OSMAN MOHAMMED ARAB AND ANOTHER v. LEUNG WAI HAN AND ANOTHER

OSMAN MOHAMMED ARAB AND ANOTHER v. LEUNG WAI HAN AND ANOTHER

Insufficient evidence of market value prevented summary disposal of the undervalue claim, but the assignment constituted an unfair preference to the 2nd defendant by way of set-off of her debt within the two-year relevant period while the bankrupt was insolvent; the statutory presumption of influence as to an associate was unrebutted, therefore the court ordered vesting of the Chi Fu Property in the trustee and delivery of vacant possession, with the trustee to assume mortgage liabilities and to account and reimburse the defendants for sums paid in effecting the assignment and mortgage discharge as part of restoration under s50(2) and s51A(1)(a).

Citation
OSMAN MOHAMMED ARAB AND ANOTHER v. LEUNG WAI HAN AND ANOTHER
Parties
Plaintiff/trustee in Bankruptcy: Osman Mohammed Arab and Wong Kwok Keung, the joint and several trustees-in-bankruptcy of Leung Moon Chuen; 1st Defendant: Leung Wain Hann; 2nd Defendant: Leung Wain Yin
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
5 June 2015
Case Number
HCA605/2014
Procedural Posture
Bankruptcy Vesting/avoidance Proceedings / Summary Judgment Application (court of First Instance)
Outcome
Application partly granted: vesting order on unfair preference claim granted; summary judgment on undervalue claim refused; orders for vesting, delivery of possession, assumption of mortgage liabilities, accounting and reimbursement; costs awarded to plaintiff.
Legal Topics
Unfair Preference, Transaction at Undervalue, Vesting Order Under S51 a, Constructive Trust, Mortgage, Set Off, Summary Judgment
Source Language
EN
Bankruptcy Insolvency Property Equity Civil Procedure Unfair Preference Transaction at Undervalue Vesting Order Under S51 a +4 more

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Parties

Osman Mohammed Arab and Wong Kwok Keung, the joint and several trustees-in-bankruptcy of Leung Moon Chuen

Plaintiff/trustee in Bankruptcy

Leung Wain Hann

1st Defendant

Leung Wain Yin

2nd Defendant

Procedural Posture

Bankruptcy Vesting/avoidance Proceedings / Summary Judgment Application (court of First Instance)

Legal Issues

  1. 1 Whether the transfer of the Chi Fu Property was a transaction at an undervalue under s49 of the Bankruptcy Ordinance
  2. 2 Whether the assignment constituted an unfair preference under s50 and s51 given the 2nd defendant was a creditor/associate
  3. 3 Whether the statutory presumption under s50(5) was rebutted

Ratio Decidendi

Insufficient evidence of market value prevented summary disposal of the undervalue claim, but the assignment constituted an unfair preference to the 2nd defendant by way of set-off of her debt within the two-year relevant period while the bankrupt was insolvent; the statutory presumption of influence as to an associate was unrebutted, therefore the court ordered vesting of the Chi Fu Property in the trustee and delivery of vacant possession, with the trustee to assume mortgage liabilities and to account and reimburse the defendants for sums paid in effecting the assignment and mortgage discharge as part of restoration under s50(2) and s51A(1)(a).

Court Disposition

Application partly granted: vesting order on unfair preference claim granted; summary judgment on undervalue claim refused; orders for vesting, delivery of possession, assumption of mortgage liabilities, accounting and reimbursement; costs awarded to plaintiff.

Orders

  • Vesting of the Chi Fu Property in the plaintiff (trustee) pursuant to sections 50(2) and 51A(1)(a) of the Bankruptcy Ordinance, Cap.6
  • Defendants to deliver up vacant possession of the Chi Fu Property to the plaintiff