Tu v Chang (No 2)

In Tu v Chang (No 2), Mr Tu applied to set aside a bankruptcy notice issued by Ms Chang, which was based on costs orders made in her favour. Mr Tu contested the validity of the bankruptcy notice on two grounds: first, that the judgment upon which the notice was issued was invalid due to the inclusion of a filing fee; and second, that he had a counter-claim, set-off or cross-demand that exceeded the amount specified in the bankruptcy notice. The court was required to determine whether the bankruptcy notice was valid and whether Mr Tu had established a counter-claim, set-off or cross-demand that exceeded the amount specified in the notice.

The court found that the first ground of Mr Tu's application failed because the defect relied upon did not invalidate the bankruptcy notice. The court also found that Mr Tu had established a counter-claim, set-off or cross-demand that exceeded the amount specified in the bankruptcy notice. As a result, the court allowed the application to set aside the bankruptcy notice and ordered that Ms Chang pay Mr Tu's costs of and incidental to the application, without any reduction or apportionment in respect of the unsuccessful ground in the application.

This case highlights the importance of establishing the validity of a bankruptcy notice and the potential for a counter-claim, set-off or cross-demand to exceed the amount specified in the notice. It also demonstrates the court's willingness to set aside a bankruptcy notice where the debtor has established a valid counter-claim, set-off or cross-demand.