Re Sy Chin Mong, Stephen

HCB 199/1989

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 199 OF 1989

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Re: SY CHIN MONG, STEPHEN

Ex parte: POLARIOD FAR EAST LIMITED, a Creditor

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Before: Hon Kwan J in Chambers

Date of Hearing: 30 April 2008

Date of Decision: 30 April 2008

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D E C I S I O N

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1.This is an application to set aside a bankruptcy notice issued almost 20 years ago.

2.The matter arose in this way.

3.On 31 January 1989, judgment in HCA No. 5485 of 1986 was entered against Sy Chin Mong Stephen, the applicant herein, by Polaroid Far East Limited (“Polaroid”) for US$2,118,426.81.  Polaroid issued a bankruptcy notice against Mr Sy on 25 April 1989.

4.Pursuant to the prescribed form, it was stated in the bankruptcy notice that within 7 days after service of the notice, Mr Sy must pay to Polaroid the judgment sum and the consequences of not complying with the notice were that he would have committed an act of bankruptcy, on which bankruptcy proceedings might be taken against him.  It was further stated that if he had a counterclaim, set-off or cross demand which equalled or exceeded the amount claimed by Polaroid and which he could not set up in the action or other proceedings in which the judgment was obtained, he must within 3 days apply to the court to set aside the notice, by filing an affidavit to that effect.

5.Under the old legislation, which was repealed since April 1998, there must be an available act of bankruptcy to found a bankruptcy petition and there was a requirement that a petition must be presented within a stipulated period from the act of bankruptcy.

6.No bankruptcy petition was ever presented by Polaroid, no doubt because the effect of the act of bankruptcy was spent and there was no longer an available act.

7.It might well be because of that that no action was taken by any one regarding the bankruptcy notice, which was defunct for all intents and purposes.

8.Mr Sy says he has to apply to set aside the bankruptcy notice nevertheless, because it would cause damage and prejudice to his personal credit status in dealing with banks and financial institutions.  He exhibits to his supporting affirmation a bankruptcy petition enquiry dated 7 January 2008, showing that Polaroid had made a request to issue a bankruptcy notice against him in 1989.

9.Mr Sy’s supporting affirmation gave little information as to what had happened after the bankruptcy notice was issued.  Information is gleaned only from the letter dated 6 February 2008 of Baker & McKenzie, the former solicitors of Polaroid.  As Polaroid had been de-registered, the solicitors have no further instructions in the matter.  Nevertheless they have retrieved and reviewed their files and made enquiries with the court.  No further document was filed with the court following the bankruptcy notice issued on 25 April 1989.  The solicitor’s file indicates that Mr Sy had reached a settlement with Polaroid following the service of the bankruptcy notice and a deed of settlement was entered into discharging all Mr Sy’s liabilities arising out of HCA No. 5485 of 1986 along with other liabilities.  No bankruptcy petition was filed and no proceedings were instigated by Polaroid.  The solicitors are of the view that nothing is required from Polaroid in respect of the bankruptcy notice.

10.I do not think Baker and McKenzie could be criticised for taking that position.

11.The bankruptcy notice was issued nearly 20 years ago.  As the ground relied on for setting it aside is satisfaction in full of the judgment debt, there is authority in support that the court would set aside the notice on this ground and that the statutory time limit under the old law which governed an application to set aside a bankruptcy notice on the ground of a counterclaim, set-off or cross demand would not apply, see the judgment of the English Court of Appeal in Re a Debtor [1957] Ch 381.  This case is also authority for the proposition that the court would in proper cases set aside bankruptcy notices, and that satisfaction of the judgment debt must plainly be a proper case.  The English Court of Appeal clearly considered there was jurisdiction to set aside the bankruptcy notice.  I have no reason to think that this court would not have jurisdiction to make a similar order, with or without reliance on the general power of the court in section 97(1) of the Bankruptcy Ordinance, Cap. 6 referred to by Mr Sy’s solicitors.

12.I make an order that the bankruptcy notice issued against Mr Sy on 25 April 1989 is to be set aside.  I make no order as to the costs of this application.

Mr C Kam of Messrs Edward C T Wong & Co., for the Applicant