Re Lau Man Wai

HCB000656/1984

IN BANKRUPTCY

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Coram: The Honourable Mr. Justice Jones in Court

Date of hearing: 21st March 1985

Date of delivery of judgment: 21st March 1985

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JUDGMENT

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1. The petitioner obtained judgment against the debtor on the 10th February 1984 for the sum of US $264,966.34 and HK $353,949.45 interest and costs. A bankruptcy notice was served on the 21st November 1984. Based upon failure to comply with the bankruptcy notice a petition was presented on the 30th January 1985 and was served by ordinary post on the 31st January 1985 at the last known address of the debtor.

2. The debtor did not attend the hearing of the petition when a receiving order was made.

3. The debtor applies for the receiving order to be rescinded on the grounds that the petition was not served. Mr. Smith who appeared for the debtor also submitted that the affirmation of service was defective for it did not include statements to the effect that the sealed copy of the petition had not been returned by the Post Office and that in the opinion of the petitioner the petition would have come to the debtor's knowledge within 7 days after posting pursuant to Order 10 rule 1(3)(b) of the Rules of the Supreme Court.

4. Whilst these details were not included in the affirmation of service they have been set out in a supplemental affirmation of service made on the 19th March 1985. However, Section 124(1) of the Bankruptcy Ordinance provides: -

"No proceeding in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court.".

Mr. Smith contends that injustice has been caused because the debtor was unable to invoke the provisions of Section 9(3) of the Bankruptcy Ordinance by resisting the application for a receiving order on the grounds that the assets will not be sufficient to pay a dividend of 15 per cent.

5. The facts reveal that since judgment was obtained in February 1984 the debtor has taken no steps to contest the petitioner's claim. He was alerted to the bankruptcy proceedings when the bankruptcy notice was served upon him and he failed to comply with the notice. The petition was subsequently served at the same address.

6. Although the debtor claims that he did not receive the petition I consider that this was highly improbable for it was never returned by the Post Office. I prefer the evidence of Mr. Ben Ying Pan Ho the deponent to the affirmation of service to that of the debtor. The evidence of Mr. Mok Shau Chuen the Senior Manager of the petitioner also casts grave doubt upon the veracity of the debtor. The evidence also indicates that certain share transfers made by the debtor in 1983 were not made bona fide and for full consideration. It is also significant that the debtor informed the petitioner on the 25th September 1982 that his net worth was then $27,500,000.00.

7. The debtor concedes in his affirmation of the 5th March 1985 that he has been eager to negotiate a repayment schedule with the petitioner.

8. Upon the evidence I find that the debtor was properly served with the petition and that the formal defect in the affirmation of service did not cause any substantial injustice.

9. In addition I consider that this would not be a proper case to exercise the court's discretion in refusing to make a receiving order by virtue of the 15 per cent rule for the facts show that there should be an investigation of the debtor's affairs by the Official Receiver. If after an investigation by the Official Receiver the court is of the opinion that the 15 per cent rule has been satisfied an adjudication can be annulled under Section 33(1) of the Bankruptcy Ordinance.

10. Accordingly the debtor's application will be dismissed with costs to the petitioner.

Representation:

Mr. C. Smith (Robert W. H. Wang & Co.) for Applicant/Debtor.

Miss A. Eu (Johnson, Stokes & Master) for Respondent/Petitioner.

Mr. N. T. Clement-Jones for Official Receiver.