Re Woo Chiu Lin

HCB 12249/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPCTY PROCEEDINGS NO. 12249 OF 2002

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Before: Mr Recorder Kwok, S.C. in Court

Date of Hearing: 29 October 2004

Date of handing down reasons for decision: 16 November 2004

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REASONS   FOR   DECISION

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1.On 24 March 2003, Messrs Wilson Yeung & Co. took out an application on behalf of the debtor for an order that (written exactly as in the original):-

“1.    The Bankruptcy Order made by Master S. Kwang dated 30th October 2002 against the Debtor herein set aside, annulled, rescinded, and/or discharged pursuant to sections 33(1) and 98 of the Bankruptcy Ordinance.

2.    The costs of this application be provided for.”

2.The application came before me on 29 October 2004.  Having heard counsel for the debtor and solicitors for the petitioner, I ordered that:-

1.    The Bankruptcy Order made by Master S. Kwang herein on 30 October 2002 be set aside, annulled, rescinded, and/or discharged.

2.    No order as to costs between the petitioner and the debtor.

3.    The Official Receiver and Trustee’s costs of these proceedings, assessed in the sum of HK$40,400.00, be paid by the petitioner.

3.I told the parties that reasons for my decision would be handed down on 16 November 2004.

The judgment debt

4.On 9 February 1999, the debtor commenced HC Action No. A2416 of 1999 (“the Main Action”) against the petitioner.

5.The petitioner obtained an order of costs against the debtor in interlocutory proceedings in the Main Action and those costs were assessed at $69,277. 

6.By letter dated 28 July 2001, solicitors for the petitioner, Messrs George Tung, Jimmy Ng & Valent Tse, served the allocatur dated 24 July 2001 on the debtor.  The address for service was the Nathan Road address.  Service of the allocatur was not disputed by the debtor.

Steps taken to serve the statutory demand

7.Not having received any payment of the judgment debt, the petitioner demanded payment by a statutory demand dated 16 November 2001 under section 6A(1)(a) of the Bankruptcy Ordinance, Cap. 6.

8.On 28 November 2001, Solicitors for the petitioner went to the Nathan Road address at about 7:50 p.m. in an attempt to serve the statutory demand on the debtor.  The door was locked and no one answered the call.  A copy of the statutory demand was inserted into the letter box for the Nathan Road address.

9.On 30 November 2001, Solicitors for the petitioner went to the Nathan Road address again at about 4:30 p.m.  The door was again locked and no one answered the call.  An appointment letter for service on 6 December 2001 at 10:30 a.m. was inserted into the letter box for the Nathan Road address.

10.On 6 December 2001, Solicitors for the petitioner went to the Nathan Road address at about 10:30 p.m.  In contrast with the previous visits, on this occasion, the wooden door was open, the lights were on, and noises came from the residential unit.  However, no one came to the door despite the ringing of the door bell for about 10 minutes.  A watchman said that the debtor resided at the Nathan Road address.

11.On 21 December 2001, the petitioner published the statutory demand in the Sing Pao Daily, a newspaper in Chinese circulating in Hong Kong.

12.A land search on 19 January 2002 by solicitors for the petitioner showed that the debtor was the registered owner of the Nathan Road address.

13.In her witness statement dated 9 April 2002 filed by Messrs Wilson Yeung & Co. on her behalf in the Main Action, the debtor gave the Nathan Road address as her address.

14.On 18 April 2002, Solicitors for the petitioner went to the Nathan Road address at about 7:00 p.m.  A female adult in the flat said that there was no such person by the debtor’s name.  Her assertion was contradicted by a watchman who told the process server that the debtor resided at the Nathan Road address.

15.In June 2002, the Master gave leave to file the Petition.

Whether service of the statutory demand bad

16.Mr Tommy Lo, counsel for the debtor contended that service of the statutory demand was bad in that the debtor had no notice and that the petitioner had not done all that was reasonable for the purpose of bringing the statutory demand to the debtor’s attention.

17.I had no hesitation in rejecting and rejected Mr Lo’s contention.

18.To start with, there was no evidence to ground his contention.  The evidence of the debtor on this point was evasive and sloppy at best and calculated to mislead at worst.

19.In her affirmation affirmed on 7 April 2003, she gave the Nam Cheong Street address as her address.  What she deposed to in paragraphs 2 – 4 (emphasis added) is as follows (written exactly as it stands in the original):-

“First knowledge of the proceedings and my address

2.    I came to know the present bankruptcy proceedings against me only when I received a letter from the Official Receiver’s Office dated 30th January 2003 …

3.    The address shown in the Bankruptcy Petition [the Nathan Road address] is not the address I was living in at the material times.  Nor is it my usual or last known address.  At all material times, I was living at [the Nam Cheong Street address].  There are now produced and shown to me marked ‘WCL-2’ copies of the documents showing that I rented this premises since January 2002 up to date and I have used this address as my corresponding address with my bankers and the mobile phone company …

4.    At all material times, I was not living at the address of [the Nathan Road address], the address stated in the Statutory Demand and the Bankruptcy Petition.  There is now produced and shown to me marked ‘WCL-4’ a copy of the land search record of the address [the Nathan Road address].  Bby the time of about January 2002, I was ordered by the Court to surrender the premises of [the Nathan Road address] to one of my creditors … I did surrender the property to … in about January 2002 …”

20.A copy of the statutory demand was inserted into the letterbox on 28 November 2001 and the appointment letter was inserted into the letterbox on 30 November 2001.  On the debtor’s own case, she did not change her residential address from the Nathan Road address to the Nam Cheong Street address until more than a month later in January 2002.

21.If the debtor did not reside at the Nathan Road address in November and December 2001, she should have said so in clear and unequivocal words and gave her residential address in November and December 2001.  If she did not have any notice of the statutory demand until January 2003, she should have said so categorically.  The use of the phrases “at all material times” and “at the material times” and the denial of knowledge of bankruptcy proceedings are evasive at best and calculated to mislead at worst.

22.What makes the debtor’s case on this point more reprehensive is her assertion in a subsequent affirmation that another address was her “residence at the material times”.  In paragraph 14 of her 2nd Affirmation affirmed on 24 September 2004, she referred to a Ko Shan Road address and said:-

“… The Petitioner must have known this address, which was also used by my son and me after I separated with the Petitioner.  The Petitioner had cohabited with me for about 5 years and he must know that I was still using this property as my residence at the material times.  If he really wanted to serve the Statutory Demand on me, he could have visited this property and I would have known it.”

23.The debtor had not satisfied me on a balance of probabilities that she had no knowledge of the statutory demand until January 2003. 

24.Further and in any event, the petitioner had in my judgment done all that was reasonable for the purpose of bringing the statutory demand to the debtor’s attention and it was not practicable in the particular circumstances to cause personal service of the demand to be effected within the meaning of rule 46(2) of the Bankruptcy Rules.

Whether service of the Petition bad

25.I turn now to Mr Lo’s contention that service of the Petition was bad.

26.It was common ground that there was no personal service under rule 59(1) of the Bankruptcy Rules.  Mr Chau, solicitor for the petitioner, relied on substituted service under rule 59(2).

27.In the affirmation grounding the petitioner’s ex parte application for an order for substituted serve, Mr Ngai Kwok Pang, clerk to Messrs George Tung, Jimmy Ng & Valent Tse, deposed in paragraph 7 that (written exactly as it stands in the original):-

“7.     The Judgment Creditor do not know where or how I could locate the Judgement Debtor or any person or source from whom contact may be made to ascertain the whereabouts of the Judgment Debtor save and except as disclosed herein.  I verily believe that the Judgment Debtor is currently in Hong Kong and is fully aware of my efforts as aforesaid but is trying evade the same.”

28.The grounding affirmation was silent on the fact that the debtor was represented by solicitors in the Main Action.  Clearly those solicitors were persons or sources from whom contact could be made to ascertain the whereabouts of the debtor.  The Court was misled by the petitioner through Mr Ngai Kwok Pang.  Mr Chau did not attempt to defend paragraph 7 and conceded that service of the petition was irregular.

