Re: Lam Cham Ho and Ex Parte: The Official Receiver

HCB000843/1998

HEADNOTE

Section 43E(2) of the Bankruptcy Ordinance - whether "family of the Bankrupt" extends to former wife

Maintenance order in favour of former wife and the children - whether maintenance for former wife who has custody of the children to be ignored in assessing the amount of an income payments order - approach in ascertaining the reasonable domestic needs of the Bankrupt's children

HCB 843/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 843 OF 1998

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Coram : The Hon Mrs Justice Le Pichon in Court

Date of Hearing : 3 May 1999

Date of Judgment : 3 May 1999

Reasons Handed Down : 12 May 1999

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R E A S O N S

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1. This is the Official Receiver's application for an income payments order pursuant to s.43E(3)(b) of the Bankruptcy Ordinance against Lam Cham Ho ("the Bankrupt"). The Bankrupt does not object to any of the terms of the order sought save as to the amount which is proposed should be deducted from his monthly income. The Official Receiver seeks the deduction of the sum of $42,730 per month whilst the Bankrupt only consents to the sum of $24,730 being deducted.

2. A Consent Order was made on 6 January 1999 in proceedings for ancillary relief (D.J. No.7473 of 1998) whereby the Bankrupt was ordered to make periodical payments for the maintenance of his former wife and two dependent children who are in the custody of his former wife at the rate of $28,000 per month commencing 1 February 1999. Of that sum, $18,000 was allocated for the maintenance of his former wife and the balance of $10,000 for his children. The Bankrupt computes his net disposable income of $24,730 per month as follows :

3. The Official Receiver objects to the item of $18,000 per month, being the maintenance payment to the Bankrupt's former wife.

4. Whilst the court has a discretion to make an income payments order, in the exercise of that discretion, the court is specifically enjoined by s.43E(2) from making an order "the effect of which would be to reduce the income of the bankrupt below what appears to the court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family". The Official Receiver takes the view that once divorced, the former wife ceases to be a member of the Bankrupt's family within s.43E. It was submitted that as s.43E is identical for practical purposes with s.310 of the Insolvency Act 1986, English authorities on the construction of s.310 are relevant.

5. I do not consider that the English authorities are of assistance in the construction of s.43E for the reason that the Bankruptcy Ordinance does not contain the equivalent of s.385(1) of the 1986 Act which defines "the family of the bankrupt" as meaning "the persons (if any) who are living with him and dependent on him". That is a material difference between the Hong Kong provision and its English counterpart.

6. The issue which arises in the present case is not to be resolved simply by taking a view as to whether a former wife comes within the meaning of the word 'family'. Even assuming that the Official Receiver is correct, that it does not extend to a former wife, the Bankrupt's children are plainly his 'family' although they do not live with him. The apportionment in a maintenance order of the amount for maintenance between the former wife and the children is necessarily artificial where the children are in the custody of the former wife. In such a case, realistically, provision for a former wife may still be provision for the children unless non-payment of the sum for the former wife would not impinge on the reasonable domestic needs of the children.

7. It may be that in an appropriate case, it would be necessary to conduct an examination or require evidence in order to assess the reasonable domestic needs of the children. This may entail going into the assets, liabilities, income and expenditure of the former wife who has custody of children. In the present case, given the amounts involved and taking a broad-brush approach, it appears to me to be an unnecessary exercise.

8. In my judgment, the appropriate income payments order to be made as regards the monthly deductions is the sum of $24,730.

Representation:

Mrs Christine Sit, for the Official Receiver

Bankrupt : Mr Lam Cham Ho in person, present