Five years a bankrupt in error, but no payout

PUBLISHED : Saturday, 08 May, 2010, 12:00am
UPDATED : Saturday, 08 May, 2010, 12:00am

The Court of Appeal yesterday spared the Official Receiver's Office from paying damages of more than HK$100 million to a claimant who was mistakenly treated as being broke for more than five years.

The appeal stemmed from the office's misinterpretation of what the court meant when it ordered that a bankruptcy order was 'shelved'.

In fact, 'shelved' meant the order was lifted for good but the parties came to realise it only five years after it was imposed. This led Lam Ching-sheung to file a claim against the office.

Lam was declared bankrupt in 2001 after a creditor convinced the High Court that she could not settle a debt of HK$6 million. The office then became the trustee of Lam's property.

In 2002, Lam won a suit in the Court of Appeal, leading it to 'shelve' the bankruptcy order. Three years later, Lam asked the office if the bankruptcy order could be removed, but the office replied that only the court had the power to vet and remove the order. It told Lam that she could only get hold of her property after she obtained a ruling from a court lifting the order.

Lam then went to the Court of Appeal a second time to challenge the order. A 2007 judgment said the office had misinterpreted the meaning of the word 'shelve' used in the 2002 judgment. In fact it meant 'remove' and therefore Lam was not bankrupt from the day the judgment was handed down.

At that time the Court of Appeal criticised the office for not asking the court to clarify the meaning of 'shelve' earlier.

In the same month, Lam filed a writ with the High Court claiming more than HK$100 million in damages from the office for, among other things, money she could have earned. She accused the office of misinterpreting the meaning of 'shelve' after the first appeal. She further accused the office of failing in its responsibility to seek clarification from the court because it wanted to cover up its mistake.

The office did not act in an 'honest, genuine or appropriate way to carry out its duty with apt skill and ability', she said.

But the application was dismissed and Lam applied to the Court of Appeal to review the case. Yesterday, the Court of Appeal again dismissed Lam's claim, upholding the High Court's judgment.

Mr Justice Wally Yeung Chun-kuen wrote in the judgment that the office was not responsible for giving legal advice to an individual and the office had suggested Lam seek advice from a lawyer. Therefore, the judge ruled that the fact that the office did not seek clarification from the court did not involve negligence and Lam could not claim compensation from it.

Yeung also said Lam had misinterpreted what was meant by shelving a bankruptcy order, otherwise she would not have asked the office whether it could remove it.

The judge said the profit Lam was claiming in compensation was only based on her own assumption of what she would have gained through investment and was not backed by any evidence. Lam was ordered to pay court costs.