Five years a bankrupt in error, but no payout

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.