|
HCB 3777/2011
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
BANKRUPTCY PROCEEDINGS NO 3777 OF 2011
-------------------------
Re: TAM MEI KAM, a Bankrupt
-------------------------
| Before : Hon Barma J in Court |
| Date of Hearing : 6 July 2012 |
| Date of Judgment : 18 July 2012 |
------------------------
J U D G M E N T
------------------------
1. This was an application by Madam Tam Mei Kam (“the Bankrupt”) by Notice of Motion dated 29 May 2012 seeking orders that:-
(1) the decision of the Official Receiver made on 21 May 2012 be set aside; and
(2) the monthly maintenance of HK$120,000 being paid by HSBC Trustee (Hong Kong) Limited (“HSBC Trustee HK”) to the Bankrupt under an interim order made by Andrew Cheung J (as he then was) on 20 November 2007 pursuant to the Inheritance (Provision for Family and Dependants) Ordinance (Cap 481) (“the Inheritance Ordinance”) be paid directly to the Bankrupt.
2. The background to the application can be summarised as follows:-
(1) The Bankrupt is the mother of the late Anita Mui Yim Fong, a well known Hong Kong singer and performer, who died at the end of 2003. Ms Mui left a will under which she bequeathed her residuary estate to a discretionary trust, called the “Karen Trust”, which was set up at the same time. The trustee of the Karen Trust was HSBC Trustee International Limited (“HSBC Trustee International”). The Bankrupt was a named beneficiary of the trust, but was not a beneficiary under the will. The Bankrupt sought unsuccessfully to challenge the will in probate proceedings, failing in the Court of First Instance, the Court of Appeal and the Court of Final Appeal. On 19 January 2012, Letters of Administration were granted to HSBC Trustee HK, as the lawful attorney of HSBC Trustee International.
(2) On 17 June 2011, a bankruptcy petition was presented against the Bankrupt by the solicitors who had acted for her in the first instance proceedings in the probate action, on the basis of outstanding unpaid fees. On 25 April 2012, I made a bankruptcy order against the Bankrupt. The Bankrupt has appealed to the Court of Appeal against the making of the bankruptcy order, but that appeal has not yet been fixed for hearing.
(3) On the making of the bankruptcy order, the Official Receiver became the provisional trustee of the property of the Bankrupt pursuant to section 12(1) of the Bankruptcy Ordinance.
(4) Prior to her bankruptcy, the Bankrupt had applied under HCMP 2981/2004 for an interim order for monthly maintenance to be paid to her out of Ms Mui’s estate, pursuant to sections 4 and 7 of the Inheritance Ordinance. Over a period of time, various interim orders were granted, by which an amount of monthly maintenance was awarded to the Bankrupt, and was from time to time increased. As at the date of the bankruptcy, the monthly amount payable to the Bankrupt was HK$120,000, pursuant to the order of Andrew Cheung J (as he then was) made on 20 November 2007.
(5) After the bankruptcy commenced, HSBC Trustee HK paid a cheque for HK$120,000 to the Official Receiver on 2 May 2012. The cheque represented the monthly maintenance payable to the Bankrupt, under Andrew Cheung J’s order, for the period from 21 May to 20 June 2012.
(6) The receipt of the cheque prompted the Official Receiver to look into the nature of the payment. Having considered the matter, the Official Receiver took the view that any maintenance payable by HSBC Trustee HK to the Bankrupt under orders made in HCMP 2981/2004 formed part of the Bankrupt’s assets which vested in her trustee in bankruptcy under section 43(1) of the Bankruptcy Ordinance, and hence vested in the Official Receiver as provisional trustee pursuant to section 58 of the Bankruptcy Ordinance. In other words, the Official Receiver considered that such payment (and any future payments that might be received by reason of orders made in HCMP 2981/2004) formed part of the Bankrupt’s estate in bankruptcy.
(7) Having discovered that HSBC Trustee HK had paid this maintenance payment to the Official Receiver, on 10 May 2012 the Bankrupt requested the Official Receiver to make an allowance to her to meet her domestic needs. On 21 May 2012, having considered the request, the Official Receiver decided to make an allowance of HK$75,246 to the Bankrupt for May 2012, pursuant to section 63 of the Bankruptcy Ordinance, which provides that a trustee in bankruptcy may make an allowance for the support of a bankrupt out of his bankruptcy estate.
(8) On 29 May 2012, the Bankrupt took out this application.
