FRED LEE AND ANOTHER v. TONG YUK KIN

HCB 22870/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 22870 OF 2002

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RE:  TONG YUK KIN, a bankrupt

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D E C I S I O N

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Background

1.  I have before me two applications taken out by the trustees in bankruptcy (the “Trustees”) against the bankrupt, Ms Tong.  In the first application, the Trustees seek an order under section 30A(3) of the Bankruptcy Ordinance, Cap 6, that the relevant period for the purposes of the section shall cease to run for such period as the Court deems fit.  In effect, the Trustees object to the automatic discharge of Ms Tong from bankruptcy upon expiration of the statutory period of four years.  In the second application, the Trustees seek an interim order suspending the discharge of Ms Tong pending the determination of the first application.  That application was consented to by Ms Tong.

2.  The sole ground of the Trustees’ objection is the statutory ground under section 30A(4)(d), i.e. that the conduct of Ms Tong in respect of the period before the commencement of the bankruptcy had been unsatisfactory.  The Trustees rely on the fact that six months before her bankruptcy, Ms Tong obtained a loan knowing that she was insolvent or would be unable to repay and obtained three other loans by grossly understating the extent of her financial problem.  Those facts are not disputed by Ms Tong, but Ms Tong offered an explanation.  The explanation was disbelieved by the Trustees who took the view that Ms Tong’s conduct amounted not only to excessive borrowing but abusive borrowing which would justify an order under section 30A(3).

3.  Section 30A(3) and the relevant part of section 30A(4) provide as follows:

“30A.	Discharge from bankruptcy
	(3)	Where the court is satisfied on the application of the trustee or one of the bankrupt’s creditors that a valid objection based on one or more of the grounds set out in subsection (4) has been made, the court may order that the relevant period under this section shall cease to run for such period, not exceeding, in the case of a person who –
		(a)	has not previously been adjudged bankrupt, 4 years; or
		(b)	has previously been adjudged bankrupt, 3 years, as may be specified in the order.
	(4)	The grounds on which an objection can be made to the discharge of a bankrupt under this section are as follows -
	…
		(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;
	…”

The legal issues raised in this application are what amounts to unsatisfactory pre-bankruptcy conduct for the purposes of section 30A(4)(d) and if unsatisfactory pre-bankruptcy conduct is proven, how should the court exercise its discretion in an application under section 30A(3).

The legislative background

4.  Before considering the two legal issues, it would be instructive to have an insight of the legislative history of the Bankruptcy Ordinance and to understand the legislative philosophy behind the Ordinance.  The former Bankruptcy Ordinance (Ordinance No 10 of 1931) came into force on 1 January 1932.  It was modelled on the then English Bankruptcy Act 1914 c 59.  Under the old regime, there was no provision for automatic discharge of a bankrupt.  A bankrupt had to apply for his discharge, but the criteria for discharge were extremely difficult to meet.

5.  The Ordinance was overhauled in 1996 following the recommendations of the Law Reform Commission of Hong Kong, Report on Bankruptcy (May 1995).  The present Ordinance was enacted in 1996 and came into effect on 1 April 1998.  It is largely based on the United Kingdom Insolvency Act 1986 plus some innovation from the Singaporean Bankruptcy Act 1995 and the Australian Bankruptcy Act 1966.  What is significant in the present Ordinance for the purpose of this application is the introduction of the ‘automatic discharge’ of a bankrupt after a relevant period, which is four years in the case of a person who has not previously been adjudged bankrupt or five years for a person who has been so adjudged previously.  This right of automatic discharge is subject to objection by the trustee in bankruptcy or any of the bankrupt’s creditors. 

6.  The philosophy behind this scheme of automatic discharge and objection has been succinctly stated in Law Reform Commission of Hong Kong, Report on Bankruptcy (May 1995) at paragraphs 17.16 and 17.24 as follows:

“17.16  We recommend the adoption of provisions that allow for the automatic discharge of a bankrupt three years after the date of the bankruptcy order coupled with a system of objections to discharge in the event of a bankrupt not meeting certain criteria.  The introduction of automatic discharge should, with the objection system, have a two-fold effect.  Firstly, bankrupts would 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.”

7.  The Law Reform Commission had considered the objection systems under the United Kingdom Insolvency Act 1986, the Australian Bankruptcy Act 1966 as amended by the Bankruptcy Amendment Act 1980 and the Australian Bankruptcy Amendment Act 1991.  It preferred the system under the Australian Bankruptcy Act 1966 as amended in 1980 with specific provisions for objection set out in general terms, which is the middle course between the other two systems.  Hence, the four grounds of objection under section 149(4) of Australian Bankruptcy Act 1966 as amended in 1980 found their way into section 30A(4)(a) to (d) of the current Bankruptcy Ordinance.

8.  As was noted by the Law Reform Commission, the new regime was designed to shift the emphasis from discharge as a privilege to discharge as of right subject to an objection system.  Adoption of the automatic discharge system in the law of insolvency reflects a radical change in the society’s attitude towards the bankrupt and a recognition by the society of the public interest in the bankrupt’s rehabilitation.  Instead of stigmatising a man as a bankrupt for an indefinite period during which he could have no inducement to exert himself in his trade or calling as he could have no hope of bettering his position and his family’s condition, the automatic discharge system allows him to start afresh after four years upon giving up the whole of his property.  He can resume a normal life, enjoy the fruit of his industry and contribute to the society.  In the exercise of its discretion under section 30A(3), the court must bear in mind this overriding intention of the legislature to rehabilitate rather than to punish the bankrupt and to allow the bankrupt to put the burden of his debt forever behind him.

Unsatisfactory pre-bankruptcy conduct - the interpretation

9.  Mr Chan, solicitor for the Trustees, argues that the ground under section 30A(4)(d) is phrased in very simple term and uses the word ‘unsatisfactory’ rather than any stronger language.  He submits that since bankruptcy involves ordinary people, that word should be given its natural and ordinary meaning which the layman could understand.  He referred to the following dicta of Kwan J in Lee Fred (trustee in bankruptcy of the property of Leung Chin Yeung) v Leung Chin Yeung & Ors [2007] 1 HKC 164 at paragraph 44:

“44.  It is the common submission of all three counsel that ‘unsatisfactory’ conduct of the bankrupt in s 30A(4)(d) connotes a broad and low jurisdictional threshold.  Although it is recognized in the LRC Report (at para 17.42) that the pre-bankruptcy behaviour of some bankrupts will effectively disqualify them from any chance of automatic discharge, Mr Bartlett submitted that pre-bankruptcy conduct should be of a significant magnitude or quality to justify suspension of the running of the relevant period.

45.  As mentioned earlier, a balanced view should be taken by the trustee in objecting to automatic discharge.  In a case involving excessive credit in which loans were obtained when the debtor should have known he would not be able to repay, where the bankrupt has been co-operative with the trustee and made voluntary contributions to the estate, and provided there is no other misconduct, I am inclined to think that the pre-bankruptcy conduct is not such as to warrant suspension of the running of the relevant period.”

Hence, Mr Chan submits that given the very broad and low threshold, the conduct could be unsatisfactory without being illegal or dishonest.  On the other hand, Mr Kenneth Chan, counsel for Ms Tong, relies on Kwan J’s dicta in paragraph 45 in support of his argument that if the bankrupt has been co-operative with the trustee, excessive credit does not amount to unsatisfactory conduct.

10.  In relation to Mr Kenneth Chan’s submission, Mr Chan draws a distinction between pre-bankruptcy conduct and post-bankruptcy conduct.  He submits that the section should be read disjunctively such that it is not a prerequisite that there must be misconduct both before and after commencement of bankruptcy before the ground may be invoked, but he concedes that the conduct must be some conduct which is relevant to a bankrupt’s insolvency.  I agree with that interpretation.  The use of the phrase “either in respect of the period before or the period after the commencement of the bankruptcy” admits of no other interpretation but a disjunctive one.  This ground was deliberately drafted in very general terms as preferred by the Law Reform Commission. 

