Re Choy Bing Wing

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGSNO 12343 OF 2009

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Re: CHOY BING WING, Debtor/Appellant (Judgment Debtor)

Ex Parte: DIRECTOR OF HOUSING DEPARTMENT OF THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION, Petitioner/Respondent (Judgment Creditor)

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I. INTRODUCTION

1.The court granted the following costs orders in favour of the Director of Housing Department being the judgment creditor (“Director”) against Choy Bing Wing being the judgment debtor (“Choy”):

(a) on 24 December 2009, Chung J ordered Choy to pay the Director’s costs of Choy’s application to recuse and Choy’s appeal before him summarily assessed at $9,208.90 and $22,461.20 respectively (“1^st Costs Order”);

(b) on 1 February 2010, Master Ko ordered Choy to pay the Director’s costs of and incidental to the bankruptcy proceedings in the sum of $70,000 (“2^nd Costs Order”);

(c) on 24 February 2010, Barma J (as he then was) ordered Choy to pay the Director’s costs of the appeal before him in the sum of $18,000 (“3^rd Costs Order”).

The total amount of costs awarded in favour of the Director under the 1^st, 2^nd and 3^rd Costs Orders (collectively, “Costs Orders”) was $119,670.10 (ie $9,208.90 + $22,461.20 + $70,000 + $18,000) together with interest accrued thereon at post-judgment statutory rate (“Rate”) pursuant to section 49 of the High Court Ordinance Cap 4  (“HCO”) until payment (“Awarded Costs”).

2.On 4 July 2013, Master de Souza granted a charging order nisi to the effect that unless sufficient cause to the contrary be shown at a hearing on 2 August 2013 the interest of Choy in the following assets shall in the meantime stand charged with the payment of the sum of $152,426.57 (being the Awarded Costs calculated up to and inclusive of 27 June 2013) and further interest on the sum of $119,670.10 at the Rate until full payment due on the Costs Orders together with costs of the application (“Charging Order Nisi”):

(a) 35/850^th shares of and in The Remaining Portion of Inland Lot No 7109, The Remaining Portion of Inland Lot No 7110, The Remaining Portion of Inland Lot No 7111, The Remaining Portion of Section A of Inland Lot No 513, The Remaining Portion of Section B of Inland Lot No 513 and The Remaining Portion of Inland Lot No 513 (Shop 4, Ground Floor, Tak Lee Building, 270-280 Queen’s Road West, Hong Kong) (“1^st Property”); and

(b) 14/2,000^th shares of and in New Kowloon Inland Lot No 5603 (Flat 2A, 6^th Floor, Merry Court, Nos 4-6 Fessenden Road, Kowloon, Hong Kong) (“2^nd Property”).

3.At the adjourned hearing of the Charging Order Nisi before Master H Au-Yeung on 5 December 2013 (“Master Hearing”), Choy opposed the Charging Order Nisi and asked the learned master to recuse himself from hearing the matter.  After hearing submissions, Master H Au-Yeung granted the following order (“Au-Yeung Order”):

(a) the application for recusal be dismissed (“Non-Recusal Order”);

(b) the interest of Choy in the 1^st Property as sole registered owner do stand charged with the payment of the sum of $152,426.57 calculated up to and inclusive of 27 June 2013 together with further interest on the sum of $119,670.10 at the Rate from 28 June 2013 until full payment being the amount due from Choy to the Director on the Costs Orders together with costs of the Director’s application summarily assessed at $34,000 (“Charging Order Absolute”);

(c) the Charging Order Nisi imposing a charge on Choy’s beneficial interest in the 2^nd Property be discharged and the registration thereof in the Land Registry be vacated (“Discharge Order”).

4.On 16 December 2013, Choy filed a Notice of Appeal against the Au-Yeung Order, and sought an order that the Au-Yeung Order be set aside and Choy do have costs of the appeal (“Appeal”).  The hearing of the Appeal came before me on 12 March 2013 (“Hearing”).  Choy was unrepresented and appeared in person at the Hearing.  The Director was represented by Mr Boyle of his solicitors (“JSM”).

5.I have also carefully considered Choy’s written submissions dated 13 March 2014 and Mr Boyle’s written submissions dated 7 March 2014 as well as Choy’s oral submissions at the Hearing.

II. CHOY’S ABSENCE FROM PART OF THE HEARING

6.At the beginning of the Hearing, I invited Choy to make oral submissions to support his Appeal.  He enquired whether I had read his written submissions dated 13 March 2014 (which I confirmed that I had), and then proceeded to make his speech to the court with focus on the “jurisdiction issue” [1] raised in his written submissions.  He argued that since there was want of jurisdiction in granting the Charging Order Nisi/Absolute, this court should determine the “jurisdiction issue” [2] in his favour, so there was no need for him to make any further legal submissions.  He also asked the court to release to him the official tape recording of the Hearing.  On that note, Choy left the courtroom of his own accord and did not return even up to the end of the Hearing.

7.I do not see why the Hearing should not proceed as a result of Choy’s voluntary departure from the courtroom.  The Hearing therefore continued in Choy’s absence.  Mr Boyle chose to rely on his written submissions dated 7 March 2014 without additional oral submissions, and he urged the court to dismiss the Appeal and award costs of the Appeal to be summarily assessed in favour of the Director.

III.  APPEAL FROM MASTER

8.It is trite that an appeal from the master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time.  The judge will give the weight it deserves to the previous decision of the master; but he is in no way bound by it.[3]

9.Even though Choy in his written submissions and oral speech focused on the “jurisdiction issue”,[4] since the Appeal is by way of rehearing, if I conclude that Master H Au-Yeung had power to grant the Au-Yeung Order, I still proceed to deal with the other matters raised before the learned master for the sake of completeness.

10.For the purpose of the Appeal, Choy filed/served his 9^th affirmation on 20 December 2013.  I note Mr Boyle did not raise any objection to such affirmation in his written submissions or at the Hearing. In the circumstances, I grant leave for Choy to rely on his 9^th affirmation for the purpose of the Appeal.

IV.  BACKGROUND

11.The background to this matter can be traced back to November 2007 when Choy commenced HCA 2458/2007 against various defendants including the Director.  On 28 December 2007, Choy applied by summons for leave to inter alia discontinue the action.  By an order dated 7 January 2008, the Registrar of the High Court granted leave for discontinuance of HCA 2458/2007 and awarded costs against Choy in favour of all defendants including the Director (“HCA Costs Order”).  Thereafter, the Director proceeded to tax his costs pursuant to the HCA Costs Order.  The amount of taxed costs allowed on provisional taxation and certified in the allocatur dated 9 March 2009 in favour of the Director against Choy was $45,896.50 (“HCA Taxed Costs”).

12.On 15 May 2009, JSM issued and served on Choy a statutory demand for payment of (a) the HCA Taxed Costs ($45,896.50) together with interest thereon in the total sum of $51,212.72, and (b) further interest on the sum of $45,896.50 at the Rate from 16 May 2009 until payment (“Statutory Demand”).

13.On 15 September 2009, the Director issued a creditor’s bankruptcy petition against Choy based on his failure to satisfy the Statutory Demand, and the outstanding indebtedness due and payable by Choy as at 14 September 2009 was $52,439.98 being the HCA Taxed Costs ($45,896.50) together with interest thereon (“Petition”).

14.According to the affidavit of Mr Boyle filed on 11 November 2009, he received Choy’s letter dated 16 September 2009 together with a cheque for the sum of $52,439.98 (being the HCA Taxed Costs in the sum of $45,896.50 and interest thereon calculated up to 15 September 2009) (“1^st Cheque”) after service of the Petition, but a condition was imposed in Choy’s letter and on the reverse of the 1^st Cheque for encashing the 1^st Cheque.  The Director did not accept such condition, so on 8 October 2009 JSM returned the 1^st Cheque to Choy and requested him to issue a cheque or bank draft without any condition imposed on it.  According to Mr Boyle’s affidavit, on the same day JSM received another letter from Choy enclosing the same 1^st Cheque but with a slightly different condition imposed on it.  The Director did not accept such condition, and JSM again returned the 1^st Cheque to Choy on 15 October 2009 and requested him to make payment on an unconditional basis. Ultimately on 16 October 2009, JSM received a letter from Choy together with a cheque in the sum of $52,439.98 with some words inscribed on back of the cheque (“2^nd Cheque”).  As evident by JSM’s letter to Choy dated 27 October 2009, JSM took the view that the 2^nd Cheque had no conditions attached, and they informed Choy the Director would present it for payment.  Two days later on 29 October 2009, JSM received Choy’s letter which seemed to suggest that the 2^nd Cheque “remained as a conditional one”.  But the Director had already presented the 2^nd Cheque for payment by then, and when the 2^nd Cheque cleared for payment the Director obtained the sum of $52,439.98.

15.According to Mr Boyle’s affidavit, the Director was prepared to forego the remaining interest on the HCA Taxed Costs since 16 September 2009, and sought leave to withdraw the Petition against Choy with costs of the bankruptcy proceedings to be awarded in his favour against Choy and to be summarily assessed on indemnity basis. Choy opposed both applications.

16.On 11 November 2009, Master Ko adjourned the Director’s application for leave to withdraw the Petition (so that full arguments could be advanced at the adjourned hearing), and he struck out certain parts in Choy’s affirmation filed on 3 November 2009 with costs reserved.

17.Dissatisfied with such order, Choy filed a Notice of Appeal against such order on 13 November 2009. The appeal was scheduled to be heard before Chung J on 7 December 2009.

18.On 2 December 2009, Choy filed a summons (returnable also on 7 December 2009) to apply for Chung J to recuse himself from hearing such appeal. On 4 December 2009, Choy filed his 4^th affirmation to point out inter alia that Mr Boyle’s assertions in his affidavit that Choy “had withdrawn all [his] conditions imposed on the [2^nd Cheque] is a lie”.

19.Pursuant to the appeal hearing on 7 December 2009 and his written decision handed down on 24 December 2009, Chung J inter alia dismissed (a) Choy’s appeal against the order of Master Ko dated 11 November 2009 and (b) Choy’s application by summons filed on 2 December 2009 for recusal. Chung J also granted the 1^st Costs Order, and a further costs order in favour of the Official Receiver against Choy.

20.After hearing submissions at the adjourned hearing of the Director’s application for leave to withdraw the Petition with costs against Choy on 21 January 2010, Master Ko handed down his written decision on 1 February 2010.  He granted leave for the Director to withdraw the Petition, and at the same time made the 2^nd Costs Order and a further costs order against Choy to pay the Official Receiver’s costs in the sum of $5,300 (“Ko Order”).

21.On 9 February 2010, Choy filed a Notice of Appeal against the Ko Order (including the 2^nd Costs Order).  Such appeal was returnable before Barma J (as he then was) on 24 February 2010.  Upon hearing submissions, Barma J (as he then was) dismissed Choy’s appeal and granted the 3^rd Costs Order.

22.Up till 4 July 2013, Choy did not pay the Awarded Costs to the Director. According to the affirmation of Cheng Yun Wah (solicitor of JSM, “Ms Cheng”) filed on 27 June 2013 in support of the Director’s application for the Charging Order Nisi, the total amount of the outstanding Awarded Costs payable by Choy to the Director under the Costs Orders was $152,426.57 as at 27 June 2013.  Exhibited to such affirmation were (a) a statement of account for such outstanding sum, and (b) the land search records of the 1^st and 2^nd Properties which showed that Choy was the sole registered owner of such properties.  As discussed above, Master de Souza granted the Charging Order Nisi on 4 July 2013.

23.On 25 July 2013, Choy filed his 6^th affirmation to oppose the Charging Order Nisi.  Choy’s grounds of opposition are set out in greater detail below.  On 1 August 2013, the Director filed Ms Cheng’s 2^nd affirmation in reply.  Again, the grounds of the Director’s reply are set out in greater detail below.

24.At the hearing on 2 August 2013, Master K Lo adjourned the hearing of the Charging Order Nisi (so that full arguments could be advanced at the adjourned hearing) with costs reserved, and granted consequential case management directions (ie no affidavits/affirmations shall be filed without leave of the court, and written submissions shall be lodged/served at least five days before the adjourned hearing).

25.Dissatisfied with such order, Choy filed a Notice of Appeal against such order on 5 August 2013.  The appeal was returnable before Anthony Chan J on 25 September 2013.  After hearing submissions at the hearing, Anthony Chan J handed down his written decision on 3 October 2013 and dismissed Choy’s appeal with costs to the Director summarily assessed at $17,678 (“4^th Costs Order”).

26.Dissatisfied with such order, on 11 October 2013 Choy filed a summons for leave to appeal against the order by Anthony Chan J dated 3 October 2013.  The appeal was returnable to be heard on 12 December 2013. After hearing submissions, Anthony Chan J handed down his written decision on 31 December 2013 and dismissed the application with costs against Choy summarily assessed at $19,100.40.

