Re Chow Lin Shing t/a Tak Hing Paper Boxes Factory

HCB000451/1984

BANKRUPTCY

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Coram: The Honourable Mr. Justice Jones in Court

Date of hearing: 21 December 1984

Date of delivery of judgment: 21 December 1984

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JUDGMENT

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1. On the 24th October 1984 a receiving order was made against the debtor Chow Lin Shing on a petition issued by two employees in respect of claims for wages in lieu of notice and other benefits. It was alleged in the petition that the debtor was also indebted to 10 other employees. The debtor did not appear at the hearing to oppose the petition. An adjudication order was made on the 6th December 1984.

2. By the present summons Wong Chor Cheung trading as Wah Fung Corporation (the applicant) applies pursuant to Section 33 of the Bankruptcy Ordinance to rescind the receiving order and to annul the order of adjudication. Section 33(1) reads as follows:-

"Where in the opinion of the court a debtor ought not to have been adjudged bankrupt, or where the court is satisfied that the assets for division among the unsecured creditors after payment of all costs, charges and expenses and the debts which are preferential under this Ordinance are not and will not be sufficient to pay a dividend of 15 per cent, or where it is proved to the satisfaction of the court that the debts of the bankrupt are paid in full, the court may, on the application of any persons interested, by order annul the adjudication.".

3. An affirmation in support of the summons was made by the applicant on the 27th November 1984. In the affirmation he says that his firm of which he is the sole proprietor commenced an action in respect of some dishonoured cheques against the debtor, in the High Court on the 30th September 1983, and that judgment was obtained on the 15th November 1983 for the sum of $93,059.87 together with interest and costs. The debtor has made a part payment of $19,023.94, but has defaulted with regard to the balance. Execution was levied on the 30th August 1984 but was subsequently stayed by virtue of the bankruptcy proceedings.

4. The applicant states that the debtor has liabilities according to an admission made by the debtor to him of $1,708,505.00. In paragraph 9 of his affirmation the applicant has what I may say is the effrontery to allege that the bankruptcy petition was presented for the purpose of defeating his execution, but he also goes on to say that the petitioners had not discharged the burden of proof required to satisfy the 15% rule which is the ground relied upon by the applicant in the present summons.

5. Pursuant to Rule 80(3) of the Bankruptcy Rules when an application of the present nature is made the Official Receiver is required to make and file a report 4 days before the hearing as to the debtor's conduct and affairs. No report was in fact filed. However, Mr. Millican who appeared to-day for the Official Receiver informed the court that so far a sum of $72,960.68 in cash has been received and there are admitted debts amounting to $108,479.32. Although the debtor is believed to be in Hong Kong he has not so far been located by the Official Receiver. The statement made by Mr. Millican to-day has been accepted, but I must remind the Official Receiver that Rule 80(3) is mandatory, so that the requirements set out therein must be complied with in future.

6. Upon the evidence the 15% rule cannot in any event be invoked whilst in the decision of Re Wong Moon-tai Bankruptcy No. 80/1983 I have already given a judgment to the effect that it does not apply where there are as in this case preferential creditors. Further, the 15% rule is not mandatory but is one for the discretion of the court to exercise.

7. Initially, I expressed doubt as to whether this application could be made by another creditor. However, I have been persuaded by Mr. Yu who appeared on behalf of the applicant that the applicant is a person interested within Section 33, so that he has locus standi. Nevertheless, I do not retract from the comments that I made at the outset that this is an impertinent application which is made solely to enable the applicant to seize the debtor's assets in order to satisfy the debt due to him at the expense of the other creditors. It is trite law that the bankruptcy law is to be exercised in the public interest and not for the benefit of one creditor against another.

8. This wholly unmeritorious application is dismissed with costs to the petitioner and to the Official Receiver.

Representation:

Mr. B. Yu (Hastings & Co.) for Applicant.

Mr. T. Yen (Director of Legal Aid) for Petitioner.

Mr. J.W. Millican for Official Receiver.