Case Detail

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGSNO 12343 OF 2009

_____________________

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)

_____________________

Before: Deputy High Court Judge Marlene Ng in Chambers

Date of Hearing: 3 April 2014

Date of Handing Down Decision: 4 April 2014

_____________________

D E C I S I O N

_____________________

I. INTRODUCTION

1. On 14 March 2014, I handed down my Decision dismissing the appeal by Choy Bing Wing being the judgment debtor (“Choy”) against the order of Master H Au-Yeung dated 5 December 2013 (“Au-Yeung Order”) (“Decision”). For the sake of convenience, I shall adopt the abbreviations in the Decision.

2. By a summons dated 14 March 2013 (“Leave Summons”), Choy sought leave to appeal against the Decision and for an order that costs of and incidental to the application be paid by the Director being the judgment creditor. The Leave Summons was returnable before me on 3 April 2014 (“Leave Hearing”).

II. LEGAL PRINCIPLES

3. The order by this court made pursuant to Decision is an interlocutory order, and it is incumbent upon Choy to persuade this court to grant leave to appeal. Under section 14AA of the HCO, leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard. In SMSE v KL,[1] Le Pichon JA pointed out that such leave to appeal is not lightly granted. The test of reasonable prospects of success involves the notion that the prospects of succeeding must be reasonable and therefore more than fanciful without having to be probable. As the leave requirement was introduced largely to address satellite litigation, so for the court to be satisfied that the appeal does have “reasonable prospects of success”, merely showing that the appeal is “arguable” and “not fanciful” would not be sufficient.[2] Furthermore, it is pertinent to bear in mind that even if there is a reasonable prospect of success on appeal, the court still retains a discretion whether to grant leave to appeal, although the fact that there is, ex hypothesi, a reasonable prospect of success would heavily influence the court’s exercise of discretion.[3]

III. GROUNDS OF APPLICATION

4. Choy set out the grounds for his application for leave to appeal against the Decision in the Leave Summons as follows:

“1. Important questions on points of law are involved:
(a) Whether it is an abuse of the legal system by the judge to turn a blind eye to the court instrument, pointed out to him/her, of the judicial notice declaring the settlement of the case under the Bankruptcy Ordinance Cap 6, for no further action actionable after the withdrawal.
(b) Whether it is the duty of the judge to apply the law to the issues of law and fact submitted therein to be adjudicated in a “Judgment” by the judge.
(c) Whether it is the deception committed by the judge to make a “Decision” which may only be for the issue of facts under the law for turning blind eye to the issue of the law of jurisdiction to a case for the fact that it had already been withdrawn.
(d) Whether it is the duty of the judge to order the release of transcript and tape required for appeal refused by the courts below.
(e) Whether it is the duty for a judge as a fundamental starting point to address or to distinguish the improper invocation of 2 modes of the statutes within the same set of proceedings (Cap.4 & Cap.6) i.e. to deal with the point of Jurisdiction forthwith in his omission of the litigant’s submission of such in particular the withdrawal of the case under Cap.6.
2. Public interest and justice require Leave be granted to the defendant.”

5. On 1 April 2014, Choy lodged his written submissions as follows:

“ It is clear that you have deceived [Choy] in collusion with MBJSM, by failing your duty under Article 83 of the Basic Law for no law administered/applied in your “Decision”.
2. Choy’s submissions of the law of jurisdiction for the withdrawal judicially noticed by McMahon/Macrae in HCMP1313/2010 and declared on 11/2/2011 was ignored by you, M. Ng DJHC. I must request you M. Ng to answer the charges in your collusions with MBJSM to cheat [Choy] against you in Choy’s letter dated 19/3/2014 and 31/3/2014 copy each enclosed and referred.”

Choy’s letters dated 19 and 31 March 2014 reiterated similar arguments in the same vein.

6. On 31 March 2014, the Directors’ solicitors lodged their written submissions and statement of costs.

IV. CHOY’S ABSENCE FROM PART OF THE HEARING

7. At the beginning of the Leave Hearing, I invited Choy to make oral submissions in support of the Leave Summons. Without making submissions or speech in support of the Leave Summons, he requested that the official tape recording of the Leave Hearing be released to him. I asked Choy whether he wished to rely on his written submissions dated 1 April 2014. Choy said there was no need for him to make any submissions at all because in the Decision I failed to address the point of jurisdiction he raised at the Hearing on 12 March 2014. Choy also complained of my collusion with the Director’s solicitors to cheat him. On that note, Choy left the courtroom out of his own accord and did not return even up to the end of the Leave Hearing.

8. I do not see why the Hearing should not proceed as a result of Choy’s voluntary departure from the courtroom. The Leave Hearing therefore continued in Choy’s absence. Mr Boyle, solicitor for the Director, did not make any oral submissions in respect of the Leave Summons, but urged the court to award costs to be summarily assessed in favour of the Director if the court were minded to dismiss the Leave Summons. At the end of the Leave Hearing, I reserved my decision to be handed down which I now do.

V. DISCUSSION

9. Having carefully considered Choy’s grounds of application and his written submissions, I am unable to discern any intended ground of appeal that has reasonable prospect of success.

10. Insofar as Choy complained that (a) the Director could not enforce the Costs Orders by way of Charging Order Absolute after the withdrawal of the Petition and (b) there could not be conflation of the statutory regime under the HCO/RHC and the BO in the present proceedings with the result that Master H Au-Yeung had no jurisdiction to grant the Au-Yeung Order and this court had no jurisdiction to affirm such order by the Decision, such complaint is essentially a repetition of the arguments Choy raised in his written submissions for and his oral speech at the Hearing.[4] He also alluded to such arguments in his 6^th, 8^th and 9^th affirmations.[5] Choy had drawn my attention to (and I did particularly consider) the order for committal by McMahon J and Macrae J dated 11 February 2011 in HCMP 1313/2010.[6]

11. In paragraphs 43-47 of the Decision, I particularly dealt with the issue of 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 paragraphs 48-56 of the Decision, I particularly dealt with the question of 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. I am unable to see how it can be said that this court has ignored or turned a blind eye to the “jurisdiction issue”.

12. Choy claimed that this court had failed in its duty under article 83 of the Basic Law “for no law administered/applied in your “Decision”.” I reiterate the discussion in paragraphs 10-11 above. Further, I am of the view that article 83 of the Basic Law [7] has no relevance to the present application.

13. Choy suggested it was procedurally wrong for this court to hand down a “decision” and not a “judgment”. I am unable to see any sufficient basis for appeal that has reasonable prospect of success on this ground. The Decision is a decision of this court in respect of an interlocutory matter. It is not a final judgment made after trial, but is nevertheless a formal decision by this court that is determinative of the appeal against the Au-Yeung Order.

14. Choy further argued this court should have ordered the release of transcript and tape recording of the Master Hearing for the purpose of the Appeal. However, as explained in paragraph 8 of the Decision, 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. Transcript and tape recording of the Master Hearing are therefore unnecessary for the purpose of the Appeal. This does not amount to any sound basis for appeal that has reasonable prospect of success.

