RE VINCENT KAY LO IP

HCB 1209/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 1209 OF 2000

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J U D G M E N T

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Application

1. This is an application by the Official Receiver and Trustee (“the OR”) under Section 30A Bankruptcy Ordinance (“the Ordinance”) and Rule 88 Bankruptcy Rules (“the Rules”) (Cap. 6) for an order against the automatic discharge of Dr. Vincent Kay Lo Ip (“the Bankrupt”) under Section 30A(3) of the Ordinance.

Background

2. The Bankrupt studied medicine in Canada.  He started his private practice in Admiralty Centre in 1981.  The clinic grew over the years and by 1989, it became known as the Admiralty Doctors’ Group or ADG.  In 1990, the Bankrupt planned to start another clinic in Kowloon, to be known as the Parklane Doctors’ Group or PDG.  He issued a circular to attract potential doctors to join.

3. After a meeting held in Hong Kong on 23 June 1990, where certain representations were made by the Bankrupt, one Dr. Koh, a successful Malaysian general surgeon, decided to join.  The new association was not successful.  Dr. Koh only earned very low income and was required to pay more expenses than expected.  In March 1992, he left ADG and commenced HCA 699/1992 against the Bankrupt for damages resulting from misrepresentations and deceit.

4. After a trial for 8 days, on 15 December 1999, the late Trial Judge found beyond reasonable doubt the following misrepresentations on the part of the Bankrupt:

“	(a)	Dr. Ip represented to Dr. Koh that ADG made profits of about $1 million for the year 1989 when in fact the profits were those of Gaylaw. This representation gave the impression to Dr. Koh and to any objective bystander that the clinical practice of ADG was so profitable. At all material times, Dr. Ip knew that the profits of Gaylaw comprised of income from rental of properties owned by himself and from the takings of the laboratory service of ADG. The profits of Gaylaw therefore did not reflect and could not reflect the profitability of the ADG clinical practice. In this respect, there was wilful deceit on the part of Dr. Ip.
	(b)	Dr. Ip represented to Dr. Koh that he latter was being recruited to fill an opening to be left by a general surgeon without disclosing the meager income of the departing general surgeon from ADG. Knowing that Dr. Koh was looking for a full time practice general surgeon position in an established practice, Dr. Ip should have made such disclosure. In the circumstances, the failure amounted to a representation to Dr. Koh that he was to stand in the shoes of a full time general surgeon making $60,000 per month net. In this respect, there was wilful deceit too.
	(c)	Dr. Ip represented to Dr. Koh that there were surgical cases. In the context of Dr. Koh’s application to join ADG, Dr. Ip knew or ought to have known that Dr. Koh was not looking for just any number of surgical cases, but a reasonable number for a full time practice general surgeon. In fact, ADG had few surgical cases. The indication of surgical cases was plainly calculated to mislead. In this respect, there was reckless misrepresentation or wilful deceit.
	(d)	Dr. Ip represented to Dr. Koh that the take home earnings of two of the doctors at ADG were about $60,000 each. These two doctors were not general surgeons and Dr. Ip did not make this clear to Dr. Koh. Knowing that Dr. Koh was applying to join ADG as a general surgeon, Dr. Ip should have shown Dr. Koh that earnings of a general surgeon or made it clear to Dr. Koh that the figures shown were not representative of the earnings of a general surgeon. In this respect, there was at least negligent misrepresentation.
	(e)	Dr. Ip represented to Dr. Koh that the contribution of each doctor to the management expenses of ADG was about $28,000 per month and that this was likely to remain the same for he did not expect significant increase in rent for ADG. In fact, not every doctor at ADG had to pay the full share of management expenses. Also, by his own evidence, Dr. Ip did anticipate increase in rent for he was planning to concentrate his practice in PDG should the rent for ADG become unacceptable. In this respect, there was wilful deceit.
	(f)	Dr. Ip represented to Dr. Koh that every doctor had to pay $300,000 to join ADG. In fact, no doctor joining ADG before or after Dr. Koh had to pay any entry fee. In this respect, there was wilful deceit too. (paragraph 47 of the Judgment)	”

As a result of the findings, the Bankrupt was adjudged to pay Dr. Koh damages in the total sum of HK$1.5 m.

5. On 17 April 2000, the present bankruptcy proceedings were commenced against the Bankrupt.

6. The Bankrupt appealed to the Court of Appeal in CACV 75/2000.  On 18 July 2000, his appeal was allowed, but only to the extent of reducing the damages under one head of claim.  After all, he was liable to pay Dr. Koh damages in the total sum of about HK1.17m together with costs of the trial and two-thirds of the costs of the appeal.

7. On 14 August 2000, a bankruptcy order (“the Bankruptcy Order”) was made against the Bankrupt.

8. Then, without consent from the OR, the Bankrupt applied for leave to appeal against the Court of Appeal Judgment.  The OR refused to give consent for the Bankrupt to proceed with this appeal unless sufficient indemnity to cover costs was provided.  Though the Bankrupt later succeeded in persuading a Judge to accept HK$300,000 as sufficient security, on 23 February 2001, the Court of Appeal viewed that such amount was not sufficient and as such, the appeal could not be pursued further.

9. On 13 February 2003, the Bankrupt took out an application to reverse or set aside the OR’s demand upon him to remit the bank balance in a company called Gaylaw Investment Company Limited (“Gaylaw”). Since the Court refused to adjourn the matter as per the Bankrupt’s request on 6 May 2003, this application was not pursued further.  Then, on 3 February 2004, the Bankrupt issued a summons to ask for, inter alia, an annulment of the Bankruptcy Order.  The summons were eventually dismissed by the Court on 16 September 2004.

10. In the meantime, on 16 July 2004, the OR took out the present application against the Bankrupt.  The OR objected to the automatic discharge of the Bankrupt which should have taken place on 13 August 2004.  On 11 August 2004, Mr. Registrar Chan ordered, among other things, an interim extension of the Bankruptcy Order until determination of the present application or further order of this Court.  If the objections are valid, this Court has the power and discretion to the suspend the discharge for a period not exceeding 4 years from 14 August 2004.

OR’s Complaints

11. The OR complains that little progress has been made in realization of the Bankrupt’s assets because he deploys tactics to impede or even obstruct the investigation and administration of the estate.  The grounds specified in section 30A(4)(b), (c) and (d) BO are relied upon, namely:

“	(b)	that the discharge of the bankrupt would prejudice the administration of his estate;
	(c)	that the bankrupt has failed to co-operate in the administration of his estate;
	(d)	that the conduct of the bankrupt, either in respect of the period before or the period after the commencement of the bankruptcy, has been unsatisfactory;	”

12. The OR said the “misconduct” of the Bankrupt are four-folded.  They can be summarized in the followings:

(a)	The Bankrupt failed to co-operate to realize his interests in 2 properties in Canada.
(b)	The Bankrupt not only failed to provide full books and accounting records of Gaylaw but also went further, together with his wife (“the Bankrupt’s wife”), to obstruct the OR’s investigation and recovery of his interests in Gaylaw.
(c)	The Bankrupt, together with his mother (“the Bankrupt’s mother”) impeded the realization of his shares in Wei Wei Properties and Investments Limited. (“Wei Wei”).
(d)	The Bankrupt failed to co-operate with the OR to have a reasonable assessment of his expenditure and did not pay anything to the estate for the distribution among the creditors for the past 4 years.

Findings

13. Upon careful consideration of the evidence authorities submissions by the parties, I am satisfied that the OR has proved on balance of probabilities the abovementioned four “misconducts” on the part of the Bankrupt.  My reasons appear as follows.

Properties in Canada

14. In the Form 28 Statement of Affairs (“the Statement of Affairs”) completed by the Bankrupt on 10 October 2000, he declared that he owned 1/3 interest in a property situated at 3613, Mount Seymour, Mt Seymour Parkway, Westminister, B.C. Canada (“the Vancouver Property”) and 1/2 interest in another property known as Unit #816, 480 McLevin Avenue, Toronto, Canada (“the Toronto Property”), representing net values of CAD$67,667.00 and CAD$28,484.50 respectively.  Leaving aside that the mortgage created against the Vancouver Property on 9 June 2000, i.e. after the commencement of the bankruptcy proceedings herein, might be liable to be set aside, as a matter of usual course, both properties were to be disposed of so that proceeds thereof would be distributed among the creditors.  However, the OR has not been able to do so.

15. The following extracts from the Bankrupt’s Affidavit sworn on 18 August 2004 succinctly make clear his stand:

“	4.	Canadian Properties
	4.1	I have 1/3 interest in a Vancouver property and 1/2 interest in a Toronto property. It is practically impossible to sell partial interests in property without the assistance of the other co-owners [the Bankrupt’s wife]. The OR’s failure to realize these properties is not due to my fault but the nature of my interests in these properties ……
	4.2	The said mortgage …… had all along been reported to the Official Receiver as legal expenses for the Bankruptcy alone for the month of July 2000. While the Bankrupt’s one third ownership of CA 203,000 was CAD$67,667, the Bankrupt has always made known to the O.R. that he alone owed the total amount of the debt for CAD$77,000 to the property, and the Bankrupt must put back to the property if and when the property was liquidated.
	4.3	The present status of the Canadian properties:
	…… The Toronto property had been vacant since August 2003 and the Vancouver property vacant since January 1 2004.  Both properties are incurring much expense and these have been met by the Bankrupt’s two adult daughters Cheryl Ip and Joyce Ip, who are permanent residents in Canada.  The two daughters are not at present living in these properties as they have found work on the East and West Coasts of the Unites Status.  They have no other home dwellings in Canada and they are currently paying for the mortgages and expenses for the two properties and they expect that these properties will ultimately be their home dwellings.  The Official Receiver will therefore not be able to liquidate the two properties.		”

16. In my view, the Bankrupt is telling the OR to keep her hands off completely the 2 properties.  I agree with the submission of Miss Cheung, solicitor for the OR, that the titles of the 2 properties have already vested with the OR and the Bankrupt should and could have executed appropriate documents to transfer the legal title to the OR and leave her to deal with the matter.  He failed the OR.

17. On 10 October 2004, I was further informed by the Bankrupt that the Toronto Property had been redeemed.  The OR then wrote strongly to the Bankrupt and the Mortgagee bank protesting that the Bankrupt had no right to deal with the Toronto Property.  I do not think this new development can assist the Bankrupt because it is still unknown as to how the matter will develop.  In any event, I have not yet heard from the Bankrupt that he is willing to transfer his legal interest in the 2 properties to the OR.  For the time being, I also notice that the OR is considering commencing appropriate legal proceedings in Canada to recover the Bankrupt’s interest in the 2 properties.

Gaylaw

18. To start with, the late Trial Judge in HCA 699 of 1992 described Gaylaw as follows:

“	13.	Since very early days, ADG had a management company called Gaylaw Investment Company Limited (“Gaylaw”).  It is perhaps more appropriate to treat Gaylaw as a service company for Dr. Ip.  Gaylaw owned two shop premises, unrelated to ADG, and collected rent from those premises.  Gaylaw owned all the equipment of the laboratory service of ADG and hired the operating technicians.  All charges of the laboratory service of ADG went to Gaylaw as Gaylaw’s income.  All the overheads of the clinical practice of ADG were also met by Gaylaw.  In fact, Gaylaw is the lessee of the ADG premises and paid the rent.  ADG paid Gaylaw management expenses.  Dr. Ip has confirmed that the operating expenses paid by ADG to Gaylaw merely re-imbursed the operating expenses of the clinical practice, Gaylaw did not make profits on the clinical practice.  The fees charged by doctors for consultations at ADG collected by the clinic, after deducting an appropriate amount for management expenses, were paid over the doctors.
	14.	Each doctor at ADG had a separate licence agreement with Gaylaw for regulation of the doctor’s relationship with the clinical practice and the share of management expenses.  In general, doctors practiced on cost sharing basis; although one or two had an arrangement for guaranteed income which means that the doctor concerned needed not pay the normal full share of management expenses if the real earnings were less than the minimum contractual take home amount.
	15.	Following events involving Dr. Koh, by an agreement dated 13th August 1990, Dr. Ip assigned all “the chattels, goodwill and the equipment, furniture and fittings” of ADG to another corporate vehicle called Masterform.  By another agreement executed in 1990, Gaylaw appointed Masterform as manager of ADG.  According to Dr. Ip, he intended to use Masterform as the proprietary and management company of ADG.  However, also according to Dr. Ip, the bulk of the expensive equipment of ADG used by the laboratory service and owned by Gaylaw could not be transferred to Masterform at a nominal value of $1.  Hence those equipment remain the property of Gaylaw.	”

