The Bank of Tokyo-mitsubishi Ltd. v. Lee Hoi Kwong

CACV000407A/2000

CACV407/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 407 OF 2000

(On Appeal From HCA 2671 Of 2000)

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Coram: Hon Le Pichon JA and Hon Yeung J in Court

Date of Hearing: 9 February 2001

Date of Judgment: 9 February 2001

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J U D G M E N T

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Hon Le Pichon JA :

1. The question before us is who should be responsible for the costs of today's hearing.

2. It arises in this way. On 25 August 2000, a bankruptcy petition was presented against Mr Lee ("the defendant"). This was dismissed by the Court of Appeal in October. On 11 November, Messrs Tsang & Co. on behalf of the defendant took out an application by way of notice of motion for leave to appeal to the Court of Final Appeal. On 4 December, a bankruptcy order was made against the defendant and the Official Receiver became his trustee in bankruptcy.

3. The application that had been taken out by the defendant was due to be heard on 9 February 2001. Prior to that date the trustee had been corresponding with Messrs Tsang & Co. who as the defendant's solicitors had taken out the application for leave as to whether or not his trustee would be provided with an indemnity to fund the appeal.

4. On 5 February, Messrs Tsang & Co. confirmed that their client would not be in a position to provide the indemnity requested whereupon the Official Receiver decided not to give his consent to the application and the intended appeal. There was, however, pending the hearing listed for today. On 5 February, the Official Receiver advised Messrs Tsang & Co. to take steps to vacate the present hearing.

5. On 6 February, the solicitors for the Bank forwarded a draft summons to vacate the hearing for the Official Receiver to sign on behalf of the defendant. The summons contains the following provision:

"There is an agreement between the parties that the costs of and occasioned by the notice of motion and costs of this application be to the plaintiff, to be taxed if not agreed."

The Official Receiver took the view that if he were to sign that consent summons, he would be personally liable for the costs of the notice of motion. The Official Receiver was also of the view that it was up to Messrs Tsang & Co. to do what was necessary to vacate today's hearing.

6. The basis for the Official Receiver's view appears to be the decision in Borneman v. Wilson (1884) 28 Ch.D. 53. That was a case where the trustee gave notice to the plaintiff who had been adjudged a bankrupt that he should not proceed with the appeal against an interlocutory order for an injunction and, shortly after that, the trustee entered an appearance and called for a statement of claim and declined to undertake to pay the costs of the appeal incurred by the plaintiff before the notice that the appeal would not be proceeded with, and the appeal came on that the question as to those costs might be decided. Bowen LJ held that if a trustee in bankruptcy who finds an action pending to which the bankrupt is a party, elects to go on with it, he must take it as he finds it, and he cannot adopt part of the action and leave out the rest.

7. It seems to me that that decision (where the trustee had taken a step in the proceedings by entering an appearance) is not relevant to the question whether or not the Official Receiver would be landed personally with the costs by being party to the consent summons. Messrs Tsang & Co. ceased to have any mandate to act for the defendant upon the making of the bankruptcy order. The estate of the bankrupt vested in the Official Receiver and he is the only person who can legally do anything on behalf of the bankrupt. The only way of vacating the hearing today was for someone who could legally represent the bankrupt to be party to the consent summons.

8. I, for my part, do not see how this could have had costs implications for the Official Receiver himself. For this reason, I do not agree with the view of the Official Receiver and it would follow that today's hearing would not have been necessary had he not taken that view and signed the summons. It would also follow that the Official Receiver will have to bear today's costs personally.

9. I should also add a point that has been taken by the Official Receiver. Because the application for leave to appeal was made after the date of the presentation of the petition by the Bank, costs incurred by the Bank in the application are not provable in bankruptcy (section 34(2) of the Bankruptcy Ordinance). But the fact that those costs may not be provable in bankruptcy is a different matter altogether. It does not mean that the Official Receiver would have to shoulder those costs personally and I do not think that there is really anything in the point.

10. So, for the reasons given, I am of the view that the costs of the plaintiff for today's hearing will fall upon the Official Receiver personally.

Hon. Yeung J:

11. I would only add that the Official Receiver has been too prudent and such prudence, in my view, is quite unnecessary. The agreement to withdraw the motion for leave to appeal alone could not have resulted in any personal liability on the part of the Official Receiver for the costs of the motion. After all, no one else, but the Official Receiver could have consented to such withdrawal.

12. I would also order that the Official Receiver is to be liable for today's costs.

Representation:

Mr A. T. Reyes, instructed by Messrs Or, Ng & Chan, for the Plaintiff/Respondent

Mr Alex Ng, instructed by Messrs Tsang & Co.

Miss Linda Chan, instructed by the Official Receiver and Trustee in Bankruptcy of the Defendant/Appellant