15. The other matters raised in paragraph 1 of the Leave Summons and in Choy’s written submissions are scandalous. Having reviewed Choy’s intended grounds of application which I have set out in paragraphs 4-5 above, I consider that none of them has any reasonable prospect of success.

16. Lastly, for the reasons set out above and in view of the discussion/conclusion in the Decision, I find that Choy has failed to demonstrate the existence of “some other reason in the interests of justice why the appeal should be heard”. Leave to appeal is therefore refused.

VI. CONCLUSION

17. I therefore order that the Leave Summons be dismissed. 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. In my view, there was no need for the Director’s solicitors to lodge another hearing bundle when the previous hearing bundle could have been used and, where appropriate, updated. Further, the issues raised in the leave application fall within a small compass. I therefore grant a costs order nisi that costs of and occasioned by the Leave Summons be paid by Choy to the Director summarily assessed at $15,000.

18. I further do not see any sufficient justification for release of the official tape recording of the Leave Hearing to Choy, and his oral application for such is refused. First, he attended the Leave Hearing but chose to absent himself in the course of it. Secondly, after Choy absented himself, Mr Boyle did not make any oral submissions in respect the Leave Summons except to ask for costs, and this court reserved its decision to be handed down. The Leave Hearing lasted for a few minutes. Thirdly, by this Decision I dismiss the Leave Summons and decline to grant leave to appeal. Choy is entitled, if he wishes, to renew his application for leave to appeal to the Court of Appeal pursuant to the rules of court. That being the case, the official tape recording of the Leave Hearing is unnecessary for any further pursuit of Choy’s intended appeal.

(Marlene Ng)
Deputy High Court Judge

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

The judgment debtor/appellant appeared in person

[1] [2009] 4 HKLRD 125

[2] see Ho Yuen Ki Winnie & Anor v Ho Hung Sun Stanley &anor HCMP 1009/2009 (unreported, 24 August 2009) para 16

[3] see Ho Yuen Ki Winnie & Anorv Ho Hung Sun Stanley &anor HCA 391/2006, A Cheung J (as he then was) (unreported, 25 May 2009) para 3, and HCMP 1009/2009 (unreported, 24 August 2009) para 22

[4] see paras 5-6 and 42 of the Decision

[5] see paras 30(d), 32 and 33 of the Decision

[6] see para 44 of the Decision

[7] “The structure, powers and functions of the courts of the Hong Kong Special Administrative Region at all levels shall be prescribed by law.”

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

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGSNO 12343 OF 2009

_____________________

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)

_____________________

Before: Deputy High Court Judge Marlene Ng in Chambers

Date of Hearing: 12 March 2014

Date of Handing Down Decision: 14 March 2014

________________________

D E C I S I O N

________________________

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’SOBJECTIONS AND THE DIRECTOR’SREPLY

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 & CaseLtd 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 toany 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 Taylorv 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.

	(Marlene Ng)
	Deputy High Court Judge

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

The judgment debtor/appellant appeared in person

[1] see paragraph 42 below

[2] see paragraph 42 below

[3] see Hong KongCivil Procedure 2014 Vol 1 para 58/1/2 at p 1024

[4] see paragraph 42 below

[5] see letter from Choy to Master de Souza dated 18 July 2013 exhibited to Choy’s 6^th affirmation

[6] see paragraph 42 above

[7] [2004] 1 HKLRD 291, 298

[8] [2001] 1 WLR 700

[9] CACV 42/2013 and HCMP 241, 407 & 2693/2012 (unreported, 10 September 2013) para 51

[10] CACV 154/2012 and CACV 166/2012 (unreported, 10 January 2014) para 50

[11] 1999 (4) SA 147, 177

[12] [2010] 3 HKLRD 49, 55 and 64-65 (quoted in Falcon Private Bank Limited at para 52)

[13] see Falcon Private Bank Limited at para 55

[14] see paragraphs 14-15 above

[15] see paragraph 20 above

[16] (1875) 1 Ch 426, 431-432

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

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 12343 OF 2009

____________

RE: CHOY BING WING

EX PARTE: DIRECTOR OF HOUSING DEPARTMENT OF THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

____________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 12 December 2013

Date of Decision: 31 December 2013

_____________

D E C I S I O N

_____________

1. This is the judgment debtor’s (“JD”) application for leave to appeal against the decision of this court dated 3 October 2013 (“Decision”).

2. By the Decision, an order made by Master Lo (“Order”) for the further conduct of a charging order application against JD was upheld. As pointed out in the Decision, the Order is administrative in nature and does not preclude JD from having his arguments ventilated.

3. I do not begin to see any valid ground for the intended appeal. The “important questions on points of law” contained in the Summons dated 11 October 2013 and JD’s letter to the court dated 9 December 2013 are quite irrelevant and very difficult to understand. Questions (a) and (d) set out in the Summons are also scandalous.

4. In his submissions to the court, JD was much pre-occupied with obtaining the transcripts of the previous hearings before this court. It is clear that he is labouring under a misguided sense of injustice. All the hearings involving JD before this court were open to the public. JD’s application for transcript in another proceedings, HCMP 260/2013, has been approved by the court. However, the transcript has not been released because of his refusal to agree to an undertaking on the proper use of the same. JD is not entitled to special treatment in this regard, and the failure to obtain the transcript is a matter of his own making.

5. As regards his application for the transcript of the hearing in these matters on 25 September 2013, there is simply no proper ground in support of the same. It was an entirely unmeritorious appeal in respect of the Order.

6. For these reasons, this application is dismissed with costs against JD, which are summarily assessed at HK$19,100.40 as per the judgment creditor’s statement of costs dated 10 December 2013.

	(Anthony Chan) Judge of the Court of First Instance
	High Court

Ms Venna Cheng, of Mayer Brown JSM, for the judgment creditor

The judgment debtor appeared in person

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 12343 OF 2009

_________________________

IN THE MATTER of Order 50 of the Rules of the High Court

_________________________

BETWEEN

	CHOY BING WING	Debtor/ Appellant (Judgment Debtor)
	And
	DIRECTOR OF HOUSING DEPARTMENT OF THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION	Petitioner/ Respondent (Judgment Creditor)

_________________________

Before : Master H Au-Yeung in Chambers

Date of Hearing : 5 December 2013

Date of Decision : 5 December 2013

Date of Handing Down Reasons for Decision : 12 December 2013

_______________________

REASONS FOR DECISION

_______________________

BACKGROUND

1. This is the judgment creditor’s application for a charging order absolute against two properties of the judgment debtor. The properties are: (1) 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) (“the First Property”); and (2) 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) (“the Second Property”). A charging order nisi was made by Master de Souza on 4 July 2013.

2. The debt in respect of which the charging order nisi was made arose by virtue of 3 costs orders granted in the course of these bankruptcy proceedings against the judgment debtor in favour of the judgment creditor:

(1)  The first costs order in the total sum of $31,670.10 was made by the Honourable Mr Justice Chung on 24 December 2009;
(2)  The second costs order in the sum of $70,000 was made by Master Ko on 1 February 2010;
(3)  The third costs order in the sum of $18,000 was made by the Honourable Mr Justice Barma (as he then was) on 24 February 2010.

3. Thus, the total amount of costs involved (excluding interest) is $119,670.10.

JUDGMENT DEBTOR’S APPLICATION TO RECUSE

4. At the beginning of this hearing, the judgment debtor applied for me to recuse myself. His ground was that I had previously refused his application for the tape and transcripts of a hearing in another action. In his oral submissions, instead of explaining why I should not hear this case, and in particular, why my refusal to release such a tape and transcripts to him is relevant in this application, the judgment debtor only kept asking me to allow his application for such a tape and transcripts.

5. I have already refused the judgment debtor’s application for the release of the said tape and transcripts many months ago, and I do not see why the judgment debtor is entitled to renew that application in the hearing today.

6. Furthermore, I cannot see why the said refusal on my part could be said in any remote way that I would have bias, be it actual or apparent, against the judgment debtor.

7. The judgment debtor’s application for recusal was therefore dismissed.

JUDGMENT DEBTOR’S ABSENCE FROM PART OF THE HEARING

8. After his application for recusal was dismissed, the judgment debtor proceeded to make submissions in an attempt to show cause against the making of the charging order absolute. However, having gone on for a short while, he stated that he was not satisfied with the presence of a bailiff in court. He stated that he was under threat with the bailiff’s presence. He then said that he had to leave. I then told him that I had a question to ask him concerning his submissions, however, he replied that he was not going to answer any further questions. Then he left the court room of his own volition and did not come back since then.

9. I could not see why this hearing should be adjourned as a result, as it was the judgment debtor’s own choice to leave the court. The hearing was therefore carried on in his absence thereafter.

10. To be fair to the judgment debtor, I will deal with all the matters which he has raised in his affirmations and written submissions filed or lodged (as the case may be) for the purpose of this hearing, even if he did not repeat the same orally while he was in court today.

JUDGMENT DEBTOR’S OBJECTIONS

11. By his 6^th affirmation, the judgment debtor raised a number of grounds of objection as follows:

(a)  He has issued a cheque on 10 September 2012 but the judgment creditor’s solicitors returned the cheque to him 10 days later.
(b)  The judgment creditor’s solicitors are aware that the judgment debtor is financially sound and is ready to pay the costs involved.
(c)   The judgment creditor’s solicitors did not inform Master de Souza by Cheng Yun Wah’s affirmation dated 27 June 2013 that while only a small amount of costs was involved, two properties were sought to be charged.
(d)  The court should not allow the judgment creditor to enforce the costs order by way of charging order after the withdrawal of the bankruptcy proceedings.

12. By way of written submissions, the judgment debtor also queried certain decisions made by the Honourable Mr Justice Anthony Chan.

13. I shall discuss these grounds in turn.

DISCUSSION

The judgment debtor’s payment

14. The judgment debtor stated that he had issued a cheque to the judgment creditor’s solicitors on 10 September 2012. This is undisputed by the judgment creditor. However, it is evident that this is not an unconditional payment. It can be seen from the covering letter issued by the judgment debtor that such a payment was said to be subject to his right to recover the same under Article 35 of the Basic Law. On the reverse side of the cheque, it was also stated that “Rights for the recover (sic) of monies as stated in Choy’s letter dated 10/9/2012” and that “The two tilting towers must be demolished”.

15. In my view, the judgment creditor was entitled to return such a cheque on the basis that any payment made in satisfaction of the costs orders must be made unconditionally. The judgment debtor should not impose conditions on the payment of costs. It should also be pointed out that the conditions unilaterally imposed by the judgment debtor are totally unrelated to the costs order in issue.

16. The judgment creditor has demanded the judgment debtor to issue another cheque with no condition whatsoever imposed thereupon. However, the judgment debtor has failed to do so.

17. As a result, the costs under the 3 costs orders, together with interest thereon, remain outstanding. Therefore, this ground of opposition must fail.

The judgment debtor’s financial position

18. The judgment debtor stated that he is financially sound and is ready to pay the costs involved, and the judgment creditor’s solicitors are fully aware of that.

19. In my view, the judgment debtor’s financial strength is totally beside the point. No matter how wealthy he is, so long as he has failed to pay pursuant to an order of the court, the judgment creditor would be entitled to enforce such an order by relying on the procedures provided by the Rules of the High Court.

20. This ground is therefore rejected.

Judgment creditor’s failure to inform the court of material facts

21. Paragraph 5 of the judgment debtor’s 6^th affirmation reads:

“JSM charged 2 properties for such a small sum of money, while saw fit not to mention such crucial facts to Master de Souza in the Affirmation of Cheng Yun Wah dated 27/6/2013 …”

22. Pausing here, I should explain that the affirmation referred to by the judgment debtor was an affirmation filed by the judgment creditor in support of his application for a charging order nisi.

23. In my view, this allegation is totally unfair to the judgment creditor’s solicitors and the judgment debtor has misrepresented the fact.

24. As a matter of fact, the said affirmation of Cheng Yun Wah did refer to what the judgment debtor described as “crucial facts”, namely, the two properties which were proposed to be charged and the amount of outstanding costs.

25. Hence, this ground is totally without substance and must be rejected.

26. Having said that, the judgment creditor has informed this court that he would only ask the court to make a charging order absolute in respect of the First Property but not the Second Property so as to avoid further argument on the part of the judgment debtor of “over-security”. The First Property was selected out of the two properties because the Secretary for Justice has applied for an order for sale in respect of that property.

Effect of withdrawal of the bankruptcy petition

27. To understand this ground properly, I should refer to the background of the present case.

28. The history should be traced back to 2007 when the judgment debtor sued, among other parties, the judgment creditor in HCA 2458/2007. This action was subsequently discontinued. As a result, the judgment debtor was subject to a costs order (“the HCA Costs Order”) which he failed to satisfy.

29. The judgment creditor therefore filed a bankruptcy petition against the judgment debtor. Shortly before the hearing of the bankruptcy petition, the judgment debtor chose to pay pursuant to the HCA Costs Order in full.

30. The judgment creditor therefore sought leave to withdraw the bankruptcy petition. Such leave was granted by Master Ko on 1 February 2010. However, Master Ko also made the second costs order referred to in paragraph 2(2) above against the judgment debtor upon such withdrawal.

31. The judgment debtor now suggests that this court should not allow the judgment creditor to enforce the costs orders by way of charging order after his withdrawal of the bankruptcy proceedings.

32. In his written submission, the judgment debtor stated that “the Petition was dispensed off by the Defendant’s payment, thus DH had closed his case to seek bankruptcy order”.

33. In his 6^th affirmation, the judgment debtor also referred to the case of Taylor v Taylor (1875) 1 Ch D 426 and quoted a part of the judgment at page 431 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”.

34. The judgment debtor’s argument is totally misconceived because the judgment creditor is not going after the judgment debtor for the underlying debt of the bankruptcy proceedings (i.e. the HCA Costs Order), but for satisfaction of, among other things, the costs order made by Master Ko upon the withdrawal of the bankruptcy petition. The judgment debtor has mixed up two separate costs orders.

