Re Gurdas Sabhagchand Choithramani

HCB 221/1996

[2019] HKCFI 2584

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 221 OF 1996

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D E C I S I O N

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Background

1.This is an application by the judgment debtor for adjournment of the hearing of his application for annulment of his bankruptcy order (“the annulment application”).  The grounds are that his senior counsel is unavailable and the applicant cannot find a replacement counsel in the limited time available before the substantive hearing.

2.On the application of BNP, the bankruptcy order was made against the applicant on 30 October 1996, 23 years ago.  HSBC was a proving creditor.  The bankruptcy order was discharged on 24 September 2003 but the date was later brought forward to 30 December 2000.

3.The annulment application was made on 27 January 2017.  In summary, the bases were that:

(1)     The enforcement of BNP’s rights under the guarantee was conditional upon and subject to strict compliance by HSBC as the agent of all lending banks with the terms of a 1984 restructuring agreement.

(2)     By reason of HSBC’s breach of the 1984 restructuring agreement, BNP (and other lending banks as well) had no right to enforce any security held by them, including the personal guarantee, the subject matter of HCA 7559/1995, as the same has become invalid and unenforceable.

(3)     BNP instituted the bankruptcy proceedings against GSC knowing full well that it was not entitled to the judgment and the bankruptcy order in the circumstances.

See the decision of Deputy Judge Leung, 5 September 2018, §3.

4.The annulment application is due to be heard tomorrow (“the Hearing”).  It was fixed 8 months ago in consultation with the diary of Mr McCoy SC.

5.The applicant was told in mid-September 2019 that Mr McCoy SC would not be able to appear.  The applicant’s solicitors approached 5 senior counsel and some junior counsel (including those who had acted for the applicant before).  Unfortunately, counsel was either not available or for other reasons (including the lack of preparation time) could not represent the applicant.  The last attempt to find another counsel was last week but counsel declined instructions due to the long history of the matter, the amount of evidence to be reviewed, the legal research to be done, and the necessity to be acquainted with past litigation before formulating the legal arguments.

6.On 16 October 2019, the present summons for adjournment was taken out. 

7.BNP has throughout stated that it did not wish to be heard on the annulment application.  JSM, acting on behalf of HSBC, has no objection to the adjournment but leaves it to the court to exercise its discretion.  The Official Receiver and Trustee also has no objection to the adjournment.

Legal principles

8.A court will only vary a milestone date (of which the Hearing is one) if there are exceptional circumstances justifying the variation.  The court has a positive duty actively to manage cases with a view to furthering the underlying objectives of the rules, one of which is to ensure that cases are dealt with expeditiously as is reasonably practicable.  Of course, it remains nevertheless necessary for the court to recognise that its primary aim in the exercise of its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties.  See Order 25, rule 1B, Order 1A, rule 2, Law Yin Pok Bosco v Dr Chan Yee Shing, HCMP 2256/2012, §18, 2 November 2012, Fok JA (as he then was).

9.Paragraph 42 of Practice Direction 5.2 provides that:

“Milestone dates will be immovable save in the most exceptional circumstances and for that purpose, for instance, late instructions from client, change in the team of lawyers, the absence of prejudice to other party which cannot be compensated for my costs will not be treated as exceptional circumstances.”

10.The “change in the team of lawyers” in paragraph 42 of PD 5.2 contemplates a voluntary decision by the party seeking an adjournment to change its team of lawyers. A voluntary decision of such nature obviously cannot by itself support an application to a milestone date. The situation will however be different when a change has in effect been forced upon a party. This is more so when the difficulty goes beyond mere change of the legal team to an inability to engage any counsel who can responsibly appear during the trial. Sun Hing Cheong Textile Ltd v Chan Wai Ming & ors [2018] HKCFI 765, §22.

Application of the legal principles

11.For a start, this application was not properly prepared.  It started off as an informal application by letter enclosing a draft summons.  

12.Apart from the 3 bases cited in paragraph 3 above, neither the supporting affirmation of the applicant nor the submission informed the court as to the issues that need to be decided at the Hearing.  Deputy Judge Leung’s decision was not even enclosed with the skeleton submission.  This court was told that affirmations had been filed for the annulment application but those affirmations were not placed before this court nor identified in the skeleton submission of Mr Pierrepont.  The court could not assess the volume of documents that counsel needed to read to prepare for the case.

13.Today, the court was told from the bar table that 3‑4 affirmations would be used.  Judging from those 3 issues set out above and the fact that affirmations would be used (as opposed to oral evidence), one would have thought that the Hearing was likely to be one on law that counsel could quickly pick up and argue.  It was difficult to accept that there was no suitable counsel who could have taken up the case.

14.The affirmation in support did not even tell the court why, having been booked for 8 months, Mr McCoy SC is not available.  That said, I find that the need to change counsel was not a voluntary decision of the applicant.  He did make an effort to seek alternative counsel in the limited 5 weeks available. 

15.This court has trawled through the court file to try and identify the relevant affirmations for the Hearing.  One may say that the bankruptcy order is stale and question the merits of the annulment application.  However, the court could see that the applicant expressed great grievance over the bankruptcy order and spent efforts over many years to try and pursue the annulment application.  Since the filing of the annulment application, he had not done anything to try and delay the Hearing.

16.The case has a long history although the issues at the heart of the annulment application may be confined.  The application referred to the contractual right to enforce security and the propriety of past High Court action.  The applicant is aged over 80.  It may not be easy for him to present the application as a litigant in person especially in the shortness of time when bundles have not even been prepared by his solicitors, still less a draft set of submission. 

17.Having regard to the matters in paragraphs 14-16 above and for the purpose of just resolution of dispute, I consider that there are exceptional circumstances in this case to justify giving the applicant one adjournment to have his case fairly presented by counsel.  It shall be re-fixed to another date after 31 December 2019 with one day reserved.

18.The adjournment arose through no fault of HSBC or the Official Receiver & Trustee.  I make an order, nisi, that costs shall be borne by the applicant, to be summarily assessed on the papers without a hearing.  HSBC and the Official Receiver shall file and serve their statement of costs by 24 October 2019.  The applicant shall file and serve his grounds in opposition by 28 October 2019.

Mr Mark Pierrepont, of Arun Nigam Associates, for the Judgment Debtor

The Petitioning Creditor/Judgment Creditor, BNP Paribas (formerly Banque Nationale de Paris), was not represented and did not appear

Mr N Hunsworth (solicitor advocate), of Mayer Brown JSM, for the Proving Creditor (HSBC)

The attendance of the Official Receiver was excused