19. The Bankrupt declared in the Statement of Affairs that his interest in Gaylaw was about HK$363,678.00.  Land search record showed that Gaylaw acquired Flat B2, 5F, Mount Trio Court, Nos. 1-2 Hok Yu Lane and Car Parking Space No. 38 (“the Mount Trio Court”) for HK$4.9 m on 8 August 1996 and sold it for HK$7.9 m on 3 July 1997.  Then, on 7 August 1997, it purchased Block A5, Albron Court, 99 Caine Road (“the Albron Court”) for HK$7.4 m on 7 August 1997.  Subsequently, on 3 February 2001, the Albron Court was sold by the Mortgagee bank at $5.25 m.

20. From the above information, the OR certainly wanted to ascertain how much could be recovered from Gaylaw.  However, the Bankrupt and the Bankrupt’s wife only took the OR to a disorganized warehouse in which all books and accounts of the Bankrupt himself and all his companies were kept.  Eventually, although 16 boxes of documents were taken by the OR, they were still incomplete.  Further, the Bankrupt’s wife argued with the OR that “Amount due to directors” (emphasis added) appearing on the financial statements of Gaylaw means “her” only.

21. In the Affidavit of the Bankrupt sworn on 18 August 2004, he further deposed that:

“

5.4

…… But Gaylaw Investment Ltd. is a vehicle used by me and my wife to hold properties.  After the sale of relevant properties a few years ago, Gaylaw has been kept dormant.No updated accounts had been prepared since 31st March 2001.Because now I am a bankrupt, I cannot afford to retain an accountant to prepare updated accounts and to trace supporting vouchers to satisfy the OR’s queries.  Other than a bank balance of about HK$130,000, I believe that is nothing left in Gaylaw.  But according to my recollection, Gaylaw owes my mother Madam Ho Fung much more than this sum.

”

22. I do not consider that there is any dispute that the OR has not been provided with full documentation of Gaylaw which makes the administration extremely difficult, if not impossible.  Further, it appears that the Bankrupt has been trying each and every means to prove that the money now left with Gaylaw does not belong to him, irrespective of whether it belongs to the Bankrupt’s wife or the Bankrupt’s mother.  I agree with Ms. Cheung that the explanations offered were far from satisfactory and cannot be accepted.