35. Further, the meaning of the paragraph in Taylor v Taylor (supra) quoted by the judgment debtor is that if the rules have stipulated a specific mode in making an application, that particular mode, but not any other mode, must be followed. This meaning is even more apparent if the paragraph immediately follows the judgment debtor’s quotation is referred to:

“For instance, the 16th section says that the proceeding is to be by petition. It is enabling, I know, in form, that the application may be by petition; but no other process can be adopted. That has been decided on a great variety of Acts where the application has been directed to be by petition, and it has been laid down that that being the mode pointed out by the Act which conferred the jurisdiction, you must exercise the jurisdiction (as the 2nd section of this Act says in terms, though it was not necessary) according to the provisions of the Act.”

36. Therefore, it is clear that the judgment debtor has totally misunderstood the case of Taylor v Taylor. This case is certainly irrelevant as far as the application before this court is concerned.

A Chan J’s decision

37. Finally, the judgment debtor lodged a number of attacks against A Chan J who dismissed the appeal of the judgment debtor against the directions imposed by Master K Lo in this application. In my judgment, what the judgment debtor submitted in this regard is again totally without substance and has nothing to do with the issues before this court.

CONCLUSION

Charging order absolute

38. By reasons of the aforesaid, I now order that there be a charging order absolute in respect of the First Property. The charging order nisi in respect of the Second Property is hereby discharged as proposed by the judgment creditor.

Costs

39. There is no reason why the judgment creditor should not be entitled to his costs of this application.

40. The judgment creditor submitted that an order for costs on indemnity basis should be made against the judgment debtor by reason of his conduct in these proceedings, namely, that he had relied on some totally unmeritorious grounds, that he had laid challenges to various court orders which amounts to an abuse of the process of the court and that he had deliberately and persistently failed to pay costs pursuant to various court orders.

41. The judgment creditor sought to rely on a number of unmeritorious appeals and applications lodged by the judgment debtor in these proceedings. In my view, if the presiding judge or master considered it appropriate, he or she would have imposed an indemnity costs order in respect of any particular appeal or application. In my view, the failure of those appeals and applications should not be taken into account here again.

42. In respect of the judgment debtor’s unmeritorious arguments, I am prepared to be a bit more tolerant with the judgment’s debtor because after all he is acting in person.

43. That leaves the judgment debtor’s conduct in deliberately and persistently refusing to pay although, as he admitted, he has the financial means to do so.

44. I must say that the judgment debtor’s conduct is certainly not commendable. Having said that, I do not consider it appropriate for me to exercise my discretion solely on that basis.

45. I therefore would not order that the judgment creditor’s costs be assessed on indemnity basis.

46. As aforesaid, the judgment debtor should bear the costs of the judgment creditor in this application. This is an appropriate case where such costs should be assessed summarily pursuant to Order 62 rule 9A(1)(a) of the Rules of the High Court. For this purpose, Ms Cheng for the judgment creditor has provided this court with a statement of costs. Having perused the same, I am satisfied that most of the costs of the judgment creditor were reasonably incurred. Adopting a broad brush approach, I assessed the judgment creditor’s costs of this application at $34,000. Such costs should be payable by the judgment debtor forthwith.

(Herbert Au-Yeung)
Master of the High Court

Venna Cheng, of Mayer Brown JSM, for the judgment creditor

The judgment debtor appeared in person

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 12343 OF 2009

____________

RE: CHOY BING WING
EX PARTE:	DIRECTOR OF HOUSING DEPARTMENT OF THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

____________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 25 September 2013

Date of Decision: 3 October 2013

_____________

D E C I S I O N

_____________

1. This is an appeal by the judgment debtor (Mr Choy Bing Wing (“JD”)) against the order made by Master K Lo on 2 August 2013 (“Order”) giving directions to adjourn for argument the hearing of the judgment creditor’s (Director of Housing Department of the Government of the HKSAR (“JC”)) application for a charging order (“Application”).

2. The Application arose from the failure of the JD to satisfy any part of the three costs orders which have been made against him in these bankruptcy proceedings on 24 December 2009, 1 February 2010 and 24 February 2010.

3. It is contended in the written submissions advanced by the JD that the Application is legally flawed. In his oral submission, the JD has emphasized that Order 50 of the Rules of the High Court cannot be invoked in bankruptcy proceedings. However, as pointed out by Ms Cheng who appeared for the JC, Master Lo has not made any decision on the merits of the JD’s case. The Order is administrative in nature and it provides for the proper conduct of the substantive hearing during which the JD’s case, including any jurisdictional challenge, will be fully ventilated.

4. I regret to say that there is no merit in this appeal and it is dismissed with costs to the JC which are summarily assessed at HK$17,678.

	(Anthony Chan)
	Judge of the Court of First Instance
	High Court

Ms Venna Cheng, of Mayer Brown JSM, for the judgment creditor

The judgment debtor appeared in person

Please refer to HCMP50/2014 for the relevant appeal(s) to the Court of Appeal.

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 12343 OF 2009

______________________

Re: Choy Bing Wing

______________________

Coram : Master Ko in Court

Dates of Hearing : 11 November 2009 and 21 January 2010

Date of Decision : 1 February 2010

______________________

D E C I S I O N

______________________

1. This is the adjourned hearing for the application of the Director of Housing Department (“the Petitioner”) for leave to withdraw the bankruptcy petition against Mr Choy and an order of costs against Mr Choy on an indemnity basis.

2. The application was first raised at the first hearing of the petition on 11 November 2009. Mr Choy then sought an adjournment on the grounds that he had only just received the affidavit filed by the Petitioner in support of the application and that he required time to consider, research and prepare. I acceded to his request and adjourned the application.

3. Mr Choy is absent at the adjourned hearing on 21 January 2010. I am satisfied by the affidavit of service filed by the Petitioner that Mr Choy has been duly notified of the hearing. In fact, Mr Choy has written to the Petitioner[1] and to this Court[2] making references to the adjourned hearing. I have therefore decided to proceed with the application.

4. In light of Mr Choy’s absence, I shall set out the reasoning of my decision in writing.

BACKGROUND

5. In order to properly appreciate the application, it is necessary for me to go into the background of this case.

6. Mr Choy was the plaintiff in HCA 2458/2007. By that action, he claimed against, inter alia, the Petitioner for ruining his professional career. Mr Choy elected not to proceed with that action and applied for leave to discontinue it. By an order dated 7 January 2008, the Registrar granted him leave to do so and ordered him to pay costs to all the defendants. The costs due to the Petitioner under the Registrar’s order has since been taxed and allowed at $45,896.50.

7. Mr Choy refused to pay the taxed costs to the Petitioner. On 15 May 2009, the Petitioner served a statutory demand on Mr Choy demanding him to pay up but to no avail. The Petitioner then presented the petition herein for the bankruptcy of Mr Choy on the ground that Mr Choy was unable to pay the taxed costs plus interest.

8. By a letter to the Petitioner dated 16 September 2009, Mr Choy enclosed the complaint letters he had sent to the Chief Executive and the Chief Justice respectively and enclosed a cheque for the sum of $52,439.98. The last sentence of the letter read:

“You can cash the cheque only when the two tilting towers 天頌閣 be sold to the public.”

There is a similar endorsement at the back of the cheque.

9. I am told that $52,439.98 is equivalent to the Petitioner’s taxed costs in HCA 2458/2007 plus interest calculated up to 15 September 2009.

10. The Petitioner considered the condition imposed by Mr Choy on the presentment of the cheque irrelevant and unacceptable. By a letter dated 8 October 2009, the Petitioner’s solicitors (“JSM”) returned the cheque to Mr Choy urging him to issue a cheque without any condition attached.

11. In his reply to JSM dated 8 October 2009, Mr Choy accused the Petitioner of abusing the court’s process in continuing with the bankruptcy proceedings. This letter ended with the following remark:

“I now return the cheque for you to cash it with your guaranty of sale in a later date per this letter in order for you to kill off my charges of you of frauds. Please issue guaranty of sale of the tilting towers before you cash this cheque.”

The cheque previous returned by the Petitioner was enclosed in this letter. The original endorsement at the back of the cheque was crossed out and marked cancelled, and the following new endorsement was made:

“The date is revised per the reply dated 8/10/2009 by Choy with guaranty.”

12. The Petitioner did not accept the new condition. By a letter dated 15 October 2009, JSM returned the cheque to Mr Choy and asked him to make payment on an unconditional basis failing which the bankruptcy proceedings would be proceeded with.

13. By a letter to JSM dated 16 October 2009, Mr Choy enclosed a complaint letter he had sent to the Chief Executive and stated that he would reserve his rights and that:

“The two tilting towers (bombs left in the city area of Tin Shui Wai) have been excluded from the 1392 flats to be on sale to the public and your inability to make guaranty due to crime cover-ups committed by HKSAR, I now withdraw the previous conditions (i) and (ii) and pay the blackmail committed by you against me.”

Mr Choy once again returned the cheque with his letter. This time, the first two endorsements at the back of the cheque were crossed out and the following new endorsement indorsed:

“Cancelled due to evidence of no sale of these two blocks published by 東方.”

14. The Petitioner considered that Mr Choy had withdrawn all his conditions and accepted the cheque for payment. By a letter dated 27 October 2009, JSM informed Mr Choy that:

“You state in your letter that you withdraw the conditions previously imposed on the cheque. In these circumstances, our client will proceed to present the cheque to the bank for payment and will treat such payment as your settlement of the costs order dated 7 November 2008 made by the Registrar of the High Court. Upon clearance of the cheque, our client will withdraw the bankruptcy petition.

For the avoidance of doubt, our client makes no representation, agreement or guarantee on any matters raised in your previous correspondence.”

15. Two days later, JSM received Mr Choy’s letter dated 29 October 2009 in which Mr Choy insisted that “the condition of the cheque is still there” and made scandalous remarks against various parties including the Petitioner, JSM and the Registrar.

16. By then, the Petitioner had already presented the cheque. By a letter dated 10 November 2009, JSM informed Mr Choy that:

“Your letter dated 16 October 2009 clearly states that you withdraw the conditions previously imposed on the cheque. We do not accept your subsequent allegations contained in your letter dated 29 October 2009 that the cheque remains as a conditional one.

Our client has obtained payment form the bank and will seek leave to withdraw the bankruptcy petition. We will be attending the hearing set down at 10:30 am tomorrow to seek an order that you pay our client’s costs of the petition.”

17. The first hearing of the petition was scheduled for 11 November 2009. Mr Boyle (a partner of JSM) sworn an affidavit on 10 November 2009 to indicate the Petitioner’s intention to apply for leave to withdraw the petition. He stated that the Petitioner had presented Mr Choy’s cheque for payment and would forego the remaining interest.

18. Furthermore, Mr Boyle stated in paragraph 21 of his affidavit that:

“The Petitioner has incurred a substantial amount of costs in the bankruptcy petition. Most of the costs were incurred due to the unreasonable and vexatious attitude of Mr Choy in his refusal to make an unconditional payment – which has required my firm to go to considerable lengths to understand Mr Choy’s allegations, to advise the Petitioner regarding the status of the cheque tendered on a so-called conditional basis and to respond to Mr Choy.”

In those circumstances, stated Mr Boyle, the Petitioner would seek costs against Mr Choy on an indemnity basis and asked for gross sum assessment of such costs in view of the vexatious attitude of Mr Choy.

19. Mr Choy also filed an affirmation on 3 November 2009 before the first hearing in which he made scandalous remarks against the Registrar.

20. At the first hearing on 11 November 2009, I struck out the scandalous remarks in Mr Choy’s affirmation and referred the matter to the Department of Justice to consider whether contempt of court proceedings should be instituted against Mr Choy. I further adjourned the Petitioner’s application for further consideartion.

21. Mr Choy lodged an appeal against my above order. By a written decision handed down on 24 December 2009, Chung J dismissed the appeal.

22. Prior to this adjourned hearing, Mr Choy filed his 4^th affirmation in reply to Mr Boyle’s affidavit. In his affirmation, Mr Choy referred to the assertion that he had withdrawn all conditions as a lie and made some serious allegations against JSM.

DISCUSSION

23. Mr Choy is apparently appealing against Chung J’s order. In his letter to this Court dated 19 January 2010, Mr Choy enclosed a copy of his Notice of Appeal filed in CACV 4/2010 and threatened that I should not deal with the present application until after his appeal has been disposed of by the Court of Appeal. I disagree.

24. Order 59, rule 13 of the Rules of the High Court, Cap.4A (“RHC”) provides that except so far as the court below or the Court of Appeal or a single judge may otherwise direct, an appeal shall not operate as a stay of execution or of proceedings under the decision of the court below.

25. I am not aware of any order directing a stay of proceedings. There is, therefore, nothing to stop the Petitioner from proceeding with the application.

26. In my view, the Petitioner’s application can be looked at in 3 stages:

(1) Whether leave should be granted for the withdrawal of the petition?

(2) Whether Mr Choy should be ordered to pay costs to the Petitioner?

(3) Whether Mr Choy should be ordered to pay costs on the indemnity basis?

(1) Whether leave should be granted for the withdrawal of the petition?

27. The petition was presented on the ground that Mr Choy was unable to pay the taxed costs plus interest. Irrespective of whether there had been any condition imposed on the cheque, the fact remains that the Petitioner has obtained payment on part of the petitioning debt and elected to forego the remainder.

28. The Official Receiver has been informed of the application, and raises no objection.

29. As the underlying basis of the petition is gone, I grant leave under section 5(2) of the Bankruptcy Ordinance, Cap.6 (“the Ordinance”) to the Petitioner to withdraw the petition.

(2) Whether Mr Choy should be ordered to pay costs to the Petitioner?

30. Section 100(1) of the Ordinance provides that:

“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.”

31. Rule 79 of the Bankruptcy Rules, Cap.6A (“BR”) further 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 shall pay the whole or any part of the costs.”

Sub-rules (3) and (4) are not relevant for present purposes.

32. In my view, the Petitioner was clearly justified in commencing these proceedings against Mr Choy.

33. According to Mr Boyle’s affidavit, the Petitioner had repeatedly requested Mr Choy between February and September 2008 to pay the Petitioner’s costs in HCA 2458/2007. The Petitioner had also put forward a without prejudice settlement offer with a view to save time and costs of taxation. However, Mr Choy did not accept the offer. The Petitioner therefore filed a bill of costs in HCA 2458/2007 for provisional assessment. Notice of provisional assessment was subsequently served on Mr Choy and he did not apply for formal taxation. The Petitioner thereafter obtained an allocatur for the taxed costs and served it on Mr Choy.

34. Mr Choy continued to refuse to make payment and chose to ignore the statutory demand served on him on 15 May 2009. Eventually, the Petitioner presented the petition on 15 September 2009.

35. Mr Choy only settled the petitioning debt after the Petitioner had commenced these proceedings. In those circumstances, I see no reason why he should not be responsible for costs.

36. In the exercise of my discretion under r.79(2) of BR, I order Mr Choy to pay costs to the Petitioner.

(3) Whether Mr Choy should be ordered to pay costs on the indemnity basis?

37. This is a more difficult question in terms of both law and facts.

38. Mr Boyle says the application is based on Order 62, rule 28 of RHC, the relevant part of which provides:

“…

(3) The Court in awarding costs to which this rule applies may in any case in which it thinks fit to do so order or direct that the costs shall be taxed … on the indemnity basis.

(4A) On a taxation on the indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing master may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party; and in these rules the term "the indemnity basis" (彌償基準) in relation to the taxation of costs shall be construed accordingly.

…”

39. Mr Boyle submits that the combined effect of Order 1, rule 2 of RHC and section 99(1) of the Ordinance is that RHC continue to apply in bankruptcy proceedings “so far as the same may be applicable and not inconsistent with the provisions of [the Ordinance]”.

40. At the adjourned hearing, I drew Mr Boyle’s attention to rule 32A(1) of BR which provides that:

“When awarding costs the court may-
(a)    direct that the costs of any matter or application-
(i)     shall be taxed and paid as between party and party or as between solicitor and client, on the basis of a common fund in which the client and others are interested; or
(ii)    may be allowed as between solicitor and own client; or
(b)   fix a sum to be paid in lieu of taxed costs.”

That rule does not expressly provide for the court’s power to order taxation on an indemnity costs.

41. In response, Mr Boyle has submitted that although r.32A may be silent on indemnity costs, it is not inconsistent with O.62, r.28. As such, O.62, r.28 insofar as it empowers the court to order taxation on an indemnity basis should still be applicable.

42. Mr Boyle informs me that Chung J has in fact awarded costs against Mr Choy in the appeal on an indemnity basis although the written judgment does not expressly say so. I also note that there are other decided cases in which the Court has ordered indemnity costs in exercising its bankruptcy jurisdiction. [3]

43. On the final analysis, I do not think I need to labour on this point on jurisdiction. First, O.62, r.28 relates to the court’s power to order taxation on the indemnity basis. However, the Petitioner is presently asking me to make an order under r.32A(1)(b) of BR in lieu of taxation. Secondly, I have decided not to order indemnity costs against Mr Choy in the circumstances of this case. Thirdly, I consider the costs asked for by JSM to be excessive even on an indemnity basis.

44. In deference to the submissions made by Mr Boyle, I shall elaborate on why I will not order indemnity costs against Mr Choy. I shall assume (without deciding) in the ensuing discussion that Order 62, rule 28 does apply.

45. The discretion conferred by Order 62, rule 28 is a broad one. There must be some special or unusual feature in the case to justify an order for indemnity costs. In Town Planning Board v. Society for Protection of the Harbour Ltd (No.2)[4], Li CJ said this:

“Grounds for making an order for indemnity costs
16. The courts have rejected the proposition that an award of indemnity costs will only be made where a case has been brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party. (Macmillan v. Bishopsgate Investment Trust Ltd, unreported, judgment delivered 10 December 1993 (Millett J); Disney v. Plummer, unreported, judgment delivered 16 November 1987 (English Court of Appeal)). These decisions and the reasoning on which they were based have been endorsed by the Hong Kong Court of Appeal (Sung Foo Kee Ltd v. Pak Lik Co. (A Firm) at 575E-576F, per Godfrey JA; see also Choy Yee Chun v. Bond Star Development[1997] HKLRD 1327 at 1334G-1335I, per Stock J.)
17. In these and other cases, courts have emphasised the undesirability of attempting to define the circumstances in which orders for indemnity costs are to be made. It has been said that:
"the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be 'appropriate'."
(Macmillan v. Bishopsgate Investment Trust Ltd, per Millett J; Sung Foo Kee Ltd v. Pak Lik Co. (A Firm) at 575E-576F, per Godfrey JA; see also Choy Yee Chun v. Bond Star Development Ltdat 1334G-1335I, per Stock J).
18. Neither statements of principle nor authority provide any support for the Board's proposition that the attributes of the parties and the character of the proceedings are irrelevant to the exercise of the discretion to award indemnity costs. In relation to the award of costs generally, it has been accepted, as Chu J pointed out, that while
‘the grounds [upon which costs are awarded] must be connected with the case. This may extend to any matter relating to the litigation and the parties' conduct in it, and also to the circumstances leading to the litigation, but no further.’ (emphasis supplied)
(Scherer v. Counting Instruments Ltd [1986] 1 WLR 615 at 621F, per Buckley LJ). There is no reason why this statement does not apply with equal force to the exercise of the discretion to award indemnity costs.”

46. Mr Boyle argues that I should order Mr Choy to pay indemnity costs because:

“(1) The bankruptcy petition was commenced due to Mr Choy’s unreasonable and persistent refusal to comply with the costs order made by the Registrar of the High Court dated 7 January 2008. The Petitioner has made every effort to obtain payment of the costs order by correspondence. Mr Choy’s intransigence left the Petitioner with no alternative but to issue bankruptcy proceedings to enforce the costs order.
(2)   After the commencement of the bankruptcy petition, Mr Choy presented three cheques in succession with different conditions attached. The conditions imposed on the presentation of the cheque were irrelevant, unreasonable and irrational, and were a continuation of Mr Choy’s advancement of his grievance against the Petitioner. The presentation of these cheques required the Petitioner to incur substantial costs in obtaining advice from this firm whether it should cash the same.
(3)   Throughout the bankruptcy petition, Mr Choy wrote abusive letters to this Honourable Court, the Registrar, the Honourable Chief Justice and other Judges, the Chief Executives of the HKSAR, the Petitioner and JSM making groundless and defamatory allegations of fraud and dishonesty. It is evident from the letters that Mr Choy was trying to pursue the same allegations as pleaded in the Statement of Claim of the main action against the Petitioner in pursuit of his long-standing grievance against the Government and the Judiciary.
(4)   Mr Choy has conducted himself throughout these bankruptcy proceedings with an ulterior motive and in a scandalous and vexatious manner, causing the Petitioner to incur substantial costs in these bankruptcy proceedings, which would not otherwise have been incurred in the normal course of events.
(5)   Mr Choy has so far appealed against every order and decision made by this Honourable Court. Mr Choy has also indicated his intention not to comply with the Honourable Mr Justice Chung’s order to pay the indemnity costs to the Petitioner. In fact, Mr Choy has past history of making all possible applications and appeals, and conduct proceedings in a vexatious, abusive and oppressive manner. The Court in those proceedings, rightly, ordered indemnity costs against Mr Choy.”