(9) On 4 June 2012, the Official Receiver received a second cheque for HK$120,000 from HSBC Trustee HK.
(10) On 12 June 2012, the Notice of Motion came on for its first hearing. Unfortunately, the Bankrupt was taken ill during the hearing, and the hearing had to be adjourned.
(11) Also on 12 June 2012, a creditors’ meeting was held, at which Mr Wong Teck Meng and Ms Chan Pui Sze of Messrs Briscoe Wong Ferrier were appointed as Joint and Several Trustees in Bankruptcy of the Bankrupt (“the Trustees”), to act without a creditors’ committee.
(12) On 22 June 2012, a directions hearing was held to fix a hearing date for the Notice of Motion. At the hearing, the Bankrupt complained that no further allowance had been paid to her although she was in need of it. I directed that pending the hearing of the Notice of Motion, an allowance should be paid to the Bankrupt of at least the same level as had been provided in May 2012. I also directed that notice of the hearing should be given to the Trustees, so that they could, if they wished, make submissions in relation to it.
(13) On 26 June 2012, the Official Receiver issued a further cheque for HK$75,246 to the Bankrupt, by way of allowance for her expenses for the month of June. This was provided to the Bankrupt via the Trustees.
3. At the hearing, the Bankrupt appeared in person, the Official Receiver was represented by Ms Joyce Lam of the Official Receiver’s Office, and the Trustees appeared in person. Skeleton arguments were filed by both the Bankrupt and the Official Receiver, while the Trustees lodged a report with the court setting out their position.
4. I was told at the hearing that in June 2012, the amount of the monthly maintenance had recently been ordered by Poon J to be increased to HK$140,000 per month. However, I was also told that subsequently, a few days before this hearing, Poon J had made a further order in HCMP 2981/2004 suspending the monthly maintenance payable to the Bankrupt, as Ms Mui’s estate did not have sufficient liquid funds to enable further payments to be made. It appears that consideration is being given (in those proceedings) to means by which funds may be raised for the estate, possibly by selling certain assets, such as an auction of Ms Mui’s concert costumes, or the sale of a property in Happy Valley. It is not at present known when the estate will again be in a position to resume monthly payments to the Bankrupt, but this appears unlikely to happen for some months.
5. As appears from the Notice of Motion, the application is based on three grounds:-
(1) That the monthly maintenance payments were excluded from the bankruptcy estate by section 43(2)(b) of the Bankruptcy Ordinance, which provides that “such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his/her family” fall outside the bankruptcy estate, because the payments were provisions within the meaning of section 43(2)(b), and the amount of the maintenance to be paid each month had been fixed by the court in HCMP 2981/2004 at HK$120,000 on the basis that these were the “basic domestic needs” of the Bankrupt as at November 2007. It was suggested that in assessing such “basic domestic needs” in HCMP 2981/2004, the court had had regard to a number of matters, including the Bankrupt’s frustration and disappointment at the terms of Ms Mui’s will and the setting up of the Karen Trust, her old age, her poor health, her long standing living standards, her need for domestic helpers and a personal assistant, and the possible adverse effects of a forced departure from her previously accustomed standard of living. Thus, the entirety of the maintenance payment constituted “provisions” for satisfying her basic domestic needs, and had to be excluded from her bankruptcy estate.
(2) Even if this were wrong, and the monthly maintenance payments formed part of the bankruptcy estate, they should be excluded from the bankruptcy estate pursuant to section 43D of the Bankruptcy Ordinance, which provides that a bankrupt may apply to the trustee in bankruptcy for the exclusion from the estate of a particular item, and, if he objects to the trustee’s decision, may apply to the court. This was said to be the case because (as the Bankrupt submitted) the Official Receiver was obliged to make allowance for the Bankrupt’s support and maintenance, and could not adjust the level of maintenance previously ordered by the court in the Inheritance Ordinance proceedings.
(3) If, contrary to the previous submission, the Official Receiver could (in principle) adjust the amount of such allowance, the allowance of HK$75,246 granted by the Official Receiver to the Bankrupt was too low, and in deciding on that level of allowance, the Official Receiver had failed to have regard to the factors mentioned in the last sentence of paragraph (1) above, which should have led the Official Receiver to make an allowance in the same amount as the maintenance payments.
6. Ms Lam, for the Official Receiver, submitted that:-
(1) The monthly payments by way of maintenance payable to the Bankrupt formed part of the bankruptcy estate, as they consisted of...
| 
