Re Chan Chi Loi
Read the full judgment text of HCB 8632/2006 on BabelCite. This HCB judgment was delivered on 14 July 2014.
1. This is the debtor’s application to annul the bankruptcy order made against him on 13 July 2007. The debtor argued that the bankruptcy order ought not to have been made because he was clearly solvent at the time when the bankruptcy order was made.
Cites 3 cases
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HCB 8632/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDINGS NO 8632 OF 2006 _________________________ Re: CHAN CHI LOI (陳子來), Debtor Ex-parte: TIU MING KAM (刁明鑑), the person appointed to represent the estate of TIU PUI KWONG (刁培光), Deceased, Petitioner _________________________
______________________ REASON FOR DECISION ______________________ The application 1.This is the debtor’s application to annul the bankruptcy order made against him on 13 July 2007. The debtor argued that the bankruptcy order ought not to have been made because he was clearly solvent at the time when the bankruptcy order was made. 2.The debtor recognised that even if it could be established that the bankruptcy order ought not to have been made, the court still retains a discretion as to whether the bankruptcy order should be annulled. It was argued that the discretion should be exercised in his favour because:
Solvency of the Debtor 3.The first issue is whether the bankruptcy order ought not to have been made by the court on 13 July 2007. Unless the answer to this issue is “yes”, there is no need for the court to consider the other issues raised by the debtor. 4.For the purpose of this application, the debtor has produced new evidence to show that at the time of the bankruptcy order, he had the ability to pay all his debts. His counsel argued that: “Such evidence was not placed before the learned Judge in the petition hearing… Had this fact been known to the Court, there was a good chance that the bankruptcy order would be refused.” (paragraphs 16 and 17 of the Debtor’s skeleton arguments) 5.It was also argued on behalf of the debtor that “in an annulment application, the court may consider grounds that the debtor did not raise but could have raised. Further, the court may consider new evidence not adduced before the court when the bankruptcy order was made.” (paragraph 6(a) of the debtor’s skeleton arguments) 6.I accept what the debtor’s counsel asserted to be correct. A bankrupt or debtor should be able to argue points which have not been made in the bankruptcy proceedings. However, the difficulty of the debtor herein is not that the argument was not raised at the hearing of the bankruptcy petition in 2007. His difficulty is that this is already his second application which is made pursuant to section 33(1)(a) of the Bankruptcy Ordinance. 7.The debtor made his first application for annulment in early 2009 which was dismissed by Chu J (as her Ladyship then was). It is apparent that the debtor must be well aware back in as early as 2007 of the existence of the ground which he is now relying on when the petition itself was heard because the debtor stated in paragraphs 20 to 21 of his affirmation filed in support of this application that:
8.It is therefore clear that the matters which are now relied on by the debtor were known to him well before he made his first annulment application. 9.Further, as Mr Tsui for the petitioner pointed out, the debtor had relied on the assertion that he had the ability to pay his debts when he made the application for stay of execution of the bankruptcy order in August 2007. This may be seen in paragraph 9(1) of Chu J’s Judgment handed down on 10 September 2007 which stated that:
10.In my judgment, the argument which the debtor would like to rely on herein should clearly have been raised in the previous annulment application. However, the debtor did not raise it before Chu J in 2009. Neither did he raise it when he appealed to the Court of Appeal and the Court of Final Appeal against Chu J’s decision not to extend time for him to appeal against her Ladyship’s Decision on the annulment application out of time. According to the principle of res judicata, the debtor should not be allowed to raise this argument on his ability to pay in this application again, as it would amount to abuse of process of the court. 11.The case authorities cited by the debtor’s counsel cannot assist him because in none of those cases was there any previous annulment application in respect of which the appeal process had been exhausted. 12.Mr Wong for the debtor submitted that the wider sense of res judicata (also known as Henderson v Henderson abuse of process) should not apply to bankruptcy proceedings. He went as far as to submit that even if this application is dismissed by reason of the debtor’s failure to produce adequate evidence in support of his case, he is entitled to make yet another annulment application so that the necessary evidence may be adduced. With respect, this highlights the flaw in his submissions. The creditor petitioner should not be vexed twice (not to say more times) by way of annulment applications. In my view, section 33 of the Bankruptcy Ordinance has given the debtor a second chance to argue on the bankruptcy order, but that should be the only extra chance. The section does not give the debtor any permission to make annulment applications over and over again. In the circumstances of the present case, given that the debtor clearly knew about his ability to pay at the time when the first application for annulment was made, I am of the view that it amounts to abuse of process of the court for the debtor to make a second application for annulment herein, even though the debtor was acting in person previously. The public and private interest demand that there should be a finality in the matter. I do not think the petitioner should be placed in a much worse position merely by reason of the fact that the person that he was dealing with was not legally represented. This is unfair to the petitioner. I agree that on occasions the court tends to be a little more lenient to those litigants who are acting in person, but that does not mean that the court should lean backwards to assist these litigants. The prime consideration of the court is doing justice between the parties. 13.For this reason alone, the debtor’s application should be dismissed. 14.However, for the sake of completeness, I would also add this. In my view, even if the new evidence was placed before Chu J (as her Ladyship then was), the result would have been the same. In the Judgment, her Ladyship had this to say:
15.It is therefore clear that Chu J, in any event, would have made the bankruptcy order against the debtor by relying on section 6A(1)(a) of the Bankruptcy Ordinance which her Ladyship was entirely entitled to do. 16.It is also factually incorrect for the debtor’s counsel to submit in paragraph 21 of his skeleton arguments that:
17.With respect, counsel has failed to note that according to paragraph 12(6) of Chu J’s Judgment on the petition, one of the grounds of opposition raised by the debtor was that:
18.It can be seen that no matter whether the debtor had the ability to pay at the time of the bankruptcy order, the fact is that he refused to pay the petitioner in full at the material time. As far as the costs in HCA 540/2006 were concerned, he would only consider whether he would pay when the result of the appeal was known. With this clear attitude, whether there was any evidence on solvency in existence was neither here nor there in the present case. 19.I also disagree with the debtor’s submission that Chu J. ought to have adjourned the petition to a later date so that the debtor could consider whether he should pay when the result of his appeal was known. This is contrary to the well-known principle adopted by the bankruptcy court that the petitioner may base a bankruptcy petition on a judgment even if an appeal against the said judgment is pending, unless a stay of execution of the judgment has been granted. 20.In fact, this point has also been dealt with by Lam J (as his Lordship then was) when he delivered his judgment in the Court of Appeal on the debtor’s appeal against the bankruptcy order made by Chu J. His Lordship had this to say:
21.It can be seen that the Court of Appeal’s decision is two-fold. Firstly, it was held that the debtor had no basis to delay the time for payment. Secondly, in any event, he had not provided sufficient evidence in support of his ability to pay. 22.In other words, it was the decision of the Court of Appeal that even if there were adequate evidence to show the debtor’s ability to pay, his argument that he could delay payment until after the appeal of HCA 540/2006 was rejected. His argument that the bankruptcy order should not have been made was not accepted by the Court of Appeal. 23.As a result, it is my view that the debtor’s application herein has to be dismissed anyway, no matter whether the principle of res judicata is applicable or not. 24.Without disrespect to the industry of counsel, since I have dismissed the debtor’s annulment application, there is no need for me to, and I would not, deal with the debtor’s arguments on the exercise of discretion and consequential orders. [submissions on costs] Costs 25.Costs should follow the event. I therefore order that the debtor should pay the costs of the Official Receiver and the petitioner, with certificate for counsel. This is a suitable case for such costs be summarily assessed pursuant to Order 62 rule 9A(1)(a). I order that the debtor do pay the costs of the Official Receiver summarily assessed at $48,000 and costs of the petitioner summarily assessed at $120,000. Payment should be made within 14 days.
Mr Leo Wong, instructed by Hau, Lau, Li & Yeung, for the applicant Mr Raymond W N Tsui, instructed by Wong Hui & Co, for the petitioner Mr Maurice Lam, of the Official Receiver |
Cases cited in this judgment
Further hearings and rulings under HCB 8632/2006