(a)	By a letter of 18 January 2001, the Bankrupt’s wife said that:
“	I now inform you that the Director’s Loan was carried from this HK$1 million from my account above dated to the account of Gaylaw for the purchase of the property on Waterloo Hill.  This had since been sold and the present property on Caine Road bought.  Gaylaw carried that Loan forward from 1996.
	At no time was there any loan from another Director aside from me.			”
(b)	However, upon the limited information in hand, the OR was able to disapprove such assertion.  As stated in the OR’s letter of 30 January 2003,
“	According to Gaylaw’s audited accounts, the amount due by Gaylaw to the directors as at 31 March 2000 is $936,804.  My accountants cannot trace the transactions that made up to this amount since no general ledger is available for the entire 5-year period from 1 April 1995 to 21 March 2000.  Instead, my accountants have identified the vouchers relating to the movements in the directors’ account for the period from 1 April 1996 to 31 March 1997.  It is noted that apart from the loans by directors of total $1,250,000 for the purchase of the property at Flat B2, 5/F & Car Parking Space No. 38, Lower G/F, Mount Trio Court, 1-2 Hok Yu Lane, Kowloon (“the Property”), movements in the directors’ account include expenses paid by directors that were charged to Gaylaw and drawings by directors.
	In your letter dated 18 January 2001, you claimed that the loan of $1 million to Gaylaw for the purchase of the Property was solely from you.  You have produced supporting document and voucher showing that the said amount was deposited to your saving account in HSBC No. 119-9-005958 on 8 August 1996 by Madam Ho Fung.  According to another voucher of Gaylaw, the advance by a director on 7 June 1996 of $240,000 was also debited from your account No. 119-9-005958.
	It appears from the above that the advance by directors for the purchase of Property of the total sum $1,250,000 in 1996 was deducted from your saving account.  However, such evidence might not be relevant in considering whether the Bankrupt has any share in the advance by directors to Gaylaw as at the date of the bankruptcy order because:
	1.	After the advance by directors of $1,250,000 to Gaylaw in 1996, there should be a lot of transactions going through the directors’ account up to the bankruptcy order dated of 14 August 2002.  For example, in the period from 1 April 1996 to 31 March 1997, my accountants have identified from available vouchers that there had been drawings from directors of $649,973.  The drawings reduced the amount due by Gaylaw to directors.
	2.	You and the Bankrupt are husband and wife.  Even if the advance was from your savings account, it does not mean that the bankrupt was not related to the advance.  For example, you claimed that $1 million was deposited to your bank account on 8 August 1996 by Madam Ho Fung but the promissory note on the same copy of the deposit slip shows that the loan of $1 million was advanced by Madam Ho Fung to the Bankrupt, instead of you.
	Based on the above, unless you can provide me with detailed movements of the directors’ account in Gaylaw from 1 April 1996 to the date of the bankruptcy order, i.e. 14 August 2000 and explain with supporting documents why the transaction were not related to the Bankrupt, I will consider that the Bankrupt is entitled to at least half of the interest in the directors’ advance to Gaylaw.
	I understand that the surplus from the sale of Gaylaw’s property at Flat A, 5/F, 99 Caine Road has been deposited into Gaylaw’s bank account.  I therefore demand you to remit the bank balance to me to settle the directors’ loan owed to the bankrupt within the next twenty-one days.			”
(c)	Instead of liaising with the OR, the Bankrupt and the Bankrupt’s wife took out the aforesaid application on 13 February 2003 to reverse or set aside the OR’s demand to remit the bank balance at Gaylaw.
(d)	Such application has not been pursued by the Bankrupt so far and I am also pessimistic about it.  My reasons appear below.
	(i)	The evidence filed by the Bankrupt’s wife and the Bankrupt’s mother are the same, namely: all monies were provided by the Bankrupt’s mother, though the Bankrupt’s wife, and then transferred to Gaylaw’s account.  However, the Bankrupt signed the “promissory notes” as guarantor only.
	(ii)	The Bankrupt admitted during the hearing that the “promissory notes” were made up by him for the purpose of such application.They were not true and contemporaneous documents.
	(iii)	The “new” version of facts is contradicting to the “old” version of facts of that Bankrupt’s wife – she lent HK$1 m loan to Gaylaw.
	(iv)	The “new” version of facts is also inconsistent with the depositions as per the Statement of Affairs by the Bankrupt – he owed a total sum of $3,343,000 to the Bankrupt’s mother as evidenced by the same promissory notes.
	(v)	Each promissory note was made up to support a loan from the Bankrupt’s mother to Gaylaw. However, there are 3 payment vouchers showing that monies were paid to the account of the Bankrupt’s mother, viz. page 85, page 87 and page 96 of the hearing bundle.
	(vi)	The OR wrote to the auditors of Gaylaw at the material time and it was confirmed that the loan was accumulated advances and “directors’ meant both the Bankrupt and the Bankrupt’s wife.  By the auditor’s letter of 8 July 2004, it was said:
	“	(1)	The amount due to directors in the sum of HK$936,804 at March 31, 2000 represented an accumulated advances from the directors.Please therefore refer to the book of accounts of Gaylaw for the breakdown.
		(2)	The names of the directors to whom Gaylaw owed money are Ip Kay Po and Ip Chiang Sun Ching.	”

Wei Wei

23. The Bankrupt disclosed that he was holding 40,000 shares in Wei Wei in his Statement of Affairs.  It was estimated to be in the sum of HK$288,000.00.  The original share certificate was surrendered to the OR on 29 August 2000.  Sometime in 2001, the other shareholder(s) of Wei Wei offered HK$40,000.00 for the shares.  The Bankrupt disagreed as he believed that the price was too low.  Not until the Bankrupt’s mother filed her evidence in the aforesaid application to reverse or set aside the OR’s demand to remit the bank balance at Gaylaw, she claimed beneficiary ownership of the shares.  She purported to produce evidence of her payment for the shares.

24. With respect, I could accept the “evidence”.  It is nothing more than a copy receipt dated 12 May 1981 purported to be signed by Wei Wei for HK$50,000.00.  However,

(a)	it was not stated on the receipt as to the purpose of the payment; and
(b)	the original payer of the money is the Bankrupt, but it was then (when?) crossed out (who?) and changed to the Bankrupt’s mother with 2 initials (who?).

There is no corroborative evidence produced to this Court, and the Bankrupt simply told me that it happened a long time ago and he probably forgot it when he filled in the Statement of Affairs.  I do not accept the case of the Bankrupt and the Bankrupt’s mother on balance of probabilities.

Failure to make contribution

25. It is trite law that, during the relevant period, all bankrupt shall use his best endeavous to earn to maintain a reasonable standard of living approved by the OR, thereby sparing monies to be distributed equally among his creditors.  The OR complained that:

“…… the expenditure proposed by him [the Bankrupt] was too high and took the view that there was room for him to make contribution to the bankruptcy estate for the benefits of creditors.  However, when the Official Receiver and Trustee tried to reach a compromise with the Bankrupt for a reasonable assessment of his expenditure, the Bankrupt was not co-operative and indicated that he would not agree with the Official Receiver and Trustee in any event …… (paragraph 44 of Report of the OR dated 16 July 2004)”

26. The Bankrupt did not attempt to dispute the above and simply maintained that he had a different view as to the “reasonableness” of his expenditure from the OR.  On balance, I agree to accept the case of the OR.

(a)	The Bankrupt was and is still a medical practitioner although he no longer has his own clinic.  His monthly income varies from about HK$16,000.00 to HK$41,000.00.  However, since his bankruptcy on 14 August 2000, he has not made any contribution to the estate from his monthly income.
(b)	The OR produced 5 monthly statements of income and expenditure completed by the Bankrupt from 1 January 2003 to 31 May 2003.It is observed that the monthly expenditure of the Bankrupt could be increased and deceased according to the rising and lowering of the corresponding monthly income.  To me, the Bankrupt was “maximizing” his expenditure in order to absorb all income he earned.
(c)	I agree with the OR that the family meal expenses were unreasonable since the sum of HK$3,000 had already been allowed for the daily expenses of the Bankrupt’s wife.  Further, in my view, storage charges ranging from HK$780 to HK$3,960, the school fees of HK$10,800 in January 2003 were not necessary to maintain the basic needs of the Bankrupt and his family.  In making these comments, I ask myself to bear in mind that a doctor should be expected to earn a respectable living, albeit he might have been adjudged bankrupt.  However, at the same time, one should balance it with the interests of the creditors who will be unable to get anything after the discharge.

27. Ms. Cheung further told me that the OR is contemplating to apply for a public examination of the Bankrupt under section 19 of the Ordinance and it cannot be done after the discharge of the Bankrupt.

The Law

28. I now turn to the applicable principle.  In assessing the appropriate period for suspension of the automatic discharge of the bankruptcy order, I bear in mind the underlying principle of such scheme as per paragraph 17.6 and 17.24 of the Law Reform Commissions Report on Bankruptcy (1995)

“	17.16	The introduction of automatic discharge should, with the objection system, have two-fold effect.  Firstly, bankrupts should have a greater incentive than at present to co-operate with the trustee, as failure to co-operate could result in the trustee objecting to a bankrupt’s discharge.  Secondly, the rehabilitation of a bankrupt from bankruptcy would be assured, subject to rehabilitation being delayed as a consequence of a bankrupt’s own failings.	”
“	17.24	The introduction of automatic discharge would shift the emphasis from discharge being a privilege to its being a right.This right, however, must be set alongside a bankrupt’s duty to co-operate with the trustee in the administration of the estate.If he fails to co-operate with the trustee after bankruptcy, or if a bankrupt’s conduct before bankruptcy was unsatisfactory, he should not be automatically discharged.	”