29.The petitioner was clearly less than candid in his ex parte application.  The order for substituted service ought to be set aside without going into merits, see e.g. Hong Kong Racing Pigeon Association Limited and others v Lam Koon Lam and others, HC Action No. A18376 of 1999 and cases there cited, unreported, Recorder Kwok SC, 14 April 2000.  It follows that the bankruptcy order should be annulled. 

Costs

30.There is thus no need to go into merits and I express no views on the debtor’s claims of set-off and counterclaim, except to say that the contention in paragraph 6 of the debtor’s 2nd affirmation of set-off against her son’s claim against the petitioner was a clear waste of the Court’s time.

31.Both the petitioner and the debtor were less than candid with the Court.  Each lost on one issue and succeeded on the other issue.  That was why I ordered that there be no order as to costs between the petitioner and the debtor.  As service of the Petition was irregular, I ordered the petitioner to pay the costs of the Official Receiver and Trustee.

Post judgment letter from Messrs Wilson Yeung & Co.

32.A few days after I had made my order, Messrs Wilson Yeung & Co. saw fit to write to my clerk.  It was in fax form, dated 4 November 2004 and delivered by hand on 5 November 2004.  The document did not purport to have been copied to the petitioner or to the Official Receiver and Trustee.  The document is in the following terms (written exactly as in the original):-

“Dear Sir/Madam,

Re: HCB12249 of 2002

We enclose herewith a copy of a letter from the Official Receiver to us dated 4th November 2004.

We shall be obliged if you could ascertain from His Lordship Mr. Recorder Kwok, S.C. if it is also his judgment that the bankruptcy petition herein is also dismissed with costs to the Debtor.

Perhaps this should be set out in his Lordship’s written judgment to be delivered on 16th January 2004.

Yours faithfully,

Wilson Yeung & Co.,

Encl.

c.c. client”

33.If the debtor had intended to apply for dismissal of the Petition, she should have asked for it in her written application dated 24 March 2003 and at the hearing before me.  It is impertinent to tell a judge what should be “set out” in his judgment.  Messrs Wilson Yeung & Co. may also wish to read in their spare time what Pickering Acting CJ said in Sheung Kwok Leung and another v R [1976] HKLR 742 at p. 755:-

“One other matter calls for comment. Three days after the end of the trial junior defence counsel telephoned the Clerk of Court to the President of the Court indicating that Mr. Sherrard wished to make further submissions, that Crown counsel had not yet been contacted in this regard and that the question whether those submissions should be made orally or in writing had not yet been finalised. A holiday weekend intervened upon the expiration of which, that is six days after the trial had ended, a note was received from Mr. Patrick Yu, junior defence counsel, presumably at the instance of leading defence counsel, enclosing written submissions said to be delivered with the consent of the prosecution ‘and with the express understanding that the Court should indicate whether the submissions of fact . . . are acceptable in that form or whether the Court would have it read in open court’. The answer, of course, is that they are acceptable in neither form without the leave of the court. No such leave was obtained by either side and the submissions when perused consisted of references to authorities well known to the Court and of reiteration of argument previously put before the Court.

Had there been genuinely new matter to be placed before the Court, defence counsel had adequate time in which to do that since the case was set down for four days and finished at 5 o’clock on the afternoon of the second day. Had such new matter existed two whole days remained for its exploitation.

There are no grounds for the assumption that this Court will permit further argument either orally or in writing after the conclusion of the hearing of the appeal. Were this to be allowed as a practice the task of the Clerk of Court in organizing the court’s calendars would be rendered unmanageable and that of the judges in hearing and deciding the appeals coming before the court, impossible. There may be cases in which something both cogent and urgent comes to counsel’s attention after the conclusion of the hearing of the appeal and in such circumstances     - and they must be very rare - with the consent of the other side and, we emphasise, the approval of this Court, it may be permissible to allow a second bite at the cherry. In the present instance the exercise was unauthorised, unhelpful and unnecessary and therefore unwelcome.”

The debtor, absent, but represented by Mr Tommy Lo, instructed by Messrs Wilson Yeung & Co.

The petitioner, absent, but represented by Mr L Chau of Messrs George Tung, Jimmy Ng & Valent Tse

The Official Receiver, absent