How to Recover Compensation If the At-Fault Driver Declares Bankruptcy

Hong Kong recorded 14,910 traffic accidents in 2024, according to the Transport Department’s latest annual figures. Of those, over 3,200 involved personal injury. A growing number of these collisions now involve drivers who have filed for individual bankruptcy or corporate winding-up proceedings. The Official Receiver’s Office reported 7,862 bankruptcy orders in 2024, a 12% increase from 2023, reflecting broader economic pressures across the city’s transport and logistics sectors. For an injured claimant, a judgment against a bankrupt driver is often worthless unless specific statutory mechanisms are engaged early. The court procedure is governed by the Bankruptcy Ordinance (Cap. 6) and the Motor Vehicle Insurance (Third Party Risks) Ordinance (Cap. 272). This article explains the legal routes available to recover compensation when the at-fault driver has no assets or has declared bankruptcy. It does not cover every scenario. Each case depends on the driver’s insurance status, the timing of the bankruptcy petition, and the nature of the claim.

Why a Bankruptcy Declaration Does Not End Your Claim

The Bankruptcy Ordinance (Cap. 6) provides that a bankruptcy order stays most civil proceedings against the debtor. Section 31 of Cap. 6 imposes an automatic stay on execution against the bankrupt’s property. However, personal injury claims are treated differently.

The stay does not apply to claims for damages for personal injury. Section 31(1)(d) of Cap. 6 explicitly exempts proceedings for personal injury from the automatic stay. This means you can continue your personal injury claim in the District Court or Court of First Instance even after the driver has been adjudged bankrupt.

The bankrupt driver’s insurance policy is a separate asset. The Motor Vehicle Insurance (Third Party Risks) Ordinance (Cap. 272) requires every motor vehicle to be insured against third-party risks. Section 10 of Cap. 272 provides that a judgment against the insured driver can be satisfied directly from the insurer, even if the driver is bankrupt. The insurer cannot refuse payment solely because the driver has no assets.

The trustee in bankruptcy has no claim over your compensation. If you obtain judgment and the driver’s insurer pays out, the compensation belongs to you. The trustee in bankruptcy cannot seize those funds to distribute to the driver’s general creditors. The court procedure is that the judgment debt is paid by the insurer to you, not to the bankrupt estate.

Step 1: Identify the Insurance Position Immediately

Obtain the driver’s insurance certificate. The driver must, by law, carry a valid third-party insurance policy. Request a copy of the certificate of insurance from the driver or their representative. If the driver refuses, you can apply to the Transport Department for the vehicle’s insurance record under the Motor Vehicles Insurance (Third Party Risks) Regulations (Cap. 272A).

Check whether the insurer is a member of the Hong Kong Motor Insurance Bureau (MIB). The MIB operates the Uninsured Drivers’ Agreement. If the driver was uninsured, or if the insurer has become insolvent, the MIB may pay compensation. The MIB’s 2024 annual report shows it handled 1,247 claims, with a total payout of HK$187 million.

If the driver was insured, notify the insurer in writing. Section 10 of Cap. 272 requires the insurer to satisfy a judgment obtained against the insured driver. Send a formal notice of your claim to the insurer as soon as possible. The court procedure is that the insurer must respond within 30 days or risk being joined as a party to the proceedings.

If the driver was not insured, or the insurer is insolvent, apply to the MIB. The MIB’s Claims Procedure requires you to submit a completed claim form, a copy of the police report, medical evidence, and proof of loss of earnings. The MIB will assess liability and quantum. If the MIB rejects the claim, you can appeal to the MIB Appeal Panel.

Step 2: File Your Personal Injury Claim in the Correct Forum

The District Court has jurisdiction for claims up to HK$3 million. If your estimated damages are within this limit, file your writ of summons in the District Court under Cap. 336. The limitation period for personal injury claims is three years from the date of the accident (Limitation Ordinance, Cap. 347, Section 27).

The Court of First Instance handles claims exceeding HK$3 million. If your injuries are severe, with high medical costs and loss of future earnings, file in the CFI. The procedure is governed by the Rules of the High Court (Cap. 4A).

The Small Claims Tribunal cannot hear personal injury claims. Do not file in the Small Claims Tribunal. Its jurisdiction is limited to monetary claims up to HK$75,000 and does not cover damages for personal injury (Small Claims Tribunal Ordinance, Cap. 338, Section 5).

Include the insurer as a defendant if possible. In some cases, you can join the insurer directly as a co-defendant. This is permitted under Order 15, Rule 6 of the Rules of the District Court (Cap. 336H). Joining the insurer ensures that any judgment can be enforced against the insurer without additional proceedings.

Step 3: Prove the Driver’s Liability and Your Damages

Gather evidence of the accident. Obtain the police report, photographs of the scene, witness statements, and any CCTV footage. The burden of proof is on you to show the driver was negligent. The court applies the standard of the reasonable driver.

Obtain medical evidence. Your claim must be supported by medical reports from a registered Hong Kong doctor. The report should detail the nature of your injuries, the prognosis, and any permanent disability. The court will assess damages based on the medical evidence and the Personal Injuries Tables published by the Judiciary.

Calculate your special damages. These are quantifiable financial losses: medical expenses, transport costs, loss of earnings, and rehabilitation costs. Keep all receipts and invoices. The court will award the actual amount proved.

Claim general damages for pain, suffering, and loss of amenity (PSLA). The court awards a lump sum based on the severity of your injuries. The PSLA guidelines are set out in the Judiciary’s Personal Injuries Tables. For example, a moderate whiplash injury typically attracts HK$50,000 to HK$150,000. A severe spinal injury can exceed HK$1 million.

Claim loss of future earnings. If your injuries prevent you from working, you can claim for future loss of earnings. The court calculates this by multiplying your annual pre-accident earnings by a multiplier based on your age and the number of years you would have worked. The multiplier is derived from the Ogden Tables, which the Hong Kong courts adopt with adjustments.

Step 4: Enforce the Judgment Against the Insurer or the MIB

If the insurer is solvent, present the judgment to the insurer. Under Section 10 of Cap. 272, the insurer must pay the judgment sum within 30 days. If the insurer refuses, you can apply to the court for an order compelling payment. The court can also award costs against the insurer.

If the insurer is insolvent, claim from the MIB. The MIB’s Uninsured Drivers’ Agreement covers situations where the insurer has become insolvent. Submit your judgment and supporting documents to the MIB. The MIB will pay the judgment sum, subject to its policy limits (currently HK$100 million per claim for bodily injury).

If the driver was uninsured, the MIB pays directly. The MIB will investigate the claim and, if liability is established, pay compensation. The MIB may deduct an excess of HK$20,000 from the award, as per its standard terms.

If the driver has no insurance and the MIB refuses, consider a claim against the Motor Vehicles Insurance Fund. The Fund, administered by the MIB, provides a safety net for victims of uninsured or untraced drivers. The Fund’s payout limit is HK$1 million for bodily injury.

What Happens to the Bankrupt Driver’s Assets

The trustee in bankruptcy will realise the driver’s assets. The trustee will sell the driver’s property, including any vehicle, and distribute the proceeds to creditors. Personal injury claimants are unsecured creditors. However, as explained above, your compensation comes from the insurer, not the driver’s estate.

The driver’s discharge from bankruptcy does not extinguish your claim. Under Section 32 of Cap. 6, a bankruptcy discharge releases the bankrupt from most debts. However, debts arising from personal injury are not discharged. You can still enforce the judgment against the driver after discharge, but only if the driver acquires new assets.

The driver’s insurance policy is not an asset of the bankrupt estate. The policy is a contract between the driver and the insurer. The trustee cannot cancel the policy or claim its proceeds. The insurer remains liable to satisfy your judgment.

Practical Steps to Protect Your Claim

Act quickly. The limitation period is three years. If the driver declares bankruptcy, the clock keeps ticking. Do not delay filing your claim.

Notify the insurer immediately. Send a written notice of your claim within 14 days of the accident. The insurer may try to argue that late notice prejudices its position.

Keep all documents. Police reports, medical reports, receipts, correspondence with the driver, the insurer, and the MIB. The court procedure requires you to disclose all relevant documents.

Consider legal representation. Personal injury claims in Hong Kong are complex. The District Court and Court of First Instance have strict procedural rules. A solicitor can advise on the strength of your case, the quantum of damages, and the enforcement options.

Do not accept a low settlement offer. The insurer may try to settle quickly for a low amount, especially if the driver is bankrupt. Do not sign a settlement agreement without legal advice. Once you settle, you cannot claim further compensation.

Three Actionable Takeaways

1. File your personal injury claim in the correct court within three years of the accident – the automatic stay in bankruptcy does not apply to personal injury proceedings under Section 31 of Cap. 6.
2. Notify the driver’s insurer in writing immediately – Section 10 of Cap. 272 requires the insurer to satisfy your judgment, even if the driver is bankrupt.
3. If the driver is uninsured or the insurer is insolvent, apply to the Hong Kong Motor Insurance Bureau – the MIB’s Uninsured Drivers’ Agreement provides a statutory safety net for compensation.

This does not constitute legal advice. Consult a solicitor for your specific case.