47. Let me examine each of these submissions more closely.

48. First, I do not think I can regard Mr Choy’s refusal to settle prior to the commencement of these proceedings as a justification for ordering indemnity costs against him. His refusal, whilst justifying the presentation of the petition, is not unique to this case. After all, all creditor’s petitions are based on the inability of the debtor to pay the petitioning debt.

49. Secondly, Mr Choy’s attempts to settle the petitioning debt by means of cheque payment is an improvement on his pre-petition attitude. Although he was still stubborn initially in trying to impose unreasonable conditions on the presentment of the cheque, he responded positively to the Petitioner’s rejections. He eventually (in my view) dropped all his conditions and settled the matter before the first hearing of the petition. So, Mr Choy did not prolong these proceedings unnecessarily by opposing the petition.

50. It was no doubt necessary for the Petitioner to consider each of Mr Choy’s proposals with care and circumspection before responding. Such costs are recoverable even without an order for indemnity costs.

51. In my view, Mr Choy’s conduct in thrice sending a cheque to the Petitioner to settle the petitioning debt provides no basis for ordering indemnity costs against him.

52. The third and fourth submissions are really two sides of the same coin.

53. In the context of these proceedings, Mr Choy made some serious accusations in correspondence against the Petitioner and JSM in an attempt to justify the conditions he imposed on his cheque. He did not, however, insist on those conditions and eventually tendered unconditional payment.

54. Mr Choy was generally repeating his allegations in HCA 2458/2007 in those correspondences. As these accusations had been raised before (in the context of HCA 2458/2007) and were clearly unrelated to the basis of the petition, I cannot imagine that the Petitioner and JSM would have spent much time and costs in dealing with them.

55. Mr Choy has also filed 4 affirmations in these proceedings. Chung J has already dealt with the costs in relation to Mr Choy’s 2^nd and 3^rd affirmations (filed for the appeal) in the appeal. I have noted the contents of Mr Choy’s 1^st and 4^th affirmations.

56. In my view, Mr Choy’s abusive correspondences and affirmations should be looked at against his conduct in settling the matter. Given the frequency and duration of these abusive correspondences and affirmations, I do not feel disposed to order indemnity costs against Mr Choy.

57. Finally, Mr Boyle has referred me to Choy Bing Wing v Official Receiver & Trustee of Ng Yat Chi, Discharged Bankrupt[5] and Ng Yat Chi v China Resources (Holdings) Company Limited[6]to illustrate how unreasonable Mr Choy had been in other proceedings. In fact, Mr Choy has been imprisoned for contempt before.[7]

58. But all that is past. The underlying basis of the present proceeding is the non-payment of the taxed costs. It has nothing to do with the 2 cases cited by Mr Boyle. Mr Choy’s vexatious conduct in other proceedings has been appropriately dealt with by the Court. Insofar as Mr Boyle is suggesting that Mr Choy will likely take this decision further (as he has done so in relation to my previous order), it is Mr Choy’s right to do so. It would be wrong for me to penalize Mr Choy for something he has not done. Furthermore, every case is different and the fact that other Courts had seen fit to order indemnity costs in the past does not mean that it is appropriate to do so in the present instance.

59. For the above reasons, I will not order indemnity costs against Mr Choy in the exercise of my discretion even if I have the power to do so.

CONCLUSION

60. I grant leave to the Petitioner to withdraw the petition and order Mr Choy to pay the Petitioner’s costs of and incidental to these proceedings.

61. Although the Petitioner has not succeeded in his application for indemnity costs, I consider such application justified and will not deprive the Petitioner of his costs in relation to that.

QUANTUM OF COSTS

62. Mr Boyle has invited me to fix a sum on the costs payable by Mr Choy under r.32A(1)(b) of the BR. For that purpose, he has submitted a statement of costs seeking costs in the total sum of $213,691.40. I explored with him at the hearing the costs claimed in the statement.

63. As I have mentioned at the hearing, I consider JSM’s charges excessive. For example:

(a) Bearing in mind that the solicitors are charging separately for their work done in relation to the statutory demand, their charges on the bankruptcy petition (totaling $43,983) is on the high side.
(b) JSM proposes to charge $61,565.40 for their work undertaken in relation to Mr Choy’s cheque. This involves 12.1 hours of attendance on the Petitioner, 9.3 hours of attendance on Mr Choy and 11.6 hours on research.
As I have pointed out above, Mr Choy’s allegations had been raised and considered before and the conditions he imposed on the cheque were clearly irrelevant. So, what was required of the Petitioner in the context of these proceedings was simply to note these allegations and to reject the conditions. I cannot see how JSM could have spent so much time and costs on it.
(c) JSM proposes to charge $42,315 for their preparation and attendance of the hearing on 11 November 2009. This includes 3.3 hours of attendance on the Petitioner, 6.5 hours of preparation of documents, and 5.2 hours of perusal of documents.
The more significant work done in relation to this hearing should be the preparation of the affidavit sworn on 10 November 2009. However, that is not a substantial affidavit. There is also no justification for engaging 2 solicitors to prepare and attend the hearing.
(d) I also consider the proposed charges of $48,828 for the hearing on 21 January 2010 as excessive. The time charged for preparation of documents (totaling 10.7 hours) and perusal of documents (totaling 3.5 hours) is clearly excessive. Again, there is no justification to engage 2 solicitors for the preparation and attendance.

64. Taking a global view of the matter. I will fix the Petitioner’s costs at $70,000.

65. The Petitioner is agreeable to have the costs of the Official Receiver in the sum of $5,300 to be deducted from the deposit. This should also be borne by Mr Choy.

66. The total costs payable by Mr Choy therefore comes to $75,300.

(J. Ko)
Master of the High Court

Mr David Boyle of Messrs JSM, solicitors for the Petitioner

Mr Choy, acting in person, present on 11 November 2009 and absent on 21 January 2010

[1] by the letter dated 13 January 2010

[2] by the letter dated 19 January 2010

[3] For example, see Lam Lai Wah Susannav Pacific Century Insurance Company Limited (formerly known as Top Glory Insurance Company (Bermuda) Limited), unreported, CACV 385/2002, Rogers V-P, Le Pichon and Yuen JJA,18 February 2003; and Re: Lam Chik Sing, unreported, HCB 9148/2006, Kwan J, 21 January 2009.

[4] (2004) 7 HKCFAR 114

[5] unreported, HCA 667/2003, Deputy High Court Muttrie, 11 June 2003

[6] the first instance decision reported in [2005] 3 HKC 506; and Court of Appeal’s unreported decision in CACV 263/2005, Yeung JA, 9 November 2005

[7] See the unreported decisions of Hartmann and Suffiad JJ in Secretary of Justice v Choy Bing Wing, HCMP 4694/2003 dated 25 October 2005, 7 and 12 December 2005 respectively.