11.  I do not think by the above dicta Kwan J was laying down any legal principle as to what is unsatisfactory conduct or that the pre-bankruptcy conduct could only be unsatisfactory if the bankrupt has not been co-operative with the trustee.  In Lee Fred (trustee in bankruptcy of the property of Leung Chin Yeung) v Leung Chin Yeung & Ors, counsel unanimously agreed that unsatisfactory conduct connotes a low and broad threshold and assumed that the bankrupts’ conduct was unsatisfactory.  The argument before the court was whether the court should exercise its discretion to suspend the running of the relevant period.  In my view, in considering an objection to automatic discharge, the proper approach is to consider whether the conduct complained of is unsatisfactory within the meaning of section 30A(4) and, if it is, whether the court should exercise its discretion under section 30A(3) to suspend the running of the relevant period.  The answers to the two questions involve consideration of different legal principles.  To apply legal principles governing the exercise of the court’s discretion under section 30A(3) in determining whether a conduct is unsatisfactory, or vice-versa, would be to confuse the issue.

12.  I also agree with Mr Chan that the word “conduct” must be given its ordinary and common sense meaning which in the context of bankruptcy must mean any conduct which is relevant or contributed to the bankrupt’s insolvency.  But, for the conduct to be caught under section 30A(4)(d), the conduct must be unsatisfactory.  What is unsatisfactory, depends on all the circumstances.  It is impossible to be specific as to what conduct would be unsatisfactory. 

13.  Pre-bankruptcy conduct as a ground of objection to discharge is not a new innovation under the current Bankruptcy Ordinance.  After recommending the system of objection, the Law Reform Commission said:

“17.42   We believe that these criteria should provide the trustee and the court with the ability to prevent the discharge of a bankrupt if discharge is not deserved.  The provision should also be sufficiently succinct for a bankrupt to understand his obligations to the trustee.  We recognise, however, that the pre-bankruptcy behaviour of some bankrupts will effectively disqualify them from any chance of automatic discharge after three years.”

The last sentence suggests that the Law Reform Commission considered some of the grounds of objection to absolute discharge under the then existing bankruptcy law could be regarded as unsatisfactory pre-bankruptcy conduct.  Under the old regime, a bankrupt was not entitled to an absolute order of discharge if he had committed any misdemeanour under section 129(1) of the old Bankruptcy Ordinance or any other indictable offences connected with his bankruptcy or if any of the twelve facts mentioned in section 30(4) of the old Bankruptcy Ordinance were proved against the bankrupt.  The old grounds of objection based on commission of offences and misdemeanour under section 129(1) of the old Ordinance or any other indictable offence connected with his bankruptcy have been re-enacted under the new section 30A(4)(g).  As for the twelve facts under the old section 30(4), they were:

(a)  that the bankrupt’s assets are not of a value equal to 50 per cent of his unsecured liabilities;

(b)  that the bankrupt has omitted to keep such books of accounts as are usual and proper in the business carried on by him;

(c)  that the bankrupt has continued to trade after knowing himself to be insolvent;

(d)  that the bankrupt has contracted any debt provable in bankruptcy without having at the time of contracting it any reasonable or probable ground of expectation of being able to pay it;

(e)  that the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities;

(f)  that the bankrupt has brought on or contributed to his bankruptcy by rash and hazardous speculations, unjustifiable extravagance in living, gambling, or culpable neglect of his business affairs;

(g)  that the bankrupt has put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action properly brought against him;

(h)  that the bankrupt has brought on or contributed to his bankruptcy by incurring unjustifiable expense by bringing a frivolous or vexatious action;

(i)  that the bankrupt has within three months preceding the date of the receiving order, when unable to pay his debts as they become due, given undue preference to any of his creditors;

(j)  that the bankrupt has within three months preceding the date of the receiving order incurred liabilities with a view to making his assets equal to 50 per cent of his unsecured liabilities;

(k)  that the bankrupt has on any previous occasion, whether in Hong Kong or elsewhere, been adjudged bankrupt or made a composition or arrangement with his creditors; and

(l)  that the bankrupt has been guilty of any fraud or fraudulent breach of trust.

Items (a), (j) and (k) are no longer relevant in the context of the current Bankruptcy Ordinance.  Items (c) and (l) have found their way into the new section 30A(4)(f) and (g).  The remaining seven facts fall within one of the following three categories: failing to keep books of accounts, explaining for loss of assets and giving undue preference to any creditors (items (b), (e) and (i)); incurring debt with no reasonable ground of being able to pay (item (d)) and incurring liabilities in an irrational manner (items (f), (g) and (h)).  All these facts under the old regime which entitled the court to refuse to make an absolute order of discharge could fairly be regarded as unsatisfactory pre-bankruptcy conducts under the new regime.  It should be noted that in some cases a valid objection could be raised without proof that the facts were committed by the bankrupt with knowledge of all the circumstances, just proof of the facts would suffice.  If a bankrupt committed any of those facts with the necessary mens reas, he would have been guilty of one of the bankruptcy offences under the Bankruptcy Ordinance.

14.  I think the facts listed in section 30(4) of the old Bankruptcy Ordinance are examples of the type of pre-bankruptcy conduct which could be regarded as unsatisfactory under the new regime.  In general, the conduct complained of must be some positive conduct related or contributed to the bankruptcy.  These include notably, contracting debts provable in bankruptcy while being insolvent or without any reasonable belief of being able to repay; indulging in hazardous speculation, gambling, extravagant living which is inappropriate to the station in life of the bankrupt; incurring liability in frivolous or vexatious litigation (by way of his own costs as well as the costs of the opponent for which the bankrupt becomes liable); incurring liability through culpable neglects; showing preference to any of his creditors and concealing or failing to account for assets available for distribution amongst his creditors.  The type of pre-bankruptcy conducts which could be regarded as unsatisfactory is incapable of definition.  The above is a list of examples, but the list is not exhaustive.

15.  However, the bankruptcy legislation is not to be considered as a clearing house for the liquidation of debts.  As was clearly put by the Law Reform Commission in paragraph 17.24 of its report, while the emphasis has now shifted to discharge as a right rather than as a privilege, this right is subject to the bankrupt observing his duty to co-operate with the trustee in the administration of the estate and to his conduct before bankruptcy being satisfactory.  Failure to recognise the second condition in the administration of bankrupt’s estate would defeat the purpose of rehabilitation under the scheme of automatic discharge and turn the new bankruptcy regime into a debt clearing house.  This danger was recognised by the Law Reform Commission in paragraph 17.25 of its report:

“17.25     The three year period for automatic discharge is a relatively short period of time and an unscrupulous person may consider it a reasonable proposition to defraud his creditors, suffer bankruptcy, and then emerge from bankruptcy free from liability for debts incurred before he was made bankrupt.  Cynical behaviour of this nature and more common failings, such as a bankrupt continuing to trade after knowing himself to be insolvent, should be open to more severe penalties.”

While the post-bankruptcy conduct in section 30A(4)(d) is intended to secure the bankrupt’s co-operation with the trustee, the pre-bankruptcy conduct in the section is intended to protect the integrity of the automatic discharge system and to prevent the bankruptcy regime from being abused.  The three year period was changed to four years when the legislation was passed, but the philosophy behind is still valid.  Of course, what the legislature intended might not be what the Law Reform Commission had in mind.  But there is nothing to suggest the legislature intended otherwise.

16.  Thus, while the purpose of bankruptcy is rehabilitative, rehabilitation could not be over-emphasised as to turn pre-bankruptcy conduct in section 30A(4)(d) into a dead letter.  I think, in general, the society is prepared to condone most of the conducts which are related or contributed to the bankruptcy under the overriding consideