RE LI BAO TIAN

HCB 5217/2016

[2019] HKCFI 1961

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5217 OF 2016

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DECISION

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Application

1.  By Summons dated 25 March 2019, the Joint and Several Trustees of the Property of Li Bao Tian, the Bankrupt (the “Trustees”), applied for a release of the Trustees’ implied undertaking not to use information and documents obtained in a section 29 proceedings under HCB 5217/2016 (the “Implied Undertaking”) pursuant to the Order of Mr Justice Ng dated 11 September 2018 (the “Section 29 Order”) under Order 24, rule 14A of the Rules of the High Court, Cap 4A.

2.  The respondent was adjudicated bankrupt and a private examination was conducted against him on 4 March 2019 (the “Private Examination”) pursuant to section 29 of the Bankruptcy Ordinance, Cap 6.

3.  On 9 November 2017, the Trustees also commenced a High Court Action, HCA 2016/2017 against the Bankrupt and one Lo Siu Chu Judy for a number of reliefs (the “High Court Action”).

4.  The Trustees initially applied for two classes of documents to be released from the Implied Undertaking, namely, some bank statements and part of the transcript of the hearing of the Private Examination (the “Transcript”).  Before the hearing, this Court was informed by the Trusteesthat they have obtained discovery of the requested bank statements in the High Court Action,hence the only document that they would ask to be released from the Implied Undertaking is part of the Transcript.

5.  The Bankrupt appeared in person.  He told the Court that he was not legally advised and hence would leave this matter to be decided by the Court.

Applicable legal principles

6.  In Re NDT (BVI) Trading Ltd (No 2) [2009] 5 HKLRD 615 at §§4 – 6, Kwan JA (as she then was) said:

“ 4. Under O.24 r.14A, any undertaking, whether express or implied, not to use a document for any purposes other than those of the proceedings in which it is disclosed shall cease to apply to such document after it has been read to or by the court, or referredto, in open court, unless the court for special reasons has otherwiseordered on the application of a party or of the person to whom the document belongs.

5. Thus, the court has a discretion to relax or modify the implied undertaking for special reasons. The general principle is that any release or modification of this undertaking should not occasion injustice to the person giving discovery (Crest Homes Plc v Marks [1987] 1 AC 829 at p.860B–C).

6.   In exercising this discretion, the court may have regard to many factors and they vary from case to case.  It is not possible togive an exhaustive list.  A number of these factors were mentioned in Mead Corp v Carbonless Papers (Australia) Pty Ltd [2002] WASC 237, para.45.  They include the nature of the document, any prejudice the author of the document may sustain, and the likely contribution of the document to achieving justice in the second proceedings.”

Analysis

7.  Ms Fong for the Trustees submitted that the part of the Transcript that the Trustees would like to be released from the Implied Undertaking are pages 163 – 164, page 167 and pages 170 – 172 (the “Relevant Pages”).  The Relevant Pages are required in order to achieve justice in the High Court Action as they contain admissions from the Bankrupt which directly contradict Lo Siu Chu Judy’s case in the High Court Action in two respects, namely:

(1)   the Bankrupt has substantial assets when in the Relevant Pages, the Bankrupt admitted that he was and is only holding shares in two companies on trust for others and he specifically admitted that he did not have any beneficial interest in the shares of those two companies.

(2)   She and the Bankrupt’s intimate relationship ended in 2007 when the Bankrupt gave evidence in the Private Examination that their relationship was only terminated in about 2015 to 2016. 

8.  It is important that during the hearing, the Bankrupt further confirmed to this Court that he does not have any beneficial interest in the shares of the two companies.  In the circumstances, I do not see any conceivable prejudice to the Bankrupt in releasing the Relevant Pages for the purpose of the High Court Action.

9.  On the other hand, I am satisfied that the release of the Relevant Pages of the Transcript to be deployed in the High Court Action will help to achieve justice which is a core value in our system.

10.  In the circumstances, I exercise my discretion to release the Implied Undertaking and allow the Relevant Pages to be used in the High Court Action.

Disposition

11.  For the reasons stated above, I make the following orders:

(1)   The Trustees (Ho Man Kit and Kong Sau Wai) be released from the Implied Undertaking in relation to the Relevant Pagesof the Transcript but only for the purpose of deploying the same in HCA 2016/2017.

(2)   Costs of and incidental to this application be paid out from the estate of the Bankrupt.

12.  Finally, it remains for this Court to thank Ms Fong and Mr Ng for their helpful assistance.