Further, useful guidance can be located in comment of Mrs. Justice Le Pichon (as she then was) in two authorities, viz: Re Hui Hing Kwok [1999] 3 HKC 683 and Re Li Tak Kong [2000] 3 HKC 360

“Rehabilitation is the sense of enabling the bankrupt to resume a normal life in society is a key, if not the key consideration.  It should only be delayed by bankrupt’s own failings ……”

“In exercising its discretion, the court would have regard to the scope and purposes of the statutory provisions conferring the discretion, the interests of commercial morality and the public interest.  Before a discharge was granted or permitted to occur, there should be an adequate investigation of a bankrupt’s conduct and affairs, and such investigation should generally be concluded.  It was incumbent on the bankrupt to make a full and frank disclosure and to proffer all pertinent information regarding his assets and financial dealings to the Official Receiver.  In seeking a discharge, the bankrupt had to show that he had taken all reasonable steps to ensure that his estate was available for distribution among his creditors and that the trustee was appraised of all relevant information; it was not good enough for him to adopt a purely passive or reactive role.  Where there had been concealment or lack of co-operation on the part of the bankrupt, it would not be unfair to delay his discharge.”

The Ruling

29. Having considered my findings and the above principles, I agree that the OR has satisfied me the grounds set out in section 30A(b), (c) and (d) of the Ordinance.  The Bankrupt was and is unwilling to co-operate with OR in the administration of his estate.  His conduct, before or after the commencement of the bankruptcy has been unsatisfactory and the discharge of him would prejudice the administration of the estate.  Perhaps, I should add one further point to show the difficulties that the OR might have faced.  Despite my repeated “reminders” to the Bankrupt during the hearings that the Judgment in CACV 75/2000 and the Bankruptcy Order made herein were binding and final against him, he spent almost two-thirds of his effort in both his evidence and oral submissions to persuade me that the Judgment in HCA 699/1992, the Judgment in CACV 75/2000 and the Bankruptcy Order were wrongly made.  He further said in his supplemental affidavit sworn on 4 October 2004 that:

“	2.	The Deputy Judge and the petitioner are parties to the corrupt dealings that led to the trial and Judgment of HCA 699/1992:
	2.1	Together they corruptly falsified the “Amended Statement of Claim” which has the tell-tale missing gap under the particulars of para 49 6 (4) between the entries for September 1991 and January 1992;
	2.2	Together they concealed the missing evidence for the falsified entry for Sept 1991 in the missing gap, ……
	2.3	They further concealed this missing gap from the original and Amended Statements to the Court, thus removing all clues to the petitioner’s falsification of the numbers;
	2.4	The Deputy Judge then corruptly quoted their private falsified “Amended Statement of Claim” under para 49 to support his findings:
	“	…that all the figures pleaded are supported by documentary evidence.Clearly, the Plaintiff has proved his case as pleaded.	”
	3.	The petitioner proceeded from these corrupt dealings to amend his petition without service to the Bankrupt and to obtain his Bankruptcy Order dated 14th August 2000.	”

30. I hear no mitigation from the Bankrupt.  In the alternative, I fail to see any applicable mitigating factor.  The Bankrupt was and is not co-operative.  It is very likely that he will not be co-operative.  He was not merely taking a purely passive or reactive role.  He was concealing the truth and went further to make up documents i.e. the promissory notes, to hide the truth.  He is not remorseful save that he lost in the proceedings.

31. In my view, the failings of the Bankrupt justify the delay of his rehabilitation.  His unsatisfactory conduct warrants a suspension of the maximum period.  Accordingly, I order that the automatic discharge of the Bankrupt be suspended for 4 years and that he shall not be discharged until 13 August 2008.

Costs

32. I have not heard from the parties on the question of costs.  However, I see no reason why costs should not follow the event.  I therefore make a costs order nisi, which will be made absolute within 14 days from today, that the costs of the OR incidental to and of this application is to be borne by the Bankrupt, to be taxed if not agreed.