RE WILFRED ROYCE LANE

HCB 3631/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 3631 OF 2008

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Re: WILFRED ROYCE LANE

Debtor

Ex parte: QUESTNET LIMITED

Petitioner

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Before: Hon Kwan J in Court

Date of Hearing: 13 March 2009

Date of Judgment: 13 March 2009

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J U D G M E N T

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1. This is a bankruptcy petition presented by Questnet Limited, a company incorporated in the British Virgin Islands. The debtor,Wilfred Royce Lane, had once served as the in-house legal counsel of the petitioner. He is the holder of a New Zealand passport.

2. In August 2008, the debtor was joined as the 2nd defendant to a writ action brought by the petitioner in HCA No. 1475 of 2006. The petitioner obtained a Mareva injunction and prohibitionorder against the debtor prohibiting him from leaving Hong Kong. The prohibition order was extended and renewed, following the defaultjudgment obtained against the debtor in September 2007. In December 2007, the petitioner obtained a fresh prohibition order againstthe debtor, which was then extended. The debtor took out an application to discharge the prohibition order, this was heard by ChuJ on 18 February 2008. His application was dismissed, costs of the application were awarded to the petitioner and assessed by theJudge on a gross sum basis at HK$126,468.

3. The debtor brought an appeal against the decision of Chu J in CACV No. 71 of 2008. His appeal was dismissed by the Court of Appealon 10 December 2008.

4. On 27 February 2008, the petitioner served a statutory demand on the debtor personally for the debt in the costs order. This petitionwas filed on 5 May 2008 and amended on 7 July 2008.

5. The debtor filed two affidavits in opposition. He raised these grounds of opposition in his affidavits.

6. Firstly, he contended that the petition should be stayed, pending the hearing of his appeal from the decision of Chu J. That groundis no longer valid, since his appeal has been heard and was determined against him. This also disposes of the ground raised by thedebtor that the bankruptcy court should exercise its discretion to go behind the decision of Chu J. I see no sufficient reason todo so, particularly as the debtor’s appeal from that decision has been dismissed by the Court of Appeal.

7. Secondly, he mentioned that he is not domiciled in Hong Kong, nor is he ordinarily resident here nor does he own a place of residenceor carries on business in Hong Kong. He stated that he is in Hong Kong merely because the petitioner has obtained a prohibitionorder against him. This is immaterial. As he is personally present in Hong Kong on the day on which the petition was presented,the petitioner comes within the requirement in section 4(1)(b) of the Bankruptcy Ordinance, Cap. 6 and has the right to present this petition.

8. Thirdly, he contended that the authorisation in the petition should not be taken at face value. The authorisation stated that MsZhou Pei Zhen, Corporate Treasurer, was authorised to sign and present the petition on behalf of the petitioner. The debtor allegedthat the petition comes before the court without proper authority, and this leaves the court without jurisdiction to act.

9. At an earlier hearing of the petition on 27 October 2008 before Chu J, the debtor sought leave to cross-examine Ms Zhou on her affidavitto verify the amended petition as this is relevant to the issue how she had obtained the authorisation. Chu J adjourned this applicationfor leave to cross-examine to the substantive hearing of the petition.

10. At the hearing today, the debtor appearing by his solicitor Mr Finley, did not renew the application to cross-examine. I wouldhave refused it any way. Subsequent to the hearing, and on 11 March 2009, the petitioner has filed an affidavit from a director,Maria Lourdes Tigco Caluza setting out in substantial detail how the authorisation came to be given to Ms Zhou to present the petitionand to make the verifying affidavit. I am satisfied on that affidavit the debtor’s assertion concerning Ms Zhou’s lack of properauthority is groundless. I would not be satisfied it is necessary in the interest of justice to allow cross-examination in thissituation. The third ground of opposition, which was just the debtor’s surmise, fails.

11. The last ground of opposition is that raised by Mr Finley today in reliance on section 6D(3) of Cap. 6. This provides inter alia that the court may dismiss a petition if it is satisfied the debtor has made an offer to compoundfor a debt in respect of which the petition is presented, that the acceptance of that offer would have required the dismissal ofthe petition, and that offer has been unreasonably refused.

12. The latest offer made by Mr Finley on the debtor’s behalf is to pay the petitioning debt of HK$129,160.17, with further interestat the judgment rate up to the date of payment, within 28 days hereof.

13. Mr Finley informed the court on instructions the debtor has found new sponsors in Bali, Indonesia in relation to the debtor’ssnooker playing, that the sponsors are prepared to make payment of the sponsorship money which will be sufficient to cover the petitioningdebt, and it is due to the vagaries of banking and telegraphic transfer that the moneys have not yet been received from Indonesia.

14. Mr Maurellet had informed the court earlier that the petitioner is not prepared to accept the offer, as apart from the petitioningdebt, there are other costs orders made against the debtor in the petitioner’s favour. The total sum is over HK$950,000, and thedebtor has not paid them. This is apart from the fact that the default judgment entered against the debtor in September 2007 ofUS$737,600.31 has not been satisfied, although the debtor has brought an appeal to a Judge against the refusal to set aside the defaultjudgment and judgment has been reserved.

15. However, under section 6D(3), the offer that the court is required to consider is in relation to a debt in respect of which the petition is presented. No petitionhas been presented in respect of the other debts arising out of other costs orders or in respect of the default judgment.

16. The time the debtor is asking to pay in full the petitioning debt is not long. But in view of the lateness of this offer, and thereis no concrete evidence before me that money would be forthcoming from the debtor’s sponsors, I am not prepared to dismiss thepetition at this stage. I will adjourn the petition to 20 April 2009 at 9:30 a.m. If by that time the petitioning debt is paidin full with interest up to the date of payment, the petition will be dismissed. If no payment is made by then, a bankruptcy orderwill be made on the next occasion.

17. I order the petitioner is to have the costs of today in any event.

(S Kwan)
Judge of the Court of First Instance
High Court

Mr Jose-Antonio Maurellet instructed by Messrs Barlow Lyde & Gilbert, for the Petitioner

Mr S Finley of Messrs Finley & Co., for the Debtor

Miss Joyce Lam, for the Official Receiver