HCB 1201/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCYPROCEEDINGS NO. 1201 OF 1998

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D E C I S I O N

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The application

1.  This is an application for directions of the Official Receiver and trustee of the property of Ng Shiu Fan, a former bankrupt.  The summons was issued on 19 April 2007 pursuant to sections 82(3) and 97 of the Bankruptcy Ordinance, Cap. 6 and rule 158 of the Bankruptcy Rules.  The Official Receiver seeks directions on the following questions:

(1) whether the entitlement of Mr. Ng under the Subsidized School Provident Fund Rules, Cap. 279D (“the Benefits” and “the Rules” respectively) formed part of his estate under sections 43 and 2 of Cap. 6 and vested in the Official Receiver and trustee pursuant to section 58 of Cap. 6;

(2) whether on Mr. Ng’s automatic discharge from bankruptcy the Benefits remained vested in the Official Receiver and trustee;

(3) whether section 85(3) of the Education Ordinance, Cap. 279 prevents the Benefits from automatic statutory vesting in the Official Receiver and trustee;

(4) whether the Official Receiver and trustee is entitled to all payments due under the Rules which would otherwise be due to Mr. Ng; and

(5) whether Mr. Ng is entitled to claim any proportion of the Benefits attributable to his service and contribution after bankruptcy or his discharge from bankruptcy.

2.  These questions are of general importance as there are a number of similar cases in which the same issues arise and they have not been considered by the Hong Kong courts[1].  Mr. Ng has obtained legal aid for this application.

The underlying facts

3.  Mr. Ng presented a petition for his own bankruptcy on 3 November 1998.  A bankruptcy order was made against him on 23 December 1998.  At a general meeting of creditors on 1 February 1999, the Official Receiver was appointed his trustee in bankruptcy without a creditors’ committee.  On 23 December 2002, Mr. Ng was discharged from bankruptcy automatically pursuant to section 30A(1) of Cap. 6.

4.  Nine proofs of debt were received, claiming a total sum of $1,931,134.35.  Excluding the Benefits under the Rules, assets of $9,292.32 were recovered in the estate.  During his bankruptcy, Mr. Ng made monthly contribution to the estate.  His total contributions amounted to $145,376.25.  On 2 July 2002, a dividend of 4.601% was declared and on 21 April 2005 a dividend of 1.206% was declared.

5.  Mr. Ng was employed as a teacher in a subsidized school on 2 September 1977.  Since June 1998, he was employed as a librarian in the same school until his employment was terminated on his retirement on 31 August 2005.  During his 28 years of service, he was a contributor to a provident fund (“the Fund”) controlled by a board established under the Rules.  At all material times, Mr. Ng was the sole supporter of his family as a single parent.

6.  The Rules came into operation in 1961.  Save for exceptions which are immaterial for present purpose, every teacher in a subsidized school is required to contribute to the Fund (rule 7(1) of the Rules) at the rate of 5% of the basic salary (rule 8(1)).  Contributions are deducted from each contributor’s salary monthly by the management authority of the school (rule 8(2)).  For each contribution made by a contributor, the Hong Kong Government pays to the Fund a sum referred to in the Rules as a Government donation, varying from 5% to 15% depending on the length of continuous service of the contributor and such donation is credited to the contributor’s account (rules 9(1), (2) and (3)).  In the case of Mr. Ng, his account consisted of his contributions, Government donations, and dividends or interest accruing from investments or deposits of the accumulated capital of the Fund.

7.  Under rule 13, whenever a contributor ceases to be employed as a teacher in a subsidized school for any of the specified reasons, including retirement, his account shall be closed and the amount standing to the credit of his account at the date of cessation of employment, including all Government donations and all dividends that have been declared up to and including that date, shall be paid to him or his personal representative.  This is the entitlement mentioned earlier as the Benefits.

8.  As contribution to the Fund is mandatory and Mr. Ng had continued in his employment in a subsidized school, he continued to make contribution under the Rules after the commencement of bankruptcy (being the date of his bankruptcy order as provided in section 30 of Cap. 6) up to the cessation of his employment.

9.  A summary of the Benefits payable to Mr. Ng as at 23 December 1998 (the date of the bankruptcy order), 23 December 2002 (the date of his discharge from bankruptcy) and 31 August 2005 (the date of his cessation of employment) is set out in the table below:

	23/12/98	23/12/02	31/8/05
Contributions of Mr. Ng		$246,645.82	$295,320.68
Government donations		$626,313.44	$772,338.03
Dividends		$1,097,546.76	$1,392,145.68
Total entitlement	$1,285,785.35	$1,970,506.02	$2,459,804.39

10.  By a letter of 12 January 1999 from the Official Receiver, the Director of Education was informed that the Benefits payable to Mr. Ng vested in the Official Receiver under section 58 of Cap. 6 and the sum should be paid to the Official Receiver when due to be payable under rule 13 of the Rules.  On 16 January 1999, an insolvency officer of the Official Receiver explained to Mr. Ng that on the legal advice received by the Official Receiver, the Benefits when due to be paid should be paid to the Official Receiver as they formed part of his estate.  Thus, within a month of the commencement of bankruptcy, the claim was made by the Official Receiver and notified to Mr. Ng.

11.  In response, Mr. Ng wrote to the Official Receiver on 21 January 1999 asserting that the Benefits did not form part of his estate relying on section 85 of Cap. 279.  The Official Receiver rejected his contention in a letter in Chinese dated 29 January 1999, referring him to sections 2, 43 and 58 of Cap. 6.  At the general meeting of creditors held on 1 February 1999 chaired by a senior insolvency officer, it was announced to the creditors that potential assets included the provident fund of $1,189,362.13 as at 31 December 1998 (a date after the bankruptcy order) and that the Official Receiver had written to the Education Department concerning the remittance of the said provident fund to the Official Receiver when the fund became payable to Mr. Ng.  Mr. Ng informed the meeting the provident fund should not be applied to repay his liabilities and reiterated his objection to the remittance of the provident fund to the trustee.

12.  On 26 May 2005, Mr. Ng submitted an application to the Education and Manpower Bureau for the withdrawal of the Benefits.  The Official Receiver was informed of this by the Permanent Secretary for Education and Manpower in June 2005.  On 7 October 2005, Mr. Ng was notified by the Permanent Secretary that $2,342,670.85, being payment of the Benefits accrued to his account at the date of cessation of employment, would be paid to the Official Receiver.  Mr. Ng sought a refund of the amount from the Official Receiver in November 2005.  In April 2006, the Official Receiver received from the Permanent Secretary $117,133.54, being dividend for the year ended 31 August 2005 and Mr. Ng was duly notified of this by the Permanent Secretary.  The total amount of the Benefits received by the Official Receiver came up to $2,459,804.39.

If the Benefits formed part of the estate, in the absence of non-alienation provision

13.  The starting point is whether the Benefits formed part of Mr. Ng’s estate, without taking into consideration for the time being section 85(3) of Cap. 279.  Mr. Bernard Man, who appeared for the Official Receiver, and Mr. Jason Wong, who appeared for Mr. Ng, are in agreement that the answer is in the affirmative.

14.  The relevant provisions in Cap. 6 are as follows.

15.  Section 43(1) provides for the definition of the bankrupt’s estate.  The relevant part reads: “Subject to this section and sections 43A to 43E, a bankrupt’s estate comprises – (a) all property belonging to or vested in the bankrupt at the commencement of the bankruptcy”.  The term “property”, for the purpose of Cap. 6, is defined in section 2 to include  “things in action … present or future, vested or contingent, arising out of or incident to property as above defined”.  Further, section 43(4) stipulates that “references in this Ordinance to property, in relation to a bankrupt, include references to any power exercisable by him over or in respect of property …; and a power exercisable over or in respect of property is deemed to vest in the person entitled to exercise it at the time of the transaction or event by virtue of which it is exercisable by that person (whether or not it becomes so exercisable at that time).”  Under section 53(4), “where any part of the property of the bankrupt consists of things in action, such things shall be deemed to have been duly assigned to the trustee.”

16.  By section 58(1), “until a trustee is appointed the Official Receiver shall be the trustee for the purposes of this Ordinance, and immediately on a debtor being adjudged bankrupt the property of the bankrupt shall vest in the trustee”[2].  Under sub-section (2), “on the appointment of a trustee the property shall forthwith pass to and vest in the trustee appointed”.  Sub-section (3) provides that “the property of the bankrupt shall pass from trustee to trustee, including under that term the Official Receiver when he fills the office of trustee, and shall vest in the trustee for the time being during his continuance in office, without any conveyance, assignment or transfer whatever.”

17.  By these provisions, all property, including things in action, present or future, vested or contingent, belonging to or vested in the bankrupt at the date of the bankruptcy order vests in the trustee immediately on his appointment.  The legal right of Mr. Ng to be paid the amount in credit in his account as provided in rule 13, namely the Benefits mentioned earlier, is an immediate chose in action and falls within the definition of “property” in Cap. 6.  He had a present legal right to require the board of control of the Fund to make payment to him in the future when one of the contingencies provided for in rule 13 arose.  That right formed part of his estate for the purpose of section 43(1)(a) and was vested in the Official Receiver immediately on his becoming the trustee by sections 58(1) and (2).  The fact that nothing was immediately payable to Mr. Ng under rule 13 at the commencement of his bankruptcy did not alter in any way the nature of the right as a chose in action, and is irrelevant to the exercise and vesting of the right (In re Landau (A Bankrupt) [1998] Ch. 223 at 232B to C and E, citing Kwok v. Commissioner of Estate Duty [1988] 1 WLR 1035 at 1040; Krasner v. Dennison [2001] Ch 76 at 96D, paras. 36 & 37; Patel v. Jones [2001] BPIR 919 at 926, para.[36]).

18.  I hold that by the combined effect of the above statutory provisions, the Benefits formed part of Mr. Ng’s estate and would have vested in the Official Receiver in the absence of an effective non-alienation provision.  Mr. Ng’s discharge from bankruptcy does not have the effect of transferring the ownership of the Benefits back to him.  The Benefits would remain vested in the Official Receiver after his discharge.

19.  The effect of non-alienation provision on the vesting of pension benefits in a trustee in bankruptcy was considered in the three English cases mentioned above.  I now turn to these cases.

Re Landau

20.  In Re Landau, Ferris J considered a non-alienation provision in a personal pension policy.  This provided that the policy could not be surrendered and no annuity could be assigned or commuted.  The question was whether the word “assigned” should be construed as covering and thus prohibiting the vesting of the right of payment of the annuity as part of the bankrupt’s estate under section 306 of the Insolvency Act 1986 (the equivalent provision in Cap. 6 is section 58).  He answered the question in the negative, accepting the argument for the trustee that section 306 describes the transmission of the bankrupt’s estate in terms of vesting, not assignment, and noting that section 306(2) expressly provides “where any property which is … comprised in the bankrupt’s estate vests in the trustee … it shall so vest without any conveyance, assignment or transfer.”  The relevant provision in the policy could not be regarded as treating transmission by operation of law as an assignment.  In re Riggs; Ex parte Lovell [1901] 2 KB 16 at 21 was referred to, in which Wright J construed the words “assign or underlet” in a lease and concluded that these words should be used in their ordinary or popular sense and referred only to assignments as were made directly by the lessee as distinguished from such assignments by law as result by the statute from a petition in bankruptcy followed by adjudication (at 235B to 237C). 

21.  A further reason for preferring the construction of the word “assigned” which prevented it from extending to a statutory vesting under section 306 was based on public policy.  If it were otherwise, it would mean that a person could place a part of his assets beyond the reach of his creditors in a bankruptcy and reserve it for himself by applying those assets in payment of premiums due under a policy with a non-alienation clause.  This would be contrary to the principle of bankruptcy law which prevents a person relying on protective trusts created by his own disposition as a means of defeating his creditors (at 236C to E). 

22.  Re Landau was considered by Chadwick LJ in Krasner v. Dennison.  He stated that whilst he was in agreement with the decision in Re Landau, he would not adopt the reasoning of Ferris J that the relevant restriction against assignment in the policy did not purport to extend to vesting in a trustee in bankruptcy by operation of law.  He would prefer to base his conclusion on the additional ground, namely, that an attempt to provide by contract that benefits will be inalienable on a bankruptcy must fail on grounds of public policy (at 99H to 100A, para. 49).

Krasner v. Dennison

23.  The English Court of Appeal in Krasner v. Dennison considered restrictions against alienation in annuity contracts and personal pension schemes.  The provision in the former provided that the policy and the benefits payable shall not be capable in whole or in part of commutation or surrender, nor shall any annuity be capable of assignment, except by will, away from the person assured.  In the personal pension schemes, it was stipulated that rights to a lump sum retirement benefit under the scheme may not be assigned or surrendered, that no pension secured with a member’s fund may be assigned or surrendered, and that the only exception is that a pension which continues to a person’s estate after his death may be assigned by his will or by his personal representative in distributing his estate.  It was held the provisions did not prevent the statutory vesting of the pension rights and benefits in the trustee in bankruptcy. 

24.  Chadwick LJ (with whom the other members of the court agreed) held that the prohibition in the contracts and schemes was ineffective as any attempt to provide that benefits would be inalienable on bankruptcy was ineffective on grounds of public policy, and it was long established it would be contrary to public interest to allow a party to contract out of the bankruptcy code.  He thought it unarguable that a mere restriction against alienation in an annuity contract or a personal pension scheme[3] can prevent the benefits under that contract or scheme, from vesting in a trustee in bankruptcy (at 99C to F, paras. 46 and 47).

25.  Where the legislature thought it right to provide protection of certain classes of pension benefits from the claims of creditors, it had enacted that an assignment of the pension rights shall be void and, sometimes in more explicit terms, provided that on the pensioner’s bankruptcy the pension should not pass to any trustee or other person, as in the Police Pensions Act 1921 considered in In re Garrett [1930] 2 Ch 137.  The courts had given effect to such statutory provision by holding that it precluded vesting in a trustee in the event of bankruptcy (at 99G to H, 100B to D, paras. 48 to 50).

26.  Chadwick LJ concluded that the legislature knows well how to provide, when it thinks fit, that the general public interest that a restriction on alienation shall not be enforceable against creditors in a bankruptcy should yield to some more specific element of public policy requiring the protection of pension rights, and has done so over many years.  In the retirement annuity contracts and personal pension schemes under consideration, the legislature must be taken to have made a deliberate choice not to provide such protection to the pension rights when it enacted legislation to give tax relief to approved pension arrangements (at 100G to H, para. 52).  The provisions in the tax statutes did not restrict the alienation of rights or benefits under annuity contracts or personal pension schemes but merely prescribed the conditions that must be satisfied for the contracts or schemes to qualify for favourable tax treatment (at 98D, para. 42).

27.  Permission to appeal was given by the Appeal Committee of the House of Lords (at 109E), but the appeal was not pursued (see In re Malcolm [2004] 1 WLR 1803 at 1811H).

Patel v. Jones

28.  The prohibition against assignment of pension benefits in Patel v. Jones was contained in a statutory regulation.  It provided that every benefit is not assignable and is not chargeable with that person’s debts or other liabilities.  The act giving the power to make regulations stipulated that the regulations may include all or any of the provisions referred to in a schedule to the act.  Some of these provisions, which were not included in the regulation, were a provision rendering void any assignment or charge on any benefit under the regulation, and a provision that on the bankruptcy of a person entitled to such benefit, no part thereof shall pass to a trustee in bankruptcy.  The English Court of Appeal held, as a matter of construction, the prohibition against assignment in the regulation did not prevent the pension benefits from vesting in the trustee. 

29.  In reaching that decision, Mummery LJ (with whom the other members of the court agreed) drew the distinction between regulations against voluntary assignment or charging of pension benefits, which do not prevent statutory vesting in the trustee in bankruptcy, and regulations expressly providing that pension rights shall not pass to a trustee in bankruptcy.  This distinction was recognised by the legislature in the provisions referred to in the schedule to the act, which were not included in the regulation in question, in contrast with other regulations made under the same act for other superannuation schemes (at 927, para. [40]).  Mummery LJ preferred to rest his decision on that basis rather than on the obiter dicta in paras. 48 and 73 in Krasner v. Dennison, which concerned the effect in bankruptcy of an express provision rendering void an assignment or charge of a pension benefit under a scheme.  He noted that the Court of Appeal in Lucas v. Harris (1886) 18 QBD 127 at 139 had left open the effect of such an avoidance provision in a statute in the case of bankruptcy (at 927, para. [41]).

30.  Permission to appeal to the House of Lords was refused.

Legislative changes in the United Kingdom in 1999

31.  The effect of the decisions in Re Landau and Krasner v. Dennison was reversed by the enactment of sections 11 to 14 of the Welfare Reform and Pensions Act 1999, which provided for pension rights under approved pension arrangements to be excluded from a bankrupt’s estate in cases where the bankruptcy order is made on a petition presented on or after 29 May 2000.  The new legislation has also changed the rules regarding forfeiture clauses in pension schemes and provides that the interest of a member cannot be forfeited upon bankruptcy.  To balance such protection of pension benefits, the trustee in bankruptcy is given the right to claim contributions made to a pension scheme that were excessive in view of the circumstances of the bankrupt, and to seek income payments orders for benefits paid to a bankrupt after the commencement of bankruptcy to capture any income in excess of what is necessary for meeting the reasonable domestic needs of the bankrupt and his family. 

Hong Kong legislation on pension schemes

32.  What then about the legislation in Hong Kong on pension schemes?

33.  I was referred by Mr. Wong to a number of ordinances, in support of his submission that our legislature has not made that kind of distinction as pointed out in Patel v. Jones when it comes to prohibition of alienation of pension rights.  He submitted that unlike legislation in the United Kingdom[4], Hong Kong statutes[5] do not contain express provisions that on the bankruptcy of a person entitled to a pension benefit, such benefit does not pass to any trustee or other person acting on behalf of the creditors. 

34.  To give an example, the Mandatory Provident Fund Schemes Ordinance, Cap. 485 provides as follows in section 16(1):

“No part of any accrued benefits in a registered scheme in respect of a scheme member shall be taken in execution of a judgment debt or be the subject of any charge, pledge, lien, mortgage, transfer, assignment or alienation by or on behalf of the scheme member and any purported disposition to the contrary is void.”

35.  Hong Kong statutes certainly do not have explicit provisions as in United Kingdom legislation preventing the vesting of pension benefits in a trustee in bankruptcy.  However, Mr. Wong is not correct in saying that none of the provisions in the Hong Kong statutes cited by him make specific reference to bankruptcy.

36.  As pointed out by Mr. Man, section 13(1) of the Pensions Ordinance, Cap. 89[6] (which applies to officers in public service in a civil capacity, they are exempted from the Mandatory Provident Fund Scheme) provides that any pension or allowance granted under the Ordinance shall “forthwith cease” if the officer is adjudicated bankrupt or declared insolvent by judgment of any competent court.  Sub-section (3) provides that where a pension ceases under sub-section (1), the Chief Executive may direct the moneys be paid to or applied for the maintenance or benefit of the officer, his spouse or dependents, as the Chief Executive may determine.  Sub-section (4) provides that moneys applied for the discharge of the debts of the officer shall, for the purpose of this section, be regarded as applied for his benefit.  By sub-section (5), payment of the pension shall be restored to the officer upon his discharge from bankruptcy.

37.  Section 28 of the Pension Benefits Ordinance, Cap. 99 (which applies to officers in public service other than judicial officers) and section 30 of Pension Benefits (Judicial Officers) Ordinance, Cap. 401 are in similar terms to section 13 of the Pensions Ordinance.

38.  Some of the provisions cited by Mr. Wong (Pensions Ordinance, section 12(1); Pension Benefits Ordinance, section 31(1); Pension Benefits (Judicial Officers) Ordinance, section 35(1)) providing that pension benefits are not assignable or transferable, are subject to the Public Officers (Assignment of Emoluments) Ordinance, Cap. 363.  The effect of this is that emoluments, which include any pension, may be assigned in part by a public officer with permission.  Section 6(1) of Cap. 363 provides that upon the making of a bankruptcy order against the public officer, such an approved assignment “shall be revoked”.

39.  Lastly, section 19 of the Hong Kong War Memorial Pensions Ordinance, Cap. 386, although it does not make specific reference to bankruptcy, is in these terms:

“(1)   The entitlement of an eligible beneficiary to a pension shall not be assignable or transferable except for the purpose of –

(a) satisfying (either in whole or in part) a debt due to the Government; or

(b) satisfying an order of any court for the payment of money towards the maintenance of the spouse or former spouse or minor child of the eligible beneficiary.

(2) The entitlement of an eligible beneficiary to a pension shall not pass to any other person by operation of law.”

40.  I turn to section 85(3) of Cap. 279.  How this should be construed is the main contention in this hearing.

Construction of section 85(3) of Cap. 279

41.  By virtue of section 43(6) of Cap. 6, section 43(1) (which provides that a bankrupt’s estate comprises all property belonging to or vested in the bankrupt at the commencement of the bankruptcy) has effect “subject to the provisions of any enactment not contained in this Ordinance under which any property is to be excluded from a bankrupt’s estate”.  Thus, it is recognised by the legislature that provision may be made in other statutes to exclude any property from a bankrupt’s estate so this would not pass to a trustee in bankruptcy.

42.  The Education Ordinance, Cap. 279 was enacted in 1971.  Amendments were made to it from time to time, with the latest amendments in 2007.  Section 85(1) provides that the Chief Executive in Council may make rules for the purpose of maintaining any provident fund, whether established before or after the commencement of the Ordinance, for the benefit of teachers employed by schools to which grants in aid or subsidies are made by the Government.

43.  The Rules in the present case were made under section 53 of the repealed Education Ordinance, and continue to have the like effect as if they had been made under section 85 of Cap. 279.

44.  The crucial provision, section 85(3), reads as follows:

“Subject to any rules made under subsection (1), no contribution or donation to or dividend or interest on a dividend from a provident fund shall be assignable or transferable or liable to be attached, sequestered or levied upon, for or in respect of any debt or claim whatsoever.”

45.  Mr. Man submitted that the provision in section 85(3), which prohibits assignment, transfer or the taking of property by execution to satisfy a debt or claim, is not sufficient to prevent the Benefits from vesting in the trustee.  He contended that an additional express provision – that pension benefits should not pass to the trustee upon bankruptcy – would need to be included in the statutory scheme for effective protection to be given to the pension rights from the claims of creditors in a bankruptcy.  He prayed in aid the distinction drawn by Mummery LJ in Patel v. Jones at 927, para. [40], between regulations against voluntary assignment or charging of pension benefits, which do not prevent statutory vesting in the trustee in bankruptcy, and regulations expressly providing that pension rights shall not pass to a trustee in bankruptcy. 

46.  Mr. Wong submitted that it would not be right to rely on the kind of distinction drawn in Patel v. Jones, as, unlike the legislature in the United Kingdom, the Hong Kong legislature has never made that kind of distinction in the enactments passed in relation to pension rights.  Hence, it is not possible to say, as in Krasner v. Dennison, that the local legislature must be taken to have made a deliberate choice not to provide protection to the pension benefits under the Rules.  One cannot infer from the absence of an explicit provision pension benefits should not pass to the trustee in bankruptcy that the legislature had intended to include or exclude the benefits under the Rules from the estate of a bankrupt.  He submitted that the correct approach in construing section 85(3) is to consider the ordinary meaning of the words and phrases in question, without regard to English legislation.

47.  I have no problem with that approach.  My difficulty is that in applying the ordinary and proper meaning of the relevant words and phrases – that the pension benefits shall not be “assignable or transferable or liable to be attached, sequestered or levied upon, for or in respect of any debt or claim whatsoever” – I am unable to see how these words could be stretched beyond their ordinary meaning to cover the situation where the Benefits are to vest in the trustee in bankruptcy without any assignment or transfer (sections 58(1), (2) and (3) of Cap. 6).

48.  Besides, even though the Hong Kong legislature has not enacted express provisions that pension benefits shall not pass to a trustee in bankruptcy, legislative provision has been made, in the Hong Kong War Memorial Pensions Ordinance, that the pension benefit under that Ordinance “shall not pass to any other person by operation of law”.  In the case of officers in public service and judicial officers, express provisions were made in the statutes that pensions shall cease on bankruptcy, with discretion to the Chief Executive to make payments prior to discharge, and the restoration of pensions on discharge.  I do not accept Mr. Wong’s submission that such relevant provisions in the Pensions Ordinance, the Pension Benefits Ordinance, and the Pension Benefits (Judicial Officers) Ordinance do not have the effect of excluding the vesting of pension benefits in the trustee in bankruptcy.

49.  In my view, it would not be correct to infer that legislative choice has not been made in Hong Kong in the past to give protection to certain kinds of pension rights in the event of bankruptcy of the pensioner.

50.  No wording comparable to the Hong Kong War Memorial Pensions Ordinance was used in section 85(3).  Section 85(3) does not even provide that any purported disposition of the pension benefit to the contrary is void and of no effect, unlike section 16(1) of the Mandatory Provident Fund Schemes Ordinance, or section 29(1) of the Widows and Orphans Pension Ordinance.  So, for present purpose, there is no need to resolve the difficulty left open in Lucas v. Harris, supra. at 139 of the effect of such an avoidance provision in a statute in the case of bankruptcy.

51.  Mr. Wong referred me to Re Choi Lai Ming, ex p Official Receiver [2006] 1 HKLRD 7.  One of the questions considered was whether the Government employer was a secured creditor of a bankrupt civil servant, holding security over his salary and pension.  Pension rights were governed by the Pensions Ordinance and the Pension Benefits Ordinance (see 14E, para. 20).  Section 12(1) of the Pensions Ordinance stipulates that save as otherwise provided by the Public Officers (Assignment of Emoluments) Ordinance, a pension shall not be assignable or transferable except for the purposes stated in sub-sections (a) and (b) and no such pension shall be liable to be attached, sequestered or levied upon for or in respect of any claim or debt other than a debt due to the Government.  Barma J concluded that the Government was a secured creditor in relation to the salary (at 19J to 24H, paras. 41 to 57).  As for the pension, in holding that the Government was also a secured creditor (at 25E, para. 59), the judge said “the question of whether the Government was a secured creditor in respect of [the bankrupt’s] pension was not the subject of as much argument, perhaps because this was not an asset that could form part of his bankruptcy estate” (at 24I, para. 58).  Mr. Wong relied on this statement, drawing upon the similarity in wording between section 85(3) and section 12(1) of the Pensions Ordinance.

52.  I am not able to derive assistance from this decision.  It does not appear from the judgment that the English cases on non-alienable restrictions were cited and the judge did not mention why he came to the view, which was expressed in rather tentative language.  In any event, the position of the civil servant is distinguishable, as there is provision in section 13 of the Pensions Ordinance that the pension shall cease on bankruptcy. 

53.  Mr. Wong also urged upon the court it would be anomalous and harsh to hold that the Benefits should vest in the Official Receiver.

54.  It would be anomalous, because on the face of the wording in section 85(3), a person with the right to pension benefits may not assign or transfer his right to pay his debts, and his creditors who have obtained judgment may not levy execution on this right.  However, once he is made bankrupt, this right would be vested in his trustee in bankruptcy for the benefit of his creditors (see similar reasoning in Lucas v. Harris, supra. at 137 to 138).  The apparent objective of section 85(3) in providing for the non-alienability of the pension benefit to secure for the recipient member a source of income to meet his financial needs on retirement would be frustrated. 

55.  It would be harsh, because a person who was made bankrupt and discharged from bankruptcy many years ago would find that, on retirement, he would stand to lose all the contributions he had made to the Fund, all the Government’s donations and all the dividends declared, as his trustee in bankruptcy would receive those benefits and apply them to satisfy the claims of his creditors in the bankruptcy. 

56.  I acknowledge the force of these submissions.  However, the wording of section 85(3) plainly does not prevent or prohibit the Benefits from vesting in the Official Receiver.  The words used in that provision are not reasonably capable of being construed in such a way to bring about the result argued for Mr. Ng, desirable though it may be from a social perspective, in that a person who has contributed to a pension scheme during his working life and saved up for his retirement should have his right protected.

57.  As to Mr. Wong’s arguments on Article 25 of the Basic Law (which requires that all Hong Kong residents shall be equal before the law) and Article 36 (which provides that Hong Kong residents shall have the right to social welfare in accordance with law and that welfare benefits and retirement security of the labour force shall be protected by law), there is no inequality before the law, the different treatment of the pension rights of civil servants and teachers in subsidized schools upon bankruptcy is not a difference based on discrimination on the ground of status.  I do not read Article 36 as requiring all pension rights should fall outside the bankruptcy regime, disregarding that creditors have a right to payment of their lawful debts.

58.  I hold that section 85(3) does not affect the vesting of the Benefits in the Official Receiver by virtue of section 58 of Cap. 6.

After-acquired property

59.  The next issue is whether any part of the Benefits could be regarded as after-acquired property under section 43A(1) of Cap. 6, which provides that the trustee may by notice in writing claim for the bankrupt’s estate “any property which has been acquired by, or has devolved upon, the bankrupt since the commencement of the bankruptcy”.  Sub-section (2)(b) provides that such a notice shall not be served in respect of “any property which is acquired by, or devolves upon, the bankrupt after his discharge”.  By sub-section (3), upon the service of such a notice, the property to which the notice relates shall vest in the trustee as part of the bankrupt’s estate.  Except with the leave of the court, under section 43C(1)(a), the trustee is required to serve such notice before the end of the 42-day period beginning with the time when the after-acquired property first came to his knowledge.

60.  The stance of the Official Receiver is that no part of the Benefits should be regarded as after-acquired property, as post-bankruptcy contributions, donations and dividends do not change the contingent right of the pension benefits which had vested in the Official Receiver on his becoming the trustee.  As that has always been his view, he did not serve any notice under section 43A(1).

61.  In the earlier part of this judgment, I have set out in a table the respective amounts in credit in Mr. Ng’s account as at the date of his bankruptcy order, the date of his discharge from bankruptcy, and the date of his cessation of employment when the entire sum in credit in his account became due and payable.  Notwithstanding that the sums could be segregated with reference to the different dates, Mr. Man submitted it is really not possible to segregate the Benefits conceptually.  He placed reliance on various passages in Re Landau (at 232D & G and 237G), Krasner v. Dennison (at 101F, para. 55 and 106C to E, para. 66) and in particular Patel v. Jones (at 927, para.[42]).

62.  As stated by Mummery LJ in Patel v. Jones, post-bankruptcy pension contributions did not change the quality of the contingent rights, which had ceased to vest in the bankrupt and became vested in the trustee.  The payments made by the bankrupt after the bankruptcy did not create new statutory rights or new contracts to which he was entitled.  The effect of such contributions was to lengthen his membership of the scheme and to increase the value of the existing right, which had vested in the trustee.

63.  Likewise, in Re Landau, Ferris J held that the right vested in the trustee was a present right to compel the pension provider to make payments under the policy in the future and was an immediate chose in action.  The bankrupt had, in relation to the policy, the same chose in action on the date of the bankruptcy order as he had when he attained the age of 65 and the latter event did not result in anything being acquired by or devolving upon him.

64.  The same reasoning formed the basis for the point decided in Re Landau and Krasner v. Dennison that section 310 of the Insolvency Act (the Hong Kong equivalent is section 43E of Cap. 6) has no application to property or income which vests in the trustee under section 306 (the Hong Kong equivalent is section 58).

65.  I agree with the above submissions for the Official Receiver.  After-acquired property is a separate regime in that it does not automatically form part of the bankrupt’s estate unless and until a notice is served pursuant to section 43A(1).  Property belonging to or vested in the bankrupt at the commencement of the bankruptcy in section 43(1)(a) does not overlap with after-acquired property.  There is no need, and no justification, for requiring the trustee to serve a notice for property which has vested in him on his appointment by virtue of section 58.

66.  Mr. Wong did not appear to have argued to the contrary.

67.  I hold that no part of the Benefits should be regarded as after-acquired property.

The principle in Ex parte James

68.  The last issue is whether I should apply the principle in Ex parte James (1874) 9 Ch App 609.  It was argued for Mr. Ng that the bankruptcy court should direct the Official Receiver not to retain the Benefits for distribution among the creditors as it would be contrary to just dealing for a trustee in bankruptcy, as an officer of the court, to act in that way.

69.  The principle in Ex parte James was developed in the days when a mistake of law was not a ground for restitution[7].  In that case, the money had been paid under a mistake of law that it could not be recovered by any judicial process, whether in law or equity.  It was held that the bankruptcy court had jurisdiction to relieve against the mistake of law and to order the trustee to repay the money.  The principle was explained by James LJ at 614:

“… I think that the principle that money paid under a mistake of law cannot be recovered must not be pressed too far, and there are several cases in which the Court of Chancery has held itself not bound strictly by it.  I am of opinion that a trustee in bankruptcy is an officer of the Court.  He has inquisitorial powers given him by the Court, ad the Court regards him as its officer, and he is to hold money in his hands upon trust for its equitable distribution among the creditors.  The Court, then, finding that he has in his hands money which in equity belongs to some one else, ought to set an example to the world by paying it to the person really entitled to it.  In my opinion the Court of Bankruptcy ought to be as honest as other people.”

70.  This principle is not confined to the situation where money was paid under a mistake of law.  In Re Tyler, ex parte the Official Receiver [1907] 1 KB 865, the trustee was put on inquiry that the wife of the bankrupt had been paying the premiums of life policies which had kept the policies alive for the bankrupt and trustee was not allowed to keep the whole of the sum realised by the policies without recognition of the rights of the wife.  He was ordered to pay to the wife the sums she had paid for premiums and interest.  Relevant passages in the judgment read as follows: 

“When James LJ says that the trustee has in his hands money which in equity belongs to somebody else, he is not referring to an equity which is capable of forensic enforcement in a suit or action, but he is referring to a moral principle which he describes when he says that the Court of Bankruptcy ought to be as honest as other people.  In Ex parte Simmonds (1885) 16 QBD 308 Lord Esher states exactly the same principle: ‘… But James LJ laid it down in Ex parte James that, although the Court will not prevent a litigant party from acting in this way, it will not act so itself, and it will not allow its own officer to act so.  It will direct its officer to do that which any high-minded man would do so, viz., not to take advantage of the mistake of law.’  It seems to me that those two decisions clearly lay down a general principle, and that they are not limited to the particular case of mistake of law, and I think that we ought to follow those decisions.  I know it is said that it opens the door dangerously wide when you allow the Court or its officer to order money to be repaid in a case where there is no legal right of recovery; but it must be remembered that, although these decisions allow those who are acting judicially in bankruptcy to exercise this discretion, the discretion which is given must be acted on on judicial principles.” (at 869 to 870, per Vaughan Williams LJ)

“In administering estates, whether in Chancery, bankruptcy, or the winding up of companies, the Court itself by its officer often finds itself in the position of a quasi-litigant.  As I understand the principle laid down in the cases to which my Lord has referred, it comes to this, that the officer of the Court is bound to be even more straightforward and honest than an ordinary person in the affairs of every-day life.  It would be insufferable for this Court to have it said of it that it has been guilty by its officer of a dirty trick. … to my mind it would certainly not be in accordance with fair dealing – that open, honest dealing to which reference has been made – that the Court should allow its officer to say, ‘I knew that the wife was paying, and I let her go on paying, and said nothing to her to lead her to believe that I was going to claim the policy moneys at the end without repaying the premiums which she had paid.’ ” (at 871 to 872, per Farwell LJ)

“In Ex parte James James LJ speaks of money which in equity belongs to some one else.  In my judgment he there meant money which in point of moral justice and honest dealing belongs to some one else.  He was using the words in a popular sense, and not in the sense of money which in a Court of Equity would belong to some one else.  In Ex parte Simmonds Lord Esher, referring to Ex parte James, says that the Court will direct its officer to act as any high-minded man would act, namely, not to take advantage of a mistake of law.  That is to say, assuming that he has a right enforceable in a Court of justice, the Court of Bankruptcy or the Court for the administration of estates in Chancery will not take advantage of that right if to do so would be inconsistent with natural justice and that which an honest man would do. … looking beyond rights enforceable in a Court of Law or Equity, the real fact is that the policy moneys payable in 1906 originated from and owed their existence to the premiums which the wife to the knowledge of the trustee had paid, and it would be grievously unfair, and contrary to natural justice between man and man, that whereas she kept up the policy yet when the life dropped somebody else should take the money.  She may not have an enforceable claim, but as matter of justice it cannot be right, when the time comes for the payment of the moneys due on the policy, to allow the trustee to turn round and say ‘I knew you were keeping down the premiums, but I shall take the policy moneys, and you shall go without the money you have paid.’ That is not consistent with justice, and no high-minded man would do it. ” (at 873 to 874, per Buckley LJ)

71.  In Re Clark (A Bankrupt), ex parte The Trustee v. Texaco Ltd. [1975] 1 All ER 453, Walton J laid down certain conditions that must be present for the principle in Ex parte James to operate:

(1) There must be some form of enrichment of the assets of the bankrupt by the person seeking to have the rule applied (at 458b).

(2) Except in the most unusual cases the claimant must not be in a position to submit an ordinary proof of debt.  The underlying reason is to that to give effect to the rule would conflict with the mandatory rateable division of the estate between all the bankrupt’s creditors (at 458e to f).

(3) The third and crucial test is that if, in all the circumstances of the case, an honest man who would be personally affected by the result would nevertheless be bound to admit: ‘It’s not fair that I should keep the money; my claim has no merits’, then the rule applies so as to nullify the claim which he would otherwise have (at 459a).

(4) When the rule does apply, it applies only to the extent necessary to nullify the enrichment of the estate; it by no means necessarily restores the claimant to the status quo ante (at 459b).

72.  In Re Clark, it was held that the claimant had satisfied the above conditions.  The trustee was not entitled to recover the sums received by the claimant from the bankrupt for the petrol delivered, in complete ignorance of the bankruptcy proceedings.  It could not be regarded as fair to allow the estate to take the whole benefit of the sale price of the petrol whilst repudiating all obligations to pay for it.

73.  The principle of Ex parte James was held not applicable in Re T H Knitwear (Wholesale) Ltd. [1988] 1 Ch 275, as the liquidator in a voluntary winding up is not an officer of the court for the purpose of the principle.  In any event, the conduct of the liquidator could not fairly be criticised, as the difficulties which arose were “simply the result of omissions in the relevant legislation” and there was “nothing which should or need affect the liquidator’s conscience if he proceeds to distribute the assets in accordance with the ordinary rules of law and equity without regard to [the claimant’s] claim, which … has no legal basis” (at 291B to C).  Slade LJ made these observations on the principle:

“The authorities clearly show that the reason for the existence of the rule is that, in the administration of assets on an insolvency, the court will expect its own officer to behave as honestly as other people: see for example, Ex parte James, LR 9 Ch App 609, 614, per James LJ.  It will accordingly direct him to act “in an honourable and high-minded way”: see Ex parte Simmonds (1885) 16 QBD 308, 312, per Lord Esher MR, even if this means overriding rights which persons interested might otherwise be entitled to claim on a strict application of the rules of law and of equity, in the technical sense.” (at 288B to C)

“However, on the authorities, I agree with Mr. Price for the contributories that, for the principle to apply, there must be dishonourable behaviour or a threat of dishonourable behaviour on the part of the relevant court officer, by taking an unfair advantage of someone.  Scrutton LJ put the matter thus in In re Wigzell [1921] 2 KB 835, 858:

‘Now the decisions of this court have established that though in law the money is the money of the trustee for the creditors, yet he may be restrained from enforcing his claim to it or retaining it if (and a series of phrases none of which are very definite have been used) it were not honourable – if it were not high minded – if it would be contrary to natural justice – if it would be shabby – if it would be a dirty trick for him to retain it – or to take perhaps the most temperate statement of the principle, which I find given by Buckley LJ in In re Tyler [1907] 1 KB 865, 873; and cited with approval by Atkin LJ in Thellusson’s case [1919] 2 KB 735, 762: ‘Assuming that he (the officer of the court) has a right enforceable in a court of justice, the Court of Bankruptcy or the court for the administration of estates in Chancery will not take advantage of that right if to do so would be inconsistent with natural justice and that which an honest man would do.’ ”  (at 290D to F)

74.  In Patel v. Jones, the English Court of Appeal affirmed the decision of the court below on a different ground by applying the principle in Ex parte James and held that the bankrupt was entitled to the benefits attributable to post-bankruptcy contributions.  There, the bankrupt continued to make contributions in the mistaken belief that the pension rights remained vested in him, whereas they had already vested in the trustee.  The Court of Appeal took the view it was inequitable of the trustee to retain the benefit of the increase in value of the pension benefits attributable to the post-bankruptcy contributions which were made in the course of the bankrupt continuing his service with the local government in a mistaken belief as to his entitlement of the pension benefits (at 928, para. [43]).

75.  The last decision cited to me on the principle was Re Collins & Aikman Europe SA [2007] 1 BCLC 182.  Lindsay J referred to the comments on it in McPherson The Law of Company Liquidation (4^th ed., 1999) as an “elusive and difficult principle based on morality” (at 188i, para. [15]) and to Williams and Muir Hunter on Bankruptcy (19^th ed, 1979) at page 249 in which it is stated that “it is not easy to define the exact bounds of a principle based upon the control exercised by the court over its officer, which, since it operates in fields not covered by the established rules of law and equity, is incapable of reduction to an exact formula and must in its application be governed in part by ethical considerations.” (at 189f to g, para. [16]).  He made this observation at 190a to b, para. [17]:

“I would not, however, expect the rule to have any weight where statutory provisions either expressly or by necessary implication clearly preclude the course of conduct which the rule would otherwise have supported.  To that extent the rule cannot be considered other than within the surrounding statutory structure …”

Application of the principle in Ex parte James

76.  I have quoted relevant passages from various cases extensively as this is an elusive principle not easy to apply.  As Salter J had remarked in In re Wigzell [1921] 2 KB 835 at 845: “Legal rights can be determined with precision by authority, but questions of ethical propriety have always been, and will always be, the subject of honest difference among honest men”.

77.  Here, the Official Receiver had informed Mr. Ng, within a month of his bankruptcy order, that on the legal advice received by the Official Receiver, the Benefits formed part of his estate vested in his trustee in bankruptcy and that the amounts payable in future should be paid to the Official Receiver.  Mr. Ng was not labouring under a mistake of the law.  At most, he was in a state of doubt when he continued in his employment and deductions continued to be made as his contribution to the Fund.  “A state of doubt is different from that of mistake.  A person who pays when in doubt takes the risk that he may be wrong – and that is so whether the issue is one of fact or one of law” (Kleinwort Benson Ltd. v. Lincoln City Council [1999] 2 AC 349 at 410C, per Lord Hope of Craighead).  “The real point is whether the person who made the payment took the risk that he might be wrong.  If he did, then he cannot recover the money” (Deutsche Morgan Grenfell Group plc v. Inland Revenue Commissioners [2007] 1 AC 558 at 571C, per Lord Hoffmann).

78.  Mr. Ng had made repeated objections to the Official Receiver in early 1999, orally and in writing, that the Benefits should not vest in the trustee in bankruptcy.  In each instance, the Official Receiver had stated his disagreement with Mr. Ng’s position.  Mr. Ng was under no misapprehension that the Official Receiver would not seek remittance of the Benefits when the amount became payable and he was aware from the beginning that the Official Receiver had written to the Education Department asking for the funds to be remitted to the trustee instead when the amount became payable to Mr. Ng.  In my view, the objective circumstances indicated Mr. Ng had taken the risk that if the question of law was to be litigated, it might turn out that he was wrong about the effect of section 85(3) and that the Official Receiver’s position was correct.  Mr. Ng’s situation was quite different from the bankrupt in Patel v. Jones.  He cannot avail himself of a mistake of law as a ground for restitution.

79.  Furthermore, for Mr. Ng to succeed in claiming restitution for mistake of law, he would need to show that had he known the true state of the law at the time, he would not have made the post-bankruptcy contributions.  If he would have done so anyway, he cannot recover.  He bears the burden of proof on this (Kleinwort Benson, supra. at 409F, per Lord Hope; Goff & Jones The Law of Restitution, 2007 ed., para. 4-023).

80.  Mr. Ng asserted on affirmation that “had [he] known that the pension funds would vest in the Official Receiver as trustee, there would be no point for [him] to remain in continuous employment whether before or after the bankruptcy”.  As pointed out by Mr. Man, the Rules do not contain any mechanism by which Mr. Ng could have opted out of the scheme whilst he continued to be employed in a subsidized school and contributions were deducted from his monthly salary automatically.  Mr. Ng would have to establish that he would not have continued with his employment altogether so that the pension benefits attributable to the post-bankruptcy contributions would not go to satisfy the claims of his creditors.  In view of the substantial expenses of Mr. Ng and his dependents at the time, as set out in his statement of affairs and the statements of earnings and property acquired during the period of his bankruptcy, it is difficult to see how it could be viable for Mr. Ng not to continue with his employment.  He has provided no explanation how he could have supported himself and his family had he not continued with his employment.  I am not prepared to attach weight to his assertion aforesaid.  He has not discharged the burden of proving causation that but for the mistake of law, he would not have continued in his employment and thereby continuing to make contributions to the Fund after bankruptcy.

81.  As Mr. Ng had assumed the risk that he was mistaken about the law on the vesting of the Benefits in the trustee, it does not appear to me there is anything unfair or unjust for the Official Receive to retain the Benefits to which the trustee is entitled under the law.  In my view, the Official Receiver has not taken an unfair advantage of Mr. Ng, there was no dishonourable behaviour or a threat of dishonourable behaviour.  Although under the principle in Ex parte James, the court has a discretionary jurisdiction to disregard a legal right, that discretion must be exercised on judicial principles.  Where statutory provisions either expressly or by necessary implication clearly preclude the course of conduct which the principle in Ex parte James would otherwise have supported, the principle would not be given weight in that situation.  Otherwise, the bankruptcy court would be free to override a piece of legislation if it is of the view that such legislation does not meet the court’s standards of justice and fairness in a given situation.

82.  Here, the difficulties that arose were as a result of the provisions made by the legislature.  To paraphrase the words of Slade LJ in Re T H Knitwear at 291B to C, there is nothing which should or need affect the conscience of the Official Receiver if he proceeds to distribute the assets in accordance with the ordinary rules of law and equity without regard to Mr. Ng’s claim, which has no legal basis.  Whilst the Official Receiver should act honourably as an officer of the court, he is also duty bound to gather all property which properly belonged to the bankrupt’s estate.

83.  I decline to direct the Official Receiver not to retain the Benefits for distribution among the creditors.

Legislative intervention

84.  As in what had happened in the United Kingdom after the decisions in Re Landau and Krasner v. Dennison, the legislature should review the current unsatisfactory state of legislation on pension schemes and give serious consideration to amending the law to extend the protection to pension benefits generally in the event of bankruptcy (apart from officers in public service in a civil capacity and judicial officers, who are protected), with suitable power to the trustee to claim excessive contributions and seek income payments orders for benefits paid to a bankrupt after bankruptcy.

Conclusion

85.  The questions raised by the Official Receiver in this summons are answered as follows:

(1) Whether the Benefits under the Rules formed part of Mr. Ng’s estate under sections 43 and 2 of Cap. 6 and vested in the Official Receiver and trustee pursuant to section 58 of Cap. 6: Yes.

(2) Whether on Mr. Ng’s automatic discharge from bankruptcy the Benefits remained vested in the Official Receiver and trustee: Yes.

(3) Whether section 85(3) of Cap. 279 prevents the Benefits from automatic statutory vesting in the Official Receiver and trustee: No.

(4) Whether the Official Receiver and trustee is entitled to all payments due under the Rules which would otherwise be due to Mr. Ng: Yes.

(5) Whether Mr. Ng is entitled to claim any proportion of the Benefits attributable to his service and contribution after bankruptcy or his discharge from bankruptcy: No.

Costs

86.  I make an order nisi that the costs of the Official Receiver in this application are to be borne by the estate, and that Mr. Ng’s own costs be taxed in accordance with the Legal Aid Regulations.

________________________________________________________________________

[1] The existing situation in Hong Kong in regard to the problem if pension benefits vest in a trustee in bankruptcy has been described as a “potential time bomb” (Hong Kong Personal Insolvency Manual by Charles Booth, Philip Smart & Stephen Briscoe, 2003 ed., page 253). The Official Receiver has adopted certain practices for occupational pension schemes, as described in the above work cited at pages 251 to 253. The present case is not concerned with a contractual pension arrangement but a statutory scheme.

[2] Section 58(1) has been repealed and substituted by the Bankruptcy (Amendment) Ordinance 2005, which became operative on 10 December 2007. The new section 58(1) reads: “On the making of a bankruptcy order, the property of the bankrupt shall vest in the Official Receiver.”

[3] The objection of contrary to public policy should not apply in the case of occupational pension schemes provided by employers, as the employer and not the bankrupt employee, is the settlor of the trust in favour of those employees who become members of the scheme, so a prohibition of assignment of benefits or a forfeiture clause in the event of bankruptcy would not contravene the principle that a person cannot rely on protective trusts created by his own disposition to keep property out of his trustee in bankruptcy (The Law of Insolvency by Ian Fletcher, 3^rd ed., para. 8-057). See also Krasner v. Dennison at 103F, para. 58.

[4] Reference was made to Police Pensions Act 1976 (c. 35) section 9; The Firemen’s Pension Scheme Order 1992, S.I. 1992/129, Schedule 2 rule L5(5); Social Security Administration Act 1992 (c. 5) section 187(1); The Local Government Pension Scheme Regulations 1997, S.I. 1997/1612, regulation 96(3); The National Health Service Pension Scheme Regulations 1995, S.I. 1995/300, regulation T3(2); The Teachers (Compensation for Redundancy and Premature Retirement) Regulations 1997, S.I. 1997/311, regulation 27(2); The Teachers’ Pensions Regulations 1997, S.I. 1997/3001, regulation E35(4); The Education (Student Support) Regulations 2001, S.I. 2001/951, regulation 40(1).

[5] Reference was made to Mandatory Provident Fund Schemes Ordinance, Cap. 485, section 16(1); Pensions Ordinance, Cap. 89, section 12(1); Hong Kong War Memorial Pensions Ordinance, Cap. 386, section 19; Auxiliary Forces Pay and Allowances Ordinance, Cap. 254, section 18(1); Pension Benefits (Judicial Officers) Ordinance, Cap. 401, section 35(1); Pension Benefits Ordinance, Cap. 99, section 31(1); Pensions (Special Provisions) (The Hong Kong Institute of Education) Ordinance, Cap. 477, section 7(8); Widows and Orphans Pension Ordinance, Cap. 94, section 29.

[6] This provision first appeared in the Pensions Ordinance, Ordinance No. 21 of 1932, section 13.

[7] The House of Lords clarified the law in Kleinwort Benson Ltd. v. Lincolnshire City Council [1999] 2 AC 349 and held that mistake of law is a ground for restitution.