to the Hong Kong government) upon the discharge of his bankruptcy pursuant to section 32(2) of the Bankruptcy Ordinance, Cap 6, and that the government is not entitled to apply his pension benefits to satisfy the subject debts pursuant to section 31(2) of the Pension Benefits Ordinance, Cap 99.

2.Leave to appeal was refused by the judge on 2 March 2016.  The plaintiff sought to renew his leave application to the Court of Appeal.  He would have 14 days from the date of refusal to do so.  His summons for leave to appeal out of time was issued on 6 June 2016.  His explanation for the delay was due to the time taken for legal aid to be granted.  He had pursued the action in the court below with legal aid.

3.On 8 March 2016, he made a fresh application for legal aid for the purpose of these proceedings in the Court of Appeal.  As a memorandum of notification of his legal aid application was filed, there is a statutory stay of proceedings for 42 days.  So the original deadline of 16 March 2016 to issue the summons for leave to appeal was extended to 27 April 2016.

4.Legal aid was not granted to the plaintiff until 17 May 2016 and counsel was assigned on 23 May 2016.

5.The length of delay is a little in excess of a month.  I do not consider it substantial and regard it as excusable in the circumstances.  The plaintiff is not required to meet the higher threshold in showing a real prospect of success in the intended appeal.  I would apply the test of a reasonable prospect of success on the merits (KNM v HTF, HCMP 288/2011, 7 September 2011, at §§15 to 20, following Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125 at 129I).

6.I will grant leave to appeal only on these grounds in the draft Notice of Appeal: grounds 1, 2 and 6.  These grounds relate essentially to the contentions that (1) the government’s statutory right to apply the pension benefits for satisfaction of debts under section 31(2) of Cap 99 does not make the government a secured creditor of the subject debts; (2) the judge was wrong in holding that the government was a secured creditor by virtue of the non-alienation provision in section 28 of Cap 99; and (3) the judge was wrong in holding that government’s security could not be surrendered or waived in view of such mandatory non-alienation provision.

7.The discussion in Re Choi Lai Ming, ex p Official Receiver [2006] 1 HKLRD 7, which was considered by the judge at §18 of his judgment, was focussed mainly on the salary of the civil servant charged to the government.  As stated by Barma J (as he then was) at §58, the question of whether the government was a secured creditor in respect of the pension was not the subject of as much argument.  And there are distinguishing features between this case and Choi Lai Ming.

8.I think there may be a serious argument whether the non-alienation provision, without more, is sufficient to make the government a secured creditor in respect of the pension benefits in this situation and it is in the interest of justice that the Court of Appeal should consider this and clarify the interaction between relevant provisions in Cap 99 with those of Cap 6, particularly in light of the application of Cap 99 to civil servants in a similar position as the plaintiff.  Leave should also be granted on grounds 2 and 6 as they are in a way predicated on the success of ground 1.

9.I decline to grant leave on grounds 3 and 4, which relate to the contentions that the government could not withdraw the proof of debt as an unsecured creditor without the plaintiff’s consent and that the subsequent withdrawal could not have altered the fact that the government was an unsecured creditor at the time of the discharge of bankruptcy in 2009.  These contentions are red herrings, they have been rightly rejected by the judge in §§30 to 33 of his judgment and they do not add anything of value to the debate.

10.I also refuse to grant leave for ground 5, which seeks to contend that the pension benefits do not constitute a “thing in action” in law.  The arguments advanced on the plaintiff’s behalf do not have any reasonable prospect of success.  They are contrary to first principles and were rightly rejected by the judge in §§9 to 13 of his judgment.

11.I grant an extension of time for the plaintiff to apply for leave to appeal and give leave to appeal limited to the grounds as mentioned above.  The plaintiff is to file and serve a Notice of Appeal in compliance with the leave granted within 14 days of this judgment.  I make an order nisi that the costs of this application be in the cause of the appeal and that the plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.

Written submissions by Mr Ernest Koo, instructed by Stanley K Y Ng & Co, assigned by the Director of Legal Aid, for the Plaintiff (Applicant)

Written submissions by Mr Jenkin Suen, instructed by the Department of Justice, for the Defendant (Respondent)