Millionaire wins bankruptcy fee battle

PUBLISHED : Thursday, 06 January, 2011, 12:00am
UPDATED : Thursday, 06 January, 2011, 12:00am

Suen Kin-ning had HK$27 million in assets, including HK$12 million in the bank.

But 16 years after he moved to Canada in 1993 - and without his knowledge - Suen, 75, was declared bankrupt in Hong Kong over HK$86,000 in unpaid management and renovation fees, and was ordered to pay HK$2.3 million in fees levied by the Official Receiver for handling his bankruptcy.

This was despite the fact that the time the receiver spent on the case was costed at just HK$70,000.

But Suen could count himself lucky yesterday as the Court of Appeal ruled in his favour. Describing the HK$2.3 million as 'scandalous and outrageous', a three-judge panel reduced the amount Suen must pay to HK$70,000.

Suen's trouble started in 2009, two years after he stopped visiting Hong Kong because of poor health. After finding out he had been declared bankrupt, Suen was granted an application to annul it, but he still faced the Official Receiver's fees. He appealed to the Court of First Instance in July, and the fees due were lowered.

Last month he brought his case to the Court of Appeal. Announcing its verdict yesterday, Mrs Justice Doreen Le Pichon said it was 'unsatisfactory' that the Official Receiver had no power to waive or compromise on the fees, which were prescribed by the Bankruptcy (Fees & Percentages) Order. Although another court made a similar comment in 2000 in another case, 'regrettably, nothing seems to have been done about it in the decade that has elapsed since that decision' and the situation remained unsatisfactory, she said.

The staggering fees for the Official Receiver's Office were based on a prescribed formula and included a fee applied to the HK$15.76 million it said it found in Suen's bank accounts. The judgment noted Suen had HK$12 million in his accounts and that it was not explained how the higher figure was arrived at.

His case related to a shop he owned in the Tsui Wah Building in Sai Ying Pun. He had let it to a car services company, which was meant to pay all the charges due to the building's incorporated owners. Meanwhile, Suen moved to Canada and stopped visiting Hong Kong in 2007.

In 2008, the incorporated owners demanded HK$86,000 for unpaid renovation and management fees. It then applied for a bankruptcy order. Suen was declared bankrupt in August 2009. It was not until one month later, when his daughter found a letter from the Official Receiver at his residence in Hong Kong, that Suen became aware of the demand and that he had been made bankrupt.

According to Suen, he had HK$27.5 million in assets.

The judge said that often the trustee in a bankruptcy had to use his judgment and make difficult decisions in administrating an estate.

But Suen's was not a typical case, with just one creditor, the incorporated owners, and the Official Receiver as trustee had to do very little. The Official Receiver and Suen appealed to the Court of Appeal, which ruled in Suen's favour yesterday.

A spokeswoman for the Official Receiver's Office said it had considered the matter before and had seen no need to change the existing arrangement, which provided for transparency and ensured fairness.

Bankruptcy lawyer Tsui Pui-hing said it would make more sense for the Official Receiver to calculate its fees as a portion of the amount the court said the debtor owed, rather than based on the total assets it found.