Proofs Of Debt: Looking Behind A Default Judgment

In the recent Hong Kong decision of Re Primlaks (H.K.) Ltd (In Liquidation), the High Court confirmed the liquidators' decision to reject the applicant's proof of debt (POD) on the grounds that: (1) the liquidators were entitled to go behind the default judgment, which formed the basis of the POD, on the ground of a miscarriage of justice; and (2) the applicant had not discharged its burden of proving the loans underlying the default judgment were genuine debts owed by the company.

The POD submitted by the applicant to the liquidators was based on, inter alia, a default judgment obtained against the company in separate proceedings. The applicant appealed against the liquidators' decision not to admit the sums under the POD based on the default judgment. In dismissing the application, the High Court revisited the applicable principles when challenging rejections of proofs of debt as follows: