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First Asia Finance Ltd v Tsoi Tin Kwan Fanny

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date18 September 2017
Year2017
Judgement NumberCACV149/2015
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV149A/2015 FIRST ASIA FINANCE LTD v. TSOI TIN KWAN FANNY

CACV 149/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 149 OF 2015

(ON APPEAL FROM HCA NO 1070 OF 2011)

___________________________

BETWEEN
FIRST ASIA FINANCE LIMITED Plaintiff
(Respondent)
and
TSOI TIN KWAN FANNY Defendant
(Appellant)

___________________________

AND

CACV 150/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 150 OF 2015

(ON APPEAL FROM HCA NO 1774 OF 2011)

___________________________

BETWEEN
KUTHOOR SHANTY BERNARD 1st Plaintiff
TSOI TIN KWAN FANNY 2nd Plaintiff
(Appellant)
and
SUN CHEUK PAK ALAN 1st Defendant
(1st Respondent)
LUK LAI CHING KIMMY 2nd Defendant
(2nd Respondent)

___________________________

Before: Hon Lam VP, Chu and Poon JJA in Court

Date of Written Submissions: 25 May 2017 and 5 June 2017

Date of Further Written Submissions: 16 and 26 June 2017

Date of Decision on Costs: 18 September 2017

______________________________

DECISION ON COSTS

______________________________


Hon Lam VP (giving the Decision on Costs of the Court):

1. On 18 May 2017, we dismissed the appeals for want of prosecution. We invited submissions on costs. Since then we have read the submissions and further submissions from the Official Receiver as well as the respondents in the appeals. Their respective positions are as follows: the respondents asked for an order of costs in their favour against the estate of Tsoi Tin Kwan Fanny subject to leave to be sought from the bankruptcy court to proceed with taxation; on the other hand, the Official Receiver submitted that there should be no order as to costs for the appeals.

2. By way of recap, these appeals were dismissed for want of prosecution because the appellant Tsoi was made a bankrupt on 23 January 2017 and the Official Receiver (as the trustee of bankruptcy) indicated that she would not adopt the appeals, nor would she assign the causes of action pertaining the appeals to Tsoi. The appeals were brought by Tsoi on 29 June 2015, before her bankruptcy.

3. Some costs were incurred by the respondents in the appeal before the dismissal of the same. Understandably, the respondents sought an order for costs in their favour. Given that Tsoi is now bankrupt, it may be doubtful if an order for costs would generate any actual recovery of costs for the respondents. However, it would be a relevant matter for the bankruptcy court to consider before granting leave for taxation proceedings under Section 12(1) of the Bankruptcy Ordinance. At this stage, we are only concerned to see if a costs order should be made as a matter of principle.

4. If we make an order for costs and leave is granted for taxation, the taxed costs would become a provable debt in the bankruptcy: see Lo Shing Kin v Sy Chin Mong Stephen [2015] 2 HKC 30 applying In re Nortel GmbH [2014] AC 209, overturning the effect of Re Kenworth Engineering Ltd [2005] 2 HKLRD 97. Insofar as there are net assets and distribution of dividends in the administration of the estate of the bankrupt, the trustee would have to take account of the taxed costs in making a distribution. Of course, if there is no asset for distribution, the liability for costs would be released upon the discharge of the bankrupt in accordance with Section 32(2) and (7) of the Bankruptcy Ordinance.

5. On the other hand, if we decline to make an order for costs, the respondents would have no right to recover their costs at all even assuming that there are net assets for distribution to the bankrupt’s creditors. Is there any reason why we should deprive the respondents of this opportunity?

6. The Official Receiver relied on three cases to support her position that there should be no order as to costs in these appeals. With respect, we do not find firm support for such a position in these cases.

7. The earliest case is Warder v Saunders (1882) 10 QBD 115. There was an appeal against a decision to stay an action after the plaintiff had been adjudicated bankrupt. The stay was until...

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