Re See Wah Fan

HCB8895/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY NO. 8895 OF2010

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Date of Application: 22 June 2011

Date of Ruling on Costs: 25 July 2011

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Ruling on Costs

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1.This court has delivered a Judgment on 15 June 2011 (“Judgment”) dismissing  the Judgment Creditor’s bankruptcy petition lodged against the Judgment Debtor. In addition, an order nisi was made to the effect that the costs of the petition (including the hearing on 2 June 2011) be paid by the Judgment Creditor to the Judgment Debtor (to be taxed if not agreed) (see paragraph 30 of the Judgment).

2.By her letter dated 22 June 2011, the Judgment Debtor applied to vary the costs order nisi such that the costs shall be awarded on a full indemnity basis. Put shortly, it is the Judgment Debtor’s contentions the irregularities on the part of the Judgment Creditor’s conduct justify an award of costs on indemnity basis.

3.By a letter dated 14 July 2011, the solicitors acting for the Judgment Creditor opposed the present application. The letter stressed two points. First, they pointed out that although the petition was dismissed, the Judgment Debtor was at all material times and remains indebted to the Judgment Creditor in respect of the taxed costs. Second, they submitted that the Judgment Debtor’s letter of 22 June 2011 did not disclose any ground for awarding costs on indemnity basis.

4.As the principles concerning the court’s jurisdiction to award costs on indemnity basis are fairly well settled, I do not find it necessary to repeat them here. See, e.g., Hong Kong Civil Procedure 2011, Vol. 1, para. 62/App/12 (pp. 1162-1163). In the present case, I agree with the submissions made on behalf of the Judgment Creditor and do not see any valid reasons for awarding costs on an indemnity basis.

5.Although the bankruptcy petition was dismissed, it was dismissed on the ground that the service of the statutory demand was invalid (see paragraphs 15 to 28 of the Judgment). Having reviewed the circumstances surrounding the invalidity of the service, there is no basis to suggest nor any evidence to draw an inference that the invalid service was an deliberate or intentional attempt on the part of the Judgment Creditor to conceal the intended bankruptcy proceedings from the Judgment Debtor. Put shortly, although I found the service of the statutory demand invalid, there is no other materials to suggest any further wrongdoings or unsatisfactory conduct on the part of the Judgment Creditor.

6.Besides, as rightly pointed out by the Judgment Creditor’s solicitors, the fact remains that the Judgment Debtor still has not paid the taxed costs to the Judgment Creditor. Given the Judgment Debtor’s failure to pay the taxed costs, the attempt to serve the statutory demand on her was understandable.

7.According, I dismiss the Judgment Debtor’s application to vary the costs order nisi.

8.Insofar as the costs of the present application to vary the costs order nisi is concerned, I see no reason why costs should not follow the event. However, bearing in mind the nature of the application and the history of this matter, I am of the view it is more cost-effective to have a gross sum assessment of the costs of and incidental to the present application so as to avoid the parties having to spent further time and costs to deal with the outstanding cost issue.

9.Taking into account the contents of the Judgment Debtor’s letter and the letter from the Judgment Creditor’s solicitors referred to above (both of which are only short letters), I would make an order nisi that the Judgment Debtor do pay to the Judgment Creditor costs in the sum of HK$2,500.