Most Read Contributor in Hong Kong, September 2016
Keywords: bankruptcy rules, bankruptcy
petition, bankruptcy order
Following our previous legal update on substituted service of a
statutory demand against an individual ("
Bankruptcy & Substituted Service: Petitioning Creditors
Beware...", 2 March 2012), the Court of Appeal's
recent decision in FWD Life Insurance Co (Bermuda) Ltd v. Chan
Kim Fai (4 March 2014) sheds light on the requirement of Rule
59 of the Bankruptcy Rules for substituted service of a bankruptcy
This is an appeal by a bankrupt against a master's decision
not to annul his bankruptcy order. The annulment was sought on the
The petitioning creditor did not serve the petition on the
bankrupt (then the debtor) and did not notify him of the petition
hearing. The bankruptcy order was made in his absence.
The bankrupt was (on his assertion) financially capable to
repay the debt.
The petition was not personally served on the debtor because the
petitioning creditor had obtained an order for substituted service
of the petition by post and advertisement. On appeal, the
court's focus was on the question of whether the petitioning
creditor had made adequate disclosure to the master when applying
for the order for substituted service.
The court decided the petitioning creditor's disclosure was
inadequate. Drawing on Order 65 Rule 4(3) of the Rules of the High
Court, the court held that when the petitioning creditor applied
for the order for substituted service, it was obliged (but failed)
to disclose to the master that it could contact the debtor by
telephone and email. If the master had known of this fact, he would
likely have directed the petitioning creditor to contact the debtor
using those methods in addition to advertising in a newspaper.
The court was satisfied that the substituted service of the
petition amounted to a ground for annulment "existing at
the time the [bankruptcy] order was made" that
"the order ought not to have been made" within
the meaning of section 33(1)(a) of the Bankruptcy Ordinance. This
gives a discretion to the court to annul the bankruptcy order.
However, the court decided not to do so because the debtor had
never disputed the judgment debt founding the bankruptcy petition
before his appeal, and had not substantiated his claim that he
could repay the debt. The court considered the debtor would
inevitably be adjudicated bankrupt again even if the existing order
The takeaway message is that the possibility of communicating
with the respondent by telephone, email, fax or comparable direct
methods should be disclosed by petitioning creditors in any
application made for substituted service. If a claim arises from an
existing contractual relationship, chances are the applicant would
have a record of the respondent's mobile phone number, email
The Court of Appeal handed down this judgment in the context of
a bankruptcy case, but substituted service is an issue relevant to
all types of proceedings. With the increasing popularity of instant
messaging and social networking tools, this judgment has wide
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This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
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