Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Healthy Wharf Ltd v The Official Receiver And Trustee Of The Property Of Leung Yat Tung, A Bankrupt

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date29 August 2017
Year2017
Citation[2017] 4 HKLRD 732
Judgement NumberHCB2019/2000
Subject MatterBankruptcy Proceedings
CourtHigh Court (Hong Kong)
HCB2019F/2000 HEALTHY WHARF LTD v. THE OFFICIAL RECEIVER AND TRUSTEE OF THE PROPERTY OF LEUNG YAT TUNG, A BANKRUPT

HCB 2019/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 2019 OF 2000

____________

RE: LEUNG YAT TUNG

____________

BETWEEN
HEALTHY WHARF LIMITED Applicant

and
THE OFFICIAL RECEIVER AND TRUSTEE OF THE PROPERTY OF LEUNG YAT TUNG, A BANKRUPT Respondent
____________
Before: Hon Mimmie Chan J in Chambers (Open to Public)
Date of Hearing: 10 August 2017
Date of Decision: 29 August 2017

_______________

D E C I S I O N

_______________

1. This is an application by the petitioning creditor (“Creditor”), made under s 83 of the Bankruptcy Ordinance (“Ordinance”) and rule 24 of the applicable Proof of Debt Rules (“Rules”), for the Court to reverse or vary the decision of the Official Receiver (“OR”), whereby the OR rejected the Creditor’s proof of debt in so far as the Creditor’s costs of the petition are concerned (as particularized below).

2. By the time of the hearing and as a result of the correspondence between the parties, the issue in dispute was confined to the OR’s decision to reject as a provable debt the Creditor’s taxed costs incurred in the presentation of the petition (“Petition Costs”) for the bankruptcy of Leung Yat Tung (“Bankrupt”). Other than the Petition Costs, the Creditor had additionally incurred: (1) costs as a result of the Bankrupt’s application for an interim order under ss 20 and 20A of the Ordinance, which application was dismissed by the Court, with costs to the Creditor on an indemnity basis by an order made on 1 March 2001 (“Interim Order Costs”); and (2) costs incurred in the Bankrupt’s appeal against the bankruptcy order and against the dismissal of the interim order application, which appeal was dismissed on 19 April 2001 with costs to be paid by the Bankrupt (“Appeal Costs”). The OR has accepted that the Interim Order Costs and the Appeal Costs are provable debts, as distinct from the Petition Costs.

3. The Petition Costs in this case are in the region of $249,000. The bankruptcy order was made on 1 March 2001, on the basis of the Creditor’s statutory demand for a judgment debt due from the Bankrupt to the Creditor in HCA 1125/2005, in the region of $3.6 million, with interest and costs of the action. Those sums form part of the Creditor’s proof of debt filed on 28 May 2001(“Proof”), and the OR accepted the Proof in respect of the underlying judgment debt.

4. The basis of the OR’s rejection of the Petition Costs from the Proof is that such costs are the Creditor’s costs of the petition for bankruptcy, and as such, they are to be paid under s 37 of the Ordinance as part of the costs and charges of the bankruptcy, as distinct from other debts proved in the bankruptcy which are to be paid pari passu out of the assets of the bankrupt, after the payment of costs and other priority debts under s 38 of the Ordinance.

5. The Creditor objects to the rejection of the Petition Costs, on the basis that they fall within the definition of “debts provable in bankruptcy” under s 34 of the Ordinance, and should be provable for that reason. Section 34 (3) provides that “all debts and liabilities, present or future, certain or contingent, to which the bankrupt is subject at the date of the bankruptcy order, or to which he may become subject before the discharge by reason of any obligation incurred before the date of the bankruptcy order … shall be deemed to be debts provable in bankruptcy”.

6. It was argued that if the Creditor is not allowed to prove for the costs it incurred in presenting the petition for bankruptcy, which led to the making of the bankruptcy order and the administration and distribution of the assets of the Bankrupt amongst his creditors, the Creditor would be unfairly prejudiced. It would be deprived of the right to vote in accordance with the full amount of its proved debt, and of the right to receive interest from any surplus of assets remaining after the payment of debts which are proved in bankruptcy. That, it was argued, could not have been the intention of the Ordinance.

7. As the OR’s decision to reject the Petition Costs as a provable debt is a decision on a point of law, rather than an exercise of discretion, the principles set out in Chung Kau HCB 581/2003, 5 May 2003, that the Court should not interfere with the decision of the trustee unless such decision was “perverse or clearly wrong”, do not apply.

8. Neither party has been able to identify any authority which is directly on the point of whether a petitioning creditor’s costs of the bankruptcy petition can be proved. The case of Lo Shing Kin v Sy Chin Mong Stephen (2014) 717 HKCFAR 903 relied on by the Creditor does not assist the present case, since the decision of the Court of...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT