Potential Interest in a Tso may not fall within estate of Bankrupt

2024/2/23

There are lots of Tsos (祖) and Tongs (堂) in the New Territories. If a person is a member of a Tso, and the Tso in turn holds shares and interest and another Tso/Tong, would the Tso’s interest in such other Tso/Tong fall within the asset of the person?

In the case of Re Tang Tim Chue (a Bankrupt) [2022] HKCA 909, the Plaintiff commenced an action (“the Action”) at the High Court. He claimed himself as a member of a Tso (“the Tso”) and the Defendant was a manager of the Tso. The Tso held shares of another Tso (“Another Tso”) in which another Tso owned a piece of land in Tuen Mun (“the Land”). The Plaintiff alleged that the Defendant failed to fulfill the duty as a manager in protecting the interest of the Tso and sold the Land unlawfully.

At the time of the proceedings, the Plaintiff was adjudged bankrupt. The Official Receiver (“the OR”) decided that she would not proceed with the Action as the provisional trustee of the bankruptcy estate or allow the Plaintiff to proceed. The Plaintiff made an application to reverse the decision of the OR and the Judge dismissed the application. The Plaintiff appealed.

Pursuant to s.83 of the Bankruptcy Ordinance (Cap. 6), the bankrupt can only make an application on the ground that he is “aggrieved by any act or decision of the trustee”. A well-established legal principle of “aggrieved” is that “unless a bankrupt can prove that his estate would have had a surplus after paying all the debts but for the decision of the Official Receiver”. In the instant case, as the Land belonged to Another Tso, the Land would be restored to Another Tso and the damages awarded would be paid to the Tso and/or Another Tso even if the Plaintiff’s claim was established. Since there was no way for the Plaintiff to receive any assets from the Action to repay his debts, or to achieve a surplus to his estate after repaying his debts, the Plaintiff would not be aggrieved by the act or decision of the trustee. Thus, the Plaintiff has no locus standi to make the application.

In sum, as the Plaintiff did not have a good claim and was not aggrieved, and his estate was not sufficient to cover the costs involved, his appeal was being dismissed.

This Article has been published in our firm’s 14th issue of Newsletter. Please note that the information contained herein should be regarded for general reference only. If the readers do have enquiry on the related legal matters, please seek formal legal advice.