Re Leung Siu Nang, Wilson

HCB 915/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 915 OF 2006

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Re: LEUNG SIU NANG, WILSON

Ex Parte: NEW YORK LIFE INSURANCE WORLDWIDE LIMITED

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Before: Hon Barma J in Court

Date of Hearing: 26 June 2006

Date of Judgment: 21 July 2006

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J U D G M E N T

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1.This was the hearing of a bankruptcy petition presented by New York Life Insurance Worldwide Limited (“the Petitioner”) on 9 February 2006 against Mr Leung Siu Nang, Wilson (“Mr Leung”).  The petition is based on an allocatur for costs dated 18 August 2005, in the amount of HK$57,618.67 plus interest thereon at judgment rate since 4 October 2004, obtained by the Petitioner against Mr Leung, pursuant to a costs order dated 4 October 2004.  Those costs arose out of a previous bankruptcy petition presented by the Petitioner against Mr Leung in 2004 - HCB 7599 of 2004.  A statutory demand was served on Mr Leung by advertisement, but no payment has been made pursuant thereto.

2.The only real question which arises is whether or not the debt is disputed bona fide on substantial grounds.

3.Mr Leung disputes his liability for the debt.  He has filed an affirmation in which he alleges that, prior to the hearing of the bankruptcy petition in HCB 7599 of 2004, it had been agreed between himself and a Mr Ip, a representative of the Petitioner’s solicitors, that if he were to pay the whole of the debt on which that petition was based in one lump sum, the Petitioner would not seek any costs against him.  He says that this was mentioned to the court on 13 September 2004, when the earlier petition was heard, and that he provided the Petitioner with a cheque for the amount claimed (a little under HK$170,000) at the hearing, which was adjourned to the following week with (according to Mr Leung) costs reserved.  Mr Leung says in his affirmation that he was told by the judge (Yam J.) that as agreement had been reached as to costs, he should attend the hearing the following week (although this would seem to be a slip of the pen, as Mr Leung told me that he had understood that he did not need to attend the next hearing as costs had been dealt with).

4.Mr Leung goes on to say that he later asked Mr Ip for a receipt for the payment which he had made, and for evidence of the agreement that costs would not be claimed, but was told that while a receipt would be issued, there was no need for confirmation of the oral agreement.

5.Mr Leung then says that he heard nothing further about the matter for over a year, and that he believes that the matter was only reactivated after, and as a result of, a complaint which he and other colleagues of his made to the Office of the Commissioner for Insurance concerning the Petitioner’s alleged failure to certify his attendance at certain continuing education courses while he was employed by the Petitioner.

6.The Petitioner denies that any such agreement was ever made.  In the affirmation by its solicitor in reply, it is said that on 13 September 2004, costs were not reserved, and that in fact Yam J ordered that costs of the hearing be paid to the Petitioner, to be taxed if not agreed.  The point is also made that there is no record of any such agreement in the solicitor’s files.

7.In response to Mr Leung’s suggestion that the matter was allowed to lie dormant for about a year, correspondence was exhibited which showed that the costs order dated 4 October 2004 was sent to Mr Leung by post shortly after it was made, and that bills of costs, notices of commencement of taxation and the allocatur were also posted to him between April and August 2005.  It was denied that the bringing of the present petition was triggered by the complaint which Mr Leung says he made to the Office of the Commissioner of Insurance.

8.Prior to the hearing of the petition, I caused the court file in respect of the previous proceedings to be brought up and made available to both the parties.  The court file contains the notes made by Yam J. of the hearing on 13 September 2004.  Those notes indicate that what transpired that day was not as deposed to by Mr Leung.  They show that after hearing submissions from both parties, Yam J. was minded to make a bankruptcy order against Mr Leung as there was no dispute as to the debt, and no agreement for payment by instalments, at which point Mr Leung indicated that he was in a position to provide a cheque in full settlement of the claim, whereupon Yam J. adjourned the matter to enable payment to be made, and ordered that the costs of that day’s hearing should be to the Petitioner.  There is no record of the court being told that the Petitioner had agreed not to seek costs against Mr Leung.  Thereafter, Mr Leung failed to attend the adjourned hearing, which was further adjourned to allow the Petitioner to consider how to proceed, as the amount paid by Mr Leung was slightly less than the amount actually due to the Petitioner.  When the matter came before me on 4 October 2004, the Petitioner indicated that it would not pursue the outstanding amount, and would simply withdraw its petition.  As the debt had been paid, I permitted the Petitioner to do so, making an order for costs in its favour, leading eventually to the obtaining of the allocatur on which the present petition is based.

9.In order to avoid the making of a bankruptcy order, it is necessary for Mr Leung to demonstrate that the debt on which the petition is based is disputed bona fide on substantial grounds, by sufficiently precise and believable evidence.  In my view, he has failed to do so.  Although he has asserted that there was an agreement that he should not have to pay the costs of the earlier bankruptcy proceedings, I do not think that his evidence in this respect is believable.  His evidence on affirmation was that such an agreement had been reached prior to the hearing on 13 September 2004, and that this was mentioned to the judge.  However, the record of the hearing does not show any such matter having been mentioned to the judge.  More significantly, the fact that costs of that hearing were ordered against Mr Leung is quite inconsistent with any such prior agreement.  Had there been such an agreement, and had it been brought to the attention of the judge, he would not have made a costs order against Mr Leung, as this would be contrary to the agreement between the parties, which (on Mr Leung’s case) was brought to the judge’s attention.  Mr Leung was present at the hearing that day, and must have heard the costs order pronounced, but does not seem to have queried it then or thereafter.  In these circumstances, I am unable to regard Mr Leung’s case as being believable, so as to raise a bona fide dispute of substance in relation to the debt on which the present petition is based.

10.Although Mr Leung was not present at the hearing on 4 October 2004, the costs order made on that occasion was sent to him.  Mr Leung said at the hearing of this petition that he had not received this or any of the other correspondence from the Petitioner or its solicitors which I have previously mentioned.  However, he accepted that the addresses to which such correspondence was addressed were effective addresses at which he usually received mail.  In the circumstances, I do not see that this point assists Mr Leung, as the Petitioner’s solicitors were in my view perfectly entitled to send documents to him by ordinary post at such addresses.  That correspondence also shows that, contrary to Mr Leung’s impression, the matter was being pursued well before his complaint to the Office of the Commissioner of Insurance.  That being so, I do not see any reason to conclude that the bringing of these proceedings by the Petitioner was otherwise than proper, in an attempt to recover the costs of the previous proceedings to which it was entitled.

11.For these reasons, I am not satisfied that the debt on which this petition is based is disputed bona fide on substantial grounds, and I shall accordingly make the usual bankruptcy order with costs in favour of the Petitioner.

Mr Kan Kin Hang, Michael instructed by Messrs Kennedys,  for the Petitioner

The Debtor, Mr Leung Siu Nang, Wilson, in person