Re Chun Hing Metal & Plastic Mould Factory

HCB000274/1984

BANKRUPTCY

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Coram: The Honourable Mr. Justice Jones in Court

Date of hearing: 5 December 1984

Date of delivery of judgment: 5 December 1984

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J U D G M E N T

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1. This is an application by Mr. Kau Tin Yau the sole proprietor of Chun Hing Metal & Plastic Mould Factory (hereafter referred to as the bankrupt) to rescind a receiving order that was made on the 16th July 1984 and to annul the subsequent adjudication order that was made on the 13th September 1984.

2. A petition was filed on the 8th June 1984 by Ng Wing Wah (the petitioner) based upon a judgment of the High Court which was given on the 16th January 1984 for the sum of $450,802 together with interest and costs which remains unpaid. The act of bankruptcy upon which the petitioner relies is failure by the bankrupt to comply with the terms of a bankruptcy notice which was served on him on the 17th May 1984.

3. At the first hearing of the petition before me on the 9th July 1984 the bankrupt appeared in person. He admitted liability for the debt in the following words: -

"I am the boss of the factory. I admit the amount $450,000. I cannot pay. I intend to pay off the debtor."

4. Mr. Comerford who appeared on that occasion on behalf of the Petitioner sought an adjournment for one week to which the bankrupt agreed. On the adjourned hearing on the 16th July 1984 Mr. Comerford again appeared for the petitioner and said that no proposals for settlement had been made by the debtor. The bankrupt again appeared in person and said hat he had instructed a solicitor to make an approach to the petitioner, and hoped to return the money. The Official Receiver supported the petitioner's application with the result that a receiving order was made.

5. The judgment obtained by the petitioner relates to an assessment of damages made by a Master in respect of a claim for damages for personal injuries and loss suffered by the petitioner in an accident which occurred on the 16th May 1980 during .his employment with the bankrupt. After the accident an agreement was reached between the bankrupt and the petitioner for employees' compensation in the sum of $33,574. The bankrupt received payment of this amount from his insurance company. According to the bankrupt he paid $12,000 to the petitioner, but kept the balance of $21,574 as a personal loan from the petitioner because the petitioner stated that he did not have any immediate use for the money. However there is no written evidence to support this allegation.

6. The bankrupt maintains that on several occasions he asked the petitioner to notify him whenever he needed the money, so that he could be repaid. But he says on all those occasions the petitioner said he did not require the money so that repayment was deferred.

7. In about July 1982 the bankrupt received a writ issued in the District Court claiming the balance of the employees' compensation which led to an award being given on the 7th September 1982 for $21,574 and a surcharge of $1,078.70. After the award was made the bankrupt said that the petitioner was still willing to extend the time for payment until the end of 1983.

8. On about the 8th May 1983 the bankrupt was served with the writ in the High Court action claiming damages. When he made an enquiry from the petitioner the petitioner explained that the writ related to the claim for employees' compensation. The bankrupt did not understand the contents of the writ of summons but accepted the petitioner's explanation that it related to employees' compensation. He said that had he known the true position that it was a separate action he would have notified his insurance company and would have sought legal advice.

9. On about the 12th November 1983 the bankrupt received a notice from the Director of Legal Aid informing him that he should attend Court on the 16th December 1983. Again he believed that he was required to do so in connection with the claim for employees' compensation. But the bankrupt says that he had to leave for Singapore on a business trip on the 14th December 1983, so he instructed his wife to attend Court on the date of the hearing. The bankrupt's wife has filed an affirmation in support of the bankrupt's application in which she confirms that the bankrupt told her to attend Court with the petitioner. She says that on the 15th December 1983 after the bankrupt had left Hong Kong she arranged with the petitioner to meet at the factory premises the following morning so that they could go to Court. However when the wife arrived at the factory on that morning the petitioner was not there. By the time when she arrived at Court she was told that the proceedings had already begun and was refused entry into the courtroom.

10. The assessment was made by Master Hansen in the absence of the bankrupt. Mr. North who appeared on behalf of the petitioner and with the consent of Mr.Chan who represented the bankrupt informed me that the note taken by Mr. Wills who appeared for the petitioner at the assessment reads as follows: -

"Defendant absent overseas. Defendant's wife arrived outside court, but unannounced and unidentified during the course of the assessment. As I was unaware of her presence/identity I did not call it to the attention of the Master. Apparently she rang Regina Cheung (law clerk in the case) yesterday afternoon requesting on behalf of the defendant who is abroad an adjournment. I advised the Master of this fact indicating I would not have consented to such a request and the Master himself said that he would not have allowed application for an adjournment anyway.".

11. Since the judgment was obtained the bankrupt claims that there have been several attempts to settle the matter with the petitioner, but that the petitioner's proposals for settlement have varied from $70,000 to $380,000. However the petitioner has reneged upon his promises.

12. I agree with Mr. North that the issue in this case is essentially one of credibility so far as the bankrupt is concerned.

13. It is not in dispute that payment of the balance of the employees' compensation was not in fact effected until February 1984 almost two and a half years after the award was made in the District Court.

14. Mr. Chan submitted that the assessment of damages made by the Master was wrong and that in the interests of justice this issue should be reopened. However, this submission conflicts with the draft defense filed by the bankrupt in which liability for the accident is disputed.

15. Mr. Patel appeared on behalf of the Official Receiver. He said that after the receiving order was made on the 16th July 1984, forms were handed to the bankrupt, relating to the completion of a statement of affairs. The bankrupt signed a receipt for the forms and agreed to submit a duly completed and verified statement of affairs within one month from that date. At the first meeting of creditors which was held at the Official Receiver's office on the 14th August 1984 the bankrupt had not submitted a statement of affairs. The bankrupt was present at this meeting and informed the Chairman, Mr. Brown, that he wished to have an adjournment of the meeting for one week as he wished to approach the petitioner with regard to a settlement. The request for the adjournment was granted until the 21st August 1984. At the adjourned hearing Mr. Brown asked the bankrupt whether he had made a written proposal to which he replied in the affirmative. The bankrupt then produced a letter which he had addressed to the Director of Legal Aid. This letter is undated and reads as follows:

"We act for Kau Tin Yau trading as Chun Hing Plastic Mould Factory and understand that an amicable settlement has been reached between our client and Mr. Ng Wing Wah for settlement of the above bankruptcy proceeding.

1.     The Judgment Creditor agrees to receive sum of HK$50,000.00 for the judgment debt by way of equal monthly instalments of HK$5,000.00 each of the first of which to be paid or before on the 21st day of August 1984 and subsequently monthly instalments to be paid on or before the 10th day of each and every calendar month until full payment in full and final settlement of the judgment debt mentioned in the petition herein.

2.     Usual default clause.

3.     the receiving Order made herewith be recined.

4.     the judgment debtor shall pay the costs of this proceeding to be taxed if not agree. ".

However, it appears that the petitioner who attended the meeting did not agree to this proposal. A resolution for adjudication was then passed and the order was made by the court on the 13th September 1984.

16. The present application eras filed on the 17th September 1984. After being served with the application the Official Receiver approached the bankrupt, but obtained no response. However, he received a letter from solicitors instructed on his behalf dated the 12th October 1984 in which they said that the bankrupt had lost or mislaid part of the account books so that he was unable to complete the statement of affairs. Nevertheless the letter also stated that the bankrupt would endeavour to file a statement as soon as possible. Up to the present time the bankrupt has not submitted a statement of affairs.

17. As a result of the enquiries made by the Official Receiver prima facie evidence has been obtained indicating that the bankrupt has taken steps to transfer his business to other people, and has received from a third party a sum of money which he claims he has spent for various payments. The Official Receiver comments that these transactions are highly questionable and depending upon the results of investigations could be evidence of the commission of bankruptcy offences. The bankrupt's conduct was described by Mr. Patel as highly unsatisfactory.

18. May I say that I wholly agree with the comments made by Mr. Patel. The bankrupt has shown in my opinion from the evidence that he is a person completely lacking in credibility. Having admitted his liability at the first hearing of the petition he now seeks to set aside the judgment to start all over again. The application has been made in an attempt to delay payment of his legal obligations to the petitioner. I find no merit whatsoever in the application which will be dismissed. Cost to the petitioner and the Official Receiver.

Representation:

Mr. S. Chan (Ronald Ho & Co.) for Applicant/Debtor.

Mr. Patel for Official Receiver.

Mr. North (Director of Legal Aid) for Petitioner.