HCB 12343/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 12343 OF 2009

__________________

RE: CHOY BING WING

EX PARTE:     DIRECTOR OF HOUSING DEPARTMENT OF
                        THE GOVERNMENT OF THE HONG KONG
                        SPECIAL ADMINISTRATIVE REGION

__________________

Before: Hon Chung J in Chambers

Date of Hearing: 7 December 2009

Date of Handing Down Decision: 24 December 2009

__________________

D E C I S I O N

__________________

Introduction

1. This is the debtor’s appeal against the master’s order dated 11 November 2009. By that order, the master adjourned the petitioner’s application for leave to withdraw the petition with costs against the debtor, so that full arguments can be advanced at the adjourned hearing. The matters in dispute before the master are summarized in para. 4 to 7 below.

2. Apart from the above, the transcript of that hearing shows the master also opined that there were scandalous remarks in the debtor’s affirmation dated 3 November 2009. For that reason, he:-

(a) struck out the scandalous parts of that affirmation;

(b) referred the matter to the Department of Justice (“DOJ”) for investigation. The petitioner thinks that the proposed investigation concerns a suspected contempt of court on the debtor’s part (see sub-para. (iii) of the fourth paragraph, JSM’s letter dated 2 December 2009).

Background

3. The background leading to this appeal can be summarized as follows.

4. The petition for the debtor’s bankruptcy was commenced on 15 September 2009. It is based on a judgment debt the principal sum of which was $45,896.50.

5. The debtor disputed his liability for the debt, but ultimately on 16 October 2009, he sent to the petitioner a cheque in the sum of $52,439.98 (being the said debt together with interest thereon).

6. The petitioner took the view the cheque had no conditions attached, and presented it for payment (see JSM’s letter dated 27 October 2009). The debtor contends the said cheque was a conditional payment.

7. Further, in an affidavit dated 10 November 2009, the petitioner sought leave to withdraw the petition by reason the debt had been paid. He also sought costs of the petition against the debtor. The statement of costs shows a total sum of about $160,000. The debtor also opposed the applications.

The Application to Recuse

8. On learning this appeal was scheduled to be heard by me, the debtor took out an application on 2 December 2009 for me to recuse. The debtor’s affirmation dated 2 December 2009 alleges that I have “no respect of the law” and am “totally unfit and incompetent to handle [the appeal]”.

9. No factual basis has been set out in that affirmation. Judging from the contents of the correspondence exhibited to it, the debtor’s allegation is premised on earlier decisions where I held against him. The debtor considered that the opponent’s lawyers lied in court and I knowingly assisted the fraud by granting relief in their favour.

10. The debtor’s allegation totally lacks merit. Merely because a court has held against a litigant is not a valid reason for concluding in the way the debtor did. Apart from such common sense observation, his allegation does not deserve further elaboration.

11. For the above reasons, the application to recuse was refused.

This Appeal

12. At the hearing of the appeal on 7 December 2009, despite having been informed the application to recuse had been refused, the debtor insisted on repeating his allegation of dishonesty and the like.

13. In view of the obvious difficulty the debtor had of controlling his emotion (and to focus on the appeal), I directed that he was at liberty to lodge with court and serve his written submissions within 3 days. Subsequent to the hearing, the debtor sent a letter to court. To avoid any possible misunderstanding, I directed my clerk to send a letter to him on the same day. It was in the following terms:-

“I refer to the hearing this morning before Hon Chung J and your letter dated 7 December 2009.

2. I am directed by Hon Chung J to refuse your application for transcript.
3. You claimed the transcript would assist your intended appeal. The reason for the refusal is that:-
(a) The court has not [ … ] determined your appeal and therefore there is no further appeal to speak of at present.
(b) Reasons for refusing your application for Hon Chung J to recuse will be handed down shortly. Transcript for the hearing is unnecessary.
4. As regards the directions given at the hearing. I am directed by Hon Chung J to clarify what the court actually meant as follows:-

(a) You are at liberty within 3 days of the hearing to lodge with court and serve written submissions in response to the petitioner’s submissions. Specifically, those are contained in JSM’s letter dated 2 December 2009.

(b) Your written submission should cover all matters raised in the said letter (except sub-paragraph (a) of the second-last paragraph thereof). In view of the first paragraph of your letter, please note that your submission should not be limited to costs only”.

14. The deadline for the debtor to lodge with court and serve his written response expired after 10 December 2009; none has been lodged with the court.

(a) The Adjournment

15. As stated above, the master adjourned the hearing before him to another date so that full arguments can be put forth by the parties. He cannot be faulted for doing so.

16. This is no merit in this part of the appeal.

(b) Striking Out Parts of the Affirmation

17. The master struck out the parts of the debtor’s affirmation dated 3 November 2009 which contain scandalous remarks against the Registrar of the High Court.

18. Extremely abusive language has been used against the registrar. In fact, abusive remarks have been made against other parties mentioned therein: the Director of Housing and the solicitors acting for him.

19. The master is clearly correct in making the order.

20. As stated above, the master referred the matter set out in the above sub-heading to the DOJ. There was a valid basis for him to do so. It will be up to the DOJ to consider whether contempt of court proceedings should be instituted against the debtor.

21. No valid complaint can be made against the master’s referral.

Conclusion

22. The appeal is dismissed.

Costs Order

23. The petitioner seeks costs of the application to recuse and the appeal. He also seeks those costs to be summarily assessed: see JSM’s letter dated 7 December 2009.

24. The debtor was given 7 days to respond to the above in writing: see the Judiciary’s letter dated 8 December 2009.

25. The deadline expired after 15 December 2009. The debtor has not lodged with the court any response.

26. Further, the Official Receiver submits that costs of the application to recuse and the appeal should follow the event, and that he should be entitled to his costs: see the letter dated 10 December 2009. Those costs totalled $9,750. The debtor was given another 7 days to respond in writing to the Official Receiver’s said letter: see the Judiciary’s letter dated 11 December 2009.

27. In JSM’s letter dated 11 December 2009, the petitioner asks the Official Receiver’s costs to be borne by the debtor.

28. On 11 December 2009, the debtor wrote and alleged that the directions for written submissions regarding costs were “all against the law and clear sign of conspiracy”. It can be inferred it is unlikely the debtor will make use of his right to be heard afforded by those directions (I note that his letter was written in response to the Judiciary’s letter dated 11 December 2009).

29. Having considered the matter, the following costs orders are made:-

(a) as between the petitioner and the debtor, the costs of the application to recuse and this appeal be paid by the debtor to the petitioner;

(b) those costs are summarily assessed at $9,208.90 and $22,461.20 respectively;

(c) the Official Receiver’s costs are also summarily assessed at $9,750;

(d) those costs be paid by the debtor to the Official Receiver.

(Andrew Chung)
Judge of the Court of First Instance
High Court

Mr David J A Boyle, of Messrs JSM, for the Petitioner

Debtor acts in person and present

Mr Benny Cheng, of Official Receiver’s Office

RE CHOY BING WING

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