Re Tang Tim Chue Alias Tang Tim Chu
Read the full judgment text of CACV 297/2021 on BabelCite. This Court of Appeal judgment was delivered on 30 June 2022.
1. On 28 January 2021, the court ordered that Tang Tim Chue (“the Bankrupt”) be adjudged bankrupt [1] , and the Official Receiver was appointed the provisional trustee of his estate.
Cited by 3 cases · Cites 12 cases
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[English Translation – 英譯本] CACV 297/2021 [2022] HKCA 909 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 297 OF 2021 (ON APPEAL FROM HCB 7373/2020) ______________________
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_________________ JUDGMENT _________________ Hon Chu JA (giving the judgment of the court): A. Introduction 1.On 28 January 2021, the court ordered that Tang Tim Chue (“the Bankrupt”) be adjudged bankrupt[1], and the Official Receiver was appointed the provisional trustee of his estate. 2.On 24 February 2021, the Bankrupt issued a summons to apply for leave to proceed with the action in the Court of First Instance Case No. 1123 of 2020 (“HCA 1123/2020”). The Official Receiver objected to the application. 3.Upon hearing, K Yeung J of the Court of First Instance (“the trial judge”), in his judgment handed down on 14 May 2021[2], dismissed the application of the Bankrupt and ordered him to pay the costs of the Official Receiver. The Bankrupt now appeals against the judgment. B. HCA 1123/2020 4.The Bankrupt is the Plaintiff in HCA 1123/2020 and the Defendant in that case is Tang Wing Hong (a manager of Tang Kui Yik Tso (鄧居易祖)). The writ of summons in that action was issued on 6 July 2020. The trial judge summarised the Bankrupt’s claim in the case as follows[3]:
5.Tang Wing Hong filed a defence and counterclaim on 31 August 2020. The Bankrupt issued a summons on 30 December 2020 for an application to strike out the defence and counterclaim, and to enter judgment. The summons was fixed to be heard on 11 February 2021 before a master. 6.The Official Receiver sent a letter to the court on 10 February 2021, informing the Bankrupt that he was adjudged bankrupt on 28 January 2021, and pointed out that according to sections 12(1) and 58 of the Bankruptcy Ordinance (Cap 6), the Bankrupt had no locus standi to proceed with the action in HCA 1123/2020 unless he obtained the consent of the Official Receiver or was granted the right of action by the Official Receiver. The Official Receiver also stated that since she was not satisfied that the Bankrupt had a good claim in that case and that the Bankrupt’s estate was not sufficient to cover the costs involved, including potential adverse costs to the other party in the event that the claim in the action failed, she did not agree to allow the Bankrupt to proceed with the action in HCA 1123/2020 and did not intend to attend the hearing on 11 February 2021 to save costs. 7.Before that, the Official Receiver had informed the Bankrupt through a letter delivered in person on 9 February 2021 that she would not proceed with the action in HCA 1123/2020 as the provisional trustee of the bankruptcy estate or allow the Bankrupt to proceed with the case. 8.At the hearing on 11 February 2021, Master Man of the High Court dismissed the Bankrupt’s summons. C. The Trial Judge’s Decision 9.On 24 February 2021, the Bankrupt issued the aforesaid summons in the bankruptcy case, applying for leave to proceed with the action in HCA 1123/2020. 10.The Official Receiver submitted a report to the court on 27 April 2021 opposing the application on the following grounds:
11.After the hearing, the trial judge handed down judgment on 14 May 2021, dismissing the Bankrupt’s application. The reasons for the trial judge’s decision are as follows:
D. The Bankrupt’s Grounds of Appeal 12.The Bankrupt filed a notice of appeal on 8 June 2021 against the trial judge’s decision. The grounds of his appeal are as follows:
13.The Bankrupt made the following submissions:
E. Reasons for Judgment of this Court E1. Does the Bankrupt have locus standi to make an application? 14.Section 83 of the Bankruptcy Ordinance provides as follows:
15.If the Bankrupt wishes to apply under section 83 for reversing the decision of the Official Receiver, namely, that she would not proceed with the action in HCA 1123/2020 as a provisional trustee or allow the Bankrupt to proceed with the case, and for leave of the court to proceed with the litigation, he must first prove that he has been “aggrieved” by the decision of the Official Receiver. A well-established legal principle is that unless a bankrupt can prove that his estate would have had a surplus after paying all the debts but for the decision of the Official Receiver, he will not be regarded as “aggrieved” by the decision of the Official Receiver: see Re a Debtor, ex parte The Debtor v Dodwell (The Trustee) [1949] 1 Ch 236; Re Chu Wai Tung [2017] 4 HKLRD 610 [40]-[43]; Re Kwong Yuet Ping [2021] HKCFI 118, [11]-[14]; and Butterworth Hong Kong Bankruptcy Law Handbook (6th ed) [83.02]. 16.This court agrees with what the trial judge stated that, since the said land in Tuen Mun belongs to Tang Leuk Tso, even if the claim of the Bankrupt in HCA 1123/2020 was established, leading the court to order that the agreement for the sale of the said land in Tuen Mun be dismissed and that Tang Wing Hong should pay damages, the said land in Tuen Mun should be restored to Tang Leuk Tso as part of Tang Leuk Tso’s estate, and any damages awarded should be paid to Tang Leuk Tso and/or Tang Kui Yik Tso, not to the Bankrupt. Therefore, the Bankrupt would not have received any assets from the claim in HCA 1123/2020 to repay his debts, let alone achieve a surplus to his estate after repaying his debts. 17.Moreover, even if the Bankrupt and his son were “members” of Tang Kui Yik Tso, and even if the said land in Tuen Mun was worth $30 million odd as the Bankrupt alleged, the evidence provided by the Bankrupt would not be sufficient to show that Tang Kui Yik Tso would inevitably distribute the money successfully recovered through the proceedings in HCA 1123/2020. In addition, Tang Kui Yik Tso only holds 30 shares of the 285 shares of Tang Leuk Tso. The Bankrupt did not provide any evidence to show the amount he could receive from Tang Kui Yik Tso. The Bankrupt submitted in the appeal hearing that in view of his efforts made for the Tso Tong (祖堂), the elders would undoubtedly give him at least $200,000 to $300,000. However, the Bankrupt did not provide any evidence, information or ground to support that allegation. 18.Under such circumstances, the Bankrupt failed to prove that he was “aggrieved” by the decision of the Official Receiver and thus the requirements of section 83 were not met. Therefore, the trial judge was right to rule that the Bankrupt had no locus standi to make the application. For this reason alone, the application of the Bankrupt and this appeal should be dismissed. E2. Whether the Official Receiver’s decision was perverse,clearly wrong or utterly unreasonable and absurd? 19.Even if the Bankrupt had locus standi to make this application, he would still be required to show that the Official Receiver’s decision was perverse, clearly wrong or utterly unreasonable and absurd; that is to say, no reasonable trustee would have so acted, and only then would the court interfere with and reverse her decision; and such jurisdiction would have to be cautiously exercised: see Re Chung Kau (unreported) HCB 581/2003 (23 February 2004) at paragraph 13; and Re Wan Po Jun Mary Pauline (unreported) HCB 144/2011 (26 February 2013) at paragraph 8. E2.1 Whether the claim in HCA 1123/2020 had any reasonable prospect of success? 20.In assessing the claim in HCA 1123/2020, the Official Receiver had taken into consideration the following matters[5]:
21.The Official Receiver had also taken into account a letter which was provided by the Bankrupt at a later stage. The letter, which was dated 5 March 2021, was issued to him by Tuen Mun District Office. As pointed out in the letter, the record showed that:
22.In view of the aforesaid letter from the Tuen Mun District Office, the Official Receiver inspected the relevant record of the said land in Tuen Mun at the Land Registry, which showed the following matters:
23.The Official Receiver took the view that there was no evidence to suggest that Tang Chi Cheung, Tang Sum Yuen and Tang Wing Hong, acting as the managers of Tang Leuk Tso, had received $5,619,240 without assigning the said land in Tuen Mun. Accordingly, it was the view of the Official Receiver that the Bankrupt had failed to prove that Tang Leuk Tso or he himself suffered any loss; and that there was no prospect of success for the Bankrupt’s claim in HCA 1123/2020 even if the letter from the Tuen Mun District Office dated 5 March 2021 was taken into account. 24.In our view, the Official Receiver had considered and analysed the relevant evidence and materials correctly, including the responses and documents provided by the Bankrupt. We agree that there was no evidence to show that (i) Tang Chi Cheung, Tang Sum Yuen and Tang Wing Hong, acting as the managers of Tang Leuk Tso, had assigned the interests of the said land in Tuen Mun to Strong Cheer; and that (ii) the three of them had received $5,619,240 as the proceeds of the land sale, without assigning the said land in Tuen Mun. 25.The Bankrupt submitted that Tang Wing Hong had admitted in his defence filed in HCA 1123/2020 that he had received the proceeds of the land sale. In that case, both the Bankrupt and Tang Wing Hong were unrepresented; the Bankrupt’s statement of claim was written in Chinese whereas the defence and counterclaim of Tang Wing Hong were written in English. The defence and counterclaim, which we have read carefully, did not give a specific response to each and every paragraph of the statement of claim but simply raised the following five points:
27.We agree with the submission of the Official Receiver that unlike what the Bankrupt claimed, Tang Wing Hong did not admit in his defence and counterclaim that he had received $5 million odd as the proceeds of the sale of the said land in Tuen Mun. While it was stated in paragraph 4 that there was a land sale and the representatives of Tang Kui Yik Tso had received the proceeds distributed from the land sale, it did not specify which pieces of land were involved. Nevertheless, based on paragraph 3 and the context, it appeared that what was referred to in paragraph 4 was the land sale in Yuen Long District and the proceeds thereof. 28.In any event, what the Bankrupt had claimed in HCA 1123/2020 and had been asserting was that Tang Wing Hong and the other two people, despite not being the managers of Tang Leuk Tso of Tuen Mun District, had acted unlawfully by selling the said land in Tuen Mun to Strong Cheer, and they had received $5 million odd as the proceeds of the land sale. However, in light of the letter from the Tuen Mun District Office dated 5 March 2021, the relevant record of the said land in Tuen Mun at the Land Registry, and the Official Receiver’s analysis of the evidence and the law, there was no objective evidence and ground to support the Bankrupt’s claim, which cannot be substantiated. In our view, the assessment and conclusion of the Official Receiver that there was no reasonable ground and prospect of success for the Bankrupt’s claim in HCA 1123/2020, was reasonable and was not manifestly wrong. E2.2 Whether the Bankrupt’s estate was enough to cover the costs? 29.On the other hand, the Official Receiver had also assessed whether there was sufficient funding or indemnity in the Bankrupt’s estate to cover the costs that might be incurred in the case, including any potential adverse costs to the other party in the event that the claim in the action failed: see Wan Po Jun Mary Pauline, at paragraph 9; and Dr Vincent Kay Lo-Ip v Dr Andrew Kee-suan Koh (unreported) FAMV 8/2001 (24 April 2001). 30.The trial judge held that the Bankrupt’s estate lacked sufficient funds. The Bankrupt proposed that he could provide a guarantee in the form of his interest in the Tso land of Tang Kui Yik Tso. Nevertheless, the trial judge took the view that there was no evidence to show the value of Bankrupt’s alleged interest, nor was there any evidence to show that it could be used to indemnify the relevant costs when necessary. Hence, the guarantee proposed by him did not have any practical meaning or effect. 31.We agree with the ruling of the trial judge. As stated above (see paragraphs 17 and 18), even assuming that the claim in HCA 1123/2020 was successful and that the said piece of land in Tuen Mun was worth $30 million odd as alleged by the Bankrupt, any amount that would be successfully recovered in the case would belong to Tang Leuk Tso rather than the Bankrupt himself. Besides, Tang Kui Yik Tso only had 30 shares of the 285 shares of Tang Leuk Tso. The Bankrupt had not provided any evidence to show that Tang Kui Yik Tso would distribute the amount that would be successfully recovered in HCA 1123/2020, thus benefitting the Bankrupt. Furthermore, there was no evidence from the Bankrupt to show the amount he himself could receive from Tang Kui Yik Tso, nor was there any evidence to support his claim that he could get at least $200,000 to $300,000. E3. The Order of this Court and Costs 32.Based on the above, we agree with the ruling of the trial judge that the Official Receiver’s refusal to give consent to the Bankrupt to proceed with the claim in HCA 1123/2020 or to assign the right of action in those proceedings to him was not perverse, clearly wrong or utterly unreasonable and absurd. 33.None of the grounds of appeal advanced by the Bankrupt is made out. The appeal is dismissed accordingly. 34.It is the usual rule that in the event that the Bankrupt’s appeal is not successful, he should pay the costs of the Official Receiver, which is to be assessed summarily, to be paid out of the Bankrupt’s property. We have considered the statement of costs submitted by the Official Receiver on 31 May 2022, with item B3 being the fees charged by Ms. Chan, for the hearing on 14 June 2022. In view of the fact that it was a hearing lasting for 30 minutes, the amount under this item should be adjusted to $2,900 ($5,800 X 0.5 hour). As regards the amounts under the other items on the statement, we consider that they are reasonable and appropriate. We assess the costs of the Official Receiver at $38,500. F. Conclusion 35.We order as follows:
The Bankrupt, unrepresented, acting in person. Ms Maureen Chan Mei-lin, Acting Assistant Principal Solicitor, for the Official Receiver and Provisional Trustee Translated by the Judgment Translation Unit of the Judiciary and vetted by Ms. Jenny Chung, Solicitor. |
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