27.In the meantime, the adjourned hearing of the Charging Order Nisi was scheduled to be heard on 5 December 2013.  On 29 November 2013, Choy filed his 8^th affirmation to oppose the Charging Order Nisi. Choy’s grounds of opposition are set out in greater detail below.

28.After hearing submissions on 5 December 2013, Master H Au-Yeung granted the Au-Yeung Order at the hearing.  He also handed down written Reasons for Decision on 12 December 2013 (“Master Decision”).

29.As explained above, Choy filed a Notice of Appeal against the Au-Yeung Order on 16 December 2013.  Choy filed his 9^th affirmation on 20 December 2013, and his further grounds of opposition are set out in greater detail below.

V. CHOY’S OBJECTIONS AND THE DIRECTOR’S REPLY

30.By his 6^th affirmation, Choy raised a number of objections in respect of the Charging Order Nisi for “purported enforcement of the various costs ordered in these bankruptcy proceedings”:

(a) on 10 September 2012, he sent to JSM a cheque of the same date in the sum of $144,557.85 (“10/9/12 Cheque”) covering costs under the Costs Orders, but JSM returned such cheque on 20 September 2012;

(b) in any event, JSM must be fully aware that he was financially sound and ready to pay the costs “against the historical background of their cheatings”;

(c) JSM did not by Ms Cheng’s affirmations inform Master de Souza of the crucial fact that two properties (ie the 1^st and 2^nd Properties) were charged  for such a small sum of money;

(d) the court should not allow “JSM who had abandoned the bankruptcy payment in bankruptcy proceedings to resort to another mode violating the legal principle under Article 87 of the Basic Law per Taylor v Taylor [1875] [Vol.1] Chancellery Division 430 that “when a statutory power is conferred for the first time upon a court, and the mode of exercising it is pointed out, it means no other mode is to be adopted””;

(e) as a corollary to (d) above, the court should not grant the Charging Order Nisi in the present bankruptcy proceedings, and any application for charging order “should be made in separate proceedings …… since the nature is not the same due to the debtor found able to pay by the Petitioner”.[5]

31.Ms Cheng’s 2^nd affirmation explained that Choy wrote to JSM by a letter dated 10 September 2012 enclosing the 10/9/12 Cheque. Paragraph 5 of such letter stated that “[a] cheque is enclosed herewith with the recovery of monies in due course under Article 35 of the Basic Law”, and it was endorsed on the reverse of the 10/9/12 Cheque that “[rights] for the recovery of monies as stated in Choy’s letter dated 10/9/12” and the “the two tilting towers must be demolished”.  The Director did not accept such conditions attached to the 10/9/12 Cheque, and hence JSM returned the same to Choy under cover of their letter dated 20 September 2012.  Ms Cheng also reiterated the procedural history of the present proceedings and the Costs Orders arising therefrom.

32.By his 8^th affirmation, Choy raised further objections in respect of the Costs Orders and the Charging Order Nisi:

(a) Since Choy had made payment to the Director on 10 September 2009, and no bankruptcy order was made against him, section 99(1) of the Bankruptcy Ordinance Cap 6 (“BO”) was irrelevant, and JSM was duplicitous in seeking “enforcement” by the Charging Order Nisi.

(b) The court (including Master de Souza) had no jurisdiction to grant the Costs Orders under section 54 of the HCO and to grant the Charging Order Nisi under Order 50 of the Rules of the High Court (“RHC”) when exercising statutory power in the present bankruptcy proceedings under the BO, and such orders were in violation of Article 87 of the Basic Law, but the court (including Master K Lo and Anthony Chan J) aided and abetted JSM by failing to rule on the “jurisdiction issue”,[6] and by refusing to release transcripts/audio-recordings of court hearings “to show the evidence of their cheatings”.

33.By his 9^th affirmation, Choy raised further objections in respect of the Costs Orders and the Charging Order Nisi/Absolute:

(a) Since the Director withdrew the Petition, there was no jurisdiction for the court to grant any further order after such withdrawal, and the further orders imposed after such withdrawal “could not be cured by agreement or waiver and etc”. Such fundamental question as to want of jurisdiction must be resolved first before the court could endorse the fraudulent course taken by the Director by granting the Charging Order Nisi in the present bankruptcy proceedings.

(b) Choy reiterated the arguments in paragraph 32(b) above.

Choy claimed that without addressing the above matters and thereby doing justice, the furtherance of the Charging Order Nisi/Absolute in the present bankruptcy proceedings “is only a mockery of the rule of law”. He therefore requested the court to dismiss the Charging Order Nisi/Absolute.

34.Choy’s 8^th and 9^th affirmations were also filed in opposition of another charging order nisi granted by Master J Wong on 18 November 2013 against the 1^st and 2^nd Properties in favour of the Director in respect of the 4^th Costs Order (“2^nd Charging Order Nisi”).  However, the 4^th Costs Order was not the subject matter of the Charging Order Nisi/Absolute, the Au-Yeung Order and the Appeal, so I will not canvass Choy’s arguments in respect of the 2^nd Charging Order Nisi.

VI.  DISCUSSION

(a) Recusal

35.According to the Master Decision, Choy’s application for Master H Au-Yeung to recuse himself was because the learned master previously (and indeed quite a few months ago) refused his applications for tape and transcript of a hearing in another action.  Master H Au-Yeung did not see why Choy would be entitled to renew his application for tape and recording of a hearing in another action in the present proceedings and/or why such refusal on his part in another action could suggest that he would have any actual or apparent bias against Choy.  On such basis, the learned master refused Choy’s application for recusal.

36.As to the law on recusal applications, a decision by a judge or master whether or not to recuse himself or herself from hearing a case is an exercise of discretion. An application for recusal can be made on the basis of (a) actual bias on the part of the judge or master in the sense that he or she will be unable to bring an impartial mind to bear on the submissions that will be made at the hearing or that the judge or master has in fact prejudged the matters in issue or (b) apparent bias on the part of the judge or master as will lead a fair-minded and informed observer to conclude there is a real possibility that the judge or master is biased.

37.As regards the possibility of an appearance of bias, the Court of Final Appeal in Deacons v White & Case Ltd Liability Partnership & ors [7] adopted the test formulated by Lord Phillips MR in Director General of Fair Trading v Proprietary Association of Great Britain [8] as follows:

“The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased.”

38.The Court of Appeal in Falcon Private Bank Limited v Borry Bernard Edouard Charles Limited & anor [9] and TCWF v LKKS [10] also cited the following observations by the Constitutional Court of South Africa in President of the Republic of South Africa v South Africa Rugby Football Union [11] with approval:

“The question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by the judges to administer justice without fear or favour; and their ability to carry out that oath by reason of their training ad experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions. They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves. At the same time it must never be forgotten that an impartial judge is a fundamental prerequisite for a fair trial and a judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reasons, was not or will not be impartial.”

39.As regards the notional “fair-minded observer”, the Court of Appeal in Chau Siu Woon v Cheung Shek Kong [12] said as follows:

“The observer who is fair-minded is the sort of person who always reserves judgment on every point until she has seen and fully understood both sides of the argument. She is not unduly sensitive or suspicious …… The “real possibility” test ensures that there is this measure of detachment. The assumptions that the complainer makes are not to be attributed to the observer unless they can be justified objectively. But she is not complacent either. She knows that fairness requires that a judge must be, and must be seen to be, unbiased. She knows that judges, like anybody else, have their weaknesses. She will not shrink from the conclusion, if it can be justified objectively, that things that they have said or done or associations that they have formed may make it difficult for them to judge the case before them impartially ……”

40.Further, “it is incumbent on the party seeking recusal to articulate the relevant reasoning by which the fair-minded observer would attribute a level of prejudgment justifying recusal.  There must be an articulation of the logical connection between the conduct giving rise to the apprehension of bias and the possibility of departure from impartial decision-making (Barakat v Goritsas (No 2) [2012] NSWCA 36 at paras 9 to 12)”.[13]

41.Applying the above principles, I am unable to see how a fair-minded and informed observer would conclude there was any real possibility or danger of bias on the part of Master H Au-Yeung in all the circumstances.  The fact that Choy was dissatisfied with the learned master’s refusal of his application for tape and transcript of a hearing in another action and/or that Choy had lodged complaints of judicial wrongdoing against the learned master are insufficient grounds for recusal.  It is for Choy, if he can, to take appropriate steps that are permissible under the law (if any) to seek redress against those decisions. I am also unable to see any logical connection between such conduct of the learned master in other proceedings as impugned by Choy and the possibility of departure from impartial decision-making in respect of the application that was before the learned master in the present proceedings.  There is no justifiable basis for the learned master to recuse, and that being so he had a duty to sit and hear the application before him.  There is no merit to Choy’s appeal against the Non-Recusal Order.

(b) Jurisdiction issue

42.Choy argued that once he made payment of the underlying sum, no bankruptcy order could be or had been made under the Petition.  The Director by accepting such payment had brought the present bankruptcy proceedings under the BO against him to a close.  No matter how Choy behaved after such payment, by operation of law the court was functus officio and could not allow any further enforcement proceedings to be made under section 99(1) of the BO. After all, section 113 of the BO only allowed the Legislative Council and not the Chief Justice “to fuse the jurisdiction of Cap 6 and Cap 4” as was purportedly administered by Master de Souza and Anthony Chan J. There was, therefore, want of jurisdiction for Master de Souza and Master H Au-Yeung to respectively grant the Charging Order Nisi and the Charging Order Absolute under Order 50 of the RHC, and for Master K Lo (as upheld by Anthony Chan J) to grant interlocutory case management directions.  Choy argued that the purported exercise of statutory power by invoking two “modes of law” under the HCO and the BO was duplicitous, and such conflation was in breach of Article 87 of the Basic Law.  Since the Director had invoked the court’s exercise of statutory power under the BO, it was no longer open to him to invoke and enjoy another mode of statutory power under the HCO/RHC.

43.There is no dispute that at the latest by the end of October 2009 Choy as judgment debtor had tendered payment of the HCA Taxed Costs under the HCA Costs Order being the subject matter and underlying debt in the Petition.  Such payment triggered the Director’s application for leave to withdraw the Petition with costs against Choy.[14]  At the substantive hearing for argument in respect of such application before Master Ko on 5 December 2012, he granted the Ko Order by giving leave under section 5(2) of the BO for the Director to withdraw the Petition but at the same time ordering Choy to pay costs to the Director (ie the 2^nd Costs Order).[15]

44.Choy drew my attention to the finding in the order for committal by McMahon J and Macrae J dated 11 February 2011 in HCMP 1313/2010 as follows:

“(c) On 11 November 2009, at an open court hearing before the learned Master Ko (“the Master”) in HCB No. 12343 of 2009, the Director of Housing, who was represented by Messrs JSM, asked for a withdrawal of the petition (as a cheque had been received from Mr Choy in settlement of the outstanding amount) but also an order for indemnity costs against Mr Choy. ……”

In fact, as I have referred to in the above paragraph, upon such application made to Master Ko, the learned master made the Ko Order by inter alia granting leave for the Director to withdraw the Petition and at the same time granting the 2^nd Costs Order.

45.The first question is whether the court had jurisdiction to grant the Costs Orders in the present proceedings when the Petition was withdrawn and no bankruptcy order was made against Choy.  In my view, there was ample jurisdiction for Chung J, Master Ko and Barma J (as he then was) to respectively grant the 1^st, 2^nd and 3^rd Costs Orders even though the Petition was withdrawn.

46.Section 100(1) of the BO provides as follows:

“Subject to the provisions of this Ordinance and to general rules, the costs of and incidental to any proceeding in court under this Ordinance shall be in the discretion of the court.” (my emphasis)

Rule 79(1)-(2) of the Bankruptcy Rules Cap 6A (“BR”) provides that:

“(1) Subject to paragraphs (2), (3) and (4), the costs of all proceedings under this Ordinance down to and including the making of the bankruptcy order shall be borne by the party prosecuting the same.

(2) The court may at any time order that the debtor pay the whole or any part of the costs.” (my emphasis)

47.For the 1^st Costs Order, it was made in the course of the bankruptcy proceedings before Choy’s payment of the HCA Taxed Costs by the 2^nd Cheque and before Master Ko granted leave for the Director to withdraw the Petition.  For the 2^nd Costs Order, it was granted by Master Ko at the same time when he granted leave for the Director to withdraw the Petition.  Plainly he was dealing with the bankruptcy proceedings, and was entitled to grant the 2^nd Costs Order.  For the 3^rd Costs Order, even though it was made after Master Ko granted leave for the Director to withdraw the Petition, such costs order concerned costs of the very appeal by Choy against the Ko Order, which appeal was by way of rehearing, and as such it must relate to the bankruptcy proceedings. Bearing in mind that the court has power to award costs “of and incidental” to “any proceedings” under the BO “at any time”, there is, in my view, ample jurisdiction under the BO and BR for the court to grant the Costs Orders, which orders in any event had not been overturned by any appellate court to date and which therefore remained binding on Choy.

48.The next question is whether the Director was entitled to seek recovery of the outstanding Awarded Costs by enforcing the Costs Orders by way of the Charging Order Nisi/Absolute under Order 50 of the RHC.

49.Choy argued it was not permissible to conflate the exercise of statutory powers under the BO in respect of the bankruptcy proceedings with the exercise of statutory powers under the HCO (and hence Order 50 of the RHC) in respect of enforcement proceedings by way of charging order. He suggested that to do otherwise as Master H Au-Yeung did in granting the Charging Order Absolute was duplicitous and in breach of Article 87 of the Basic Law.

50.Article 87 of the Basic Law provides as follows:

“ In criminal or civil proceedings in the Hong Kong Special Administrative Region, the principles previously applied in Hong Kong and the rights enjoyed by parties to proceedings shall be maintained.

Anyone who is unlawfully arrested shall have the right to a fair trial by judicial organs without delay and shall be presumed innocent until convicted by the judicial organs.

51.I am unable to see how Article 87 of the Basic Law is relevant to the Appeal before me which is not concerned with any arrest and criminal trial. Since both the BO and HCO were the laws of Hong Kong both before and after the transfer of sovereignty, Article 87 of the Basic Law does not add anything further to the present proceedings.

52.Section 99(1) of the BO provides as follows:

“The rules and practice of the High Court for the time being regulating the ordinary civil procedure of the court shall, so far as the same may be applicable and not inconsistent with the provisions of this Ordinance, be applied to bankruptcy proceedings, and every order of the court made in connexion with bankruptcy proceedings may be enforced in the same way as a judgment of the court made in respect of any other civil proceedings may be enforced.”

53.In my view, since the Costs Orders were properly made in the present bankruptcy proceedings, pursuant to section 99(1) of the BO the Director (as judgment creditor) was entitled to enforce such orders in the same way as a judgment made in any other civil proceedings, including by way of a charging order pursuant to Order 50 of the RHC.  It must be noted that the Director was not seeking to enforce the HCA Costs Order (ie the underlying debt that was the subject matter of the Petition). As explained above, the withdrawal of the Petition did not affect the Director’s right to obtain and the court’s power to grant the Costs Orders, so the Director was therefore entitled under section 99(1) of the BO to enforce such orders by way of charging order pursuant to Order 50 of the RHC.

54.The originating source of jurisdiction for Master de Souza and Master H Au-Yeung in respectively granting the Charging Order Nisi and the Charging Order Absolute was the BO (ie section 99(1) of the BO), and there is no question of the Director or the court invoking “another mode of law under the HCO” in enforcing the Costs Orders.  Rather, it is the express terms of the BO itself in section 99(1) that expressly allow enforcement of orders made in connexion with bankruptcy proceedings (which necessarily include costs orders) by way of enforcement procedures under the RHC. Hence, the adoption of the RHC enforcement procedures is still by virtue of the BO.  In my view, there is no improper conflation or fusion of “the jurisdiction of Cap 6 and Cap 4” as suggested by Choy.  Master de Souza and Master H Au-Yeung plainly had jurisdiction to grant the Charging Order Nisi and the Charging Order Absolute.

55.Choy prayed in aid the case of Taylor v Taylor [16] in support of his contentions.  In that case, the court was concerned with inter alia whether the applicant was a person entitled to present a petition under the Leases and Sales Settled Estates Acts. Jessel MR held that since the legislative provisions prescribed that proceedings were to be commenced by petition and further described the persons who could petition, under general principle the proceedings must be commenced by petition (and no other process) and by the persons so described (and no others).  I cannot see how this authority would assist Choy.  At best, it supports the Director’s contention that by virtue of the BO the Costs Orders could properly be enforced pursuant to section 99(1) which permitted him to pursue enforcement procedures under the RHC (including Order 50 of the RHC).

56.Choy also referred to section 113 of the BO which provides that the Chief Justice may, with the approval of the Legislative Council, make rules providing for, generally, the carrying into effect the objects of the BO. Again, I do not see how this provision would assist Choy. Since the enabling provision for the enforcement of the Costs Orders is contained in primary legislation (ie section 99(1) of the BO) and not subsidiary legislation (eg the BR), there is no need for rules to be made under the BO for such purpose at all.

57.In my view, there is no merit in respect of Choy’s arguments on the “jurisdiction issue”.

(c) 10/9/12 Cheque

58.As evident from the discussion in paragraphs 30(a) and 31 above, it is plain that the 10/9/12 Cheque was not an unconditional payment. Choy’s covering letter dated 10 September 2012 and the reverse of the 10/9/12 Cheque both imposed conditions (which were wholly unrelated to the Awarded Costs payable under the Costs Orders) on the purported payment by way of the 10/9/12 Cheque.

59.In my view, since the Director was entitled to unconditional payment of the Awarded Costs under the Cost Orders, the Director through JSM was therefore entitled to return the 10/9/12 Cheque and to demand Choy to make unconditional payment.  However, up to the time when the Petition was issued, Choy failed to make unconditional payment in settlement and discharge of the Cost Orders.  In the circumstances, the Director was entitled to issue the Petition, and upon Choy’s payment of the HCA Taxed Costs to withdraw the Petition and to enforce payment of the Costs Orders granted by the court.  The 10/9/12 Cheuqe posed no answer to the Charging Order Nisi/Absolute.  This ground of opposition fails.

60.At the Hearing, Choy reiterated his challenge to “the two tilting towers in Tin Shui Wai” and his complaint of misdeeds by the Chief Executive in relation thereto.  I should emphasise that the Charging Order Nisi/Absolute were made for the enforcement of the Costs Orders made in the course of the bankruptcy proceedings, and not the HCA Taxed Costs being the underlying debt under the Petition.  Choy’s complaints are irrelevant to the Appeal.

(d) Choy’s financial ability

61.I agree with Master H Au-Yeung that it was beside the point whether Choy was financially sound and ready to pay the Awarded Costs under the Costs Orders. The Costs Orders required Choy as the paying party to make forthwith and unconditional payment of the Awarded Costs. Even if Choy were financially sound, he nevertheless failed to comply with the Costs Orders by not making actual payment of the Awarded Costs under the Costs Orders, and the Director was therefore entitled to enforce such orders by taking steps pursuant to the BO and (via the BO) the RHC. This ground of opposition by Choy also fails.

(e) JSM’s failure to inform court of material facts

62.I am not persuaded that by Ms Cheng’s affirmations JSM failed to bring to the attention of Master de Souza that the Director sought to charge two properties (ie the 1^st and 2^nd Properties) for “such a small sum of money”.  In fact, Ms Cheng’s affirmations set out clearly (a) the amount of the Awarded Costs that was outstanding and payable under the Costs Orders and (b) the Director’s request for a charging order nisi to be imposed on the 1^st and 2^nd Properties.  It cannot be said there was any non-disclosure of material facts in Ms Cheng’s affirmations.

63.In any event, the Director by JSM informed Master H Au-Yeung that he would only seek to impose the Charging Order Absolute against the 1^st Property but not the 2^nd Property, and the learned master discharged the Charging Order Nisi against the 2^nd Property so as to avoid any possible argument of “over-security” (ie the Discharge Order).  I do not see any reason or justification for Choy to disagree with Master H Au-Yeung’s decision to discharge the Charging Order Nisi against the 2^nd Property. As for the 1^st Property, I find it proper and appropriate for the enforcement of the Costs Orders to grant the Charging Order Absolute against such property.  The learned master’s decision to impose the Charging Order Absolute on the 1^st Property rather than the 2^nd Property was also correct since the Secretary for Justice had applied for an order for sale in respect of the 1^st Property pursuant to the charging order absolute made in other proceedings and registered at the Land Registry.  This ground of opposition also fails.

(f) Complaints against decisions by Master K Lo and Anthony Chan J

64.At the hearing before Master H Au-Yeung, Choy made criticisms against Master K Lo and Anthony Chan J in respect of their judicial rulings/orders.  Those judicial rulings/orders (which concerned interlocutory case management and which to date have not been overturned) were spent when Master H Au-Yeung dealt with the substantive application and granted the Au-Yeung Order. In any event, the Appeal was against the Au-Yeung Order and not against the rulings/decisions by Master K Lo and Anthony Chan J.

VII. CONCLUSION

65.In the circumstances, I am unable to find any basis to disturb the Au-Yeung Order, and I dismiss the Appeal.  There is no reason why costs should not follow event, and Mr Boyle had lodged/served the Director’s statement of costs with his written submissions.  I therefore grant a costs order nisi that costs of and occasioned by the Appeal be paid by Choy to the Director summarily assessed at $18,023.00.

Mr David Boyle, of Mayer Brown JSM, for the judgment creditor/respondent

The judgment debtor/appellant appeared in person

Please refer to HCMP959/2014 for the relevant appeal(s) to the Court of Appeal.