The Importance Of Pursuing Debt Recovery Action And Enforcing Judgments Without Delay

Keywords: debt recovery, Hong Kong, judgment debt

Two recent Hong Kong cases highlight the importance for creditors to pursue action for debt recovery swiftly, as any undue delay may impact on the period for which interest is recoverable and may prevent any enforcement action on a judgment debt.

Bankruptcy Petition on a Judgment Debt Time Barred

Re Li Man Hoo, Re Foo Shuk Man Patty

In this Court of Appeal (CA) case, bankruptcy petitions were presented against the debtors on 22 September 2011 and were based on a judgment debt under a judgment dated 12 February 1999, more than 12 years before the date of the petitions. At first instance, bankruptcy orders were made against the debtors. On appeal, the debtors argued that the judgment debt was time-barred before the date of the petitions and therefore no bankruptcy petition could be presented against them based on the judgment debt.

The CA's Ruling

The CA decided that "action" under section 4(4) of the Limitation Ordinance (Cap. 347) includes any legal proceedings, and hence any legal proceedings based upon a judgment which was entered more than 12 years prior to such proceedings being commenced are time-barred. The CA rejected the more restricted meaning of "action" in England (and in Australia), where it has been held that the relevant limitation provision does not bar the presentation of a bankruptcy or winding-up petition and is only applicable to new sets of proceedings brought for the purpose of re-establishing a judgment debt. The CA traced the legislative history of the relevant limitation provision in England and found that at the time of its enactment, the English Parliament adopted the restricted meaning of "action" from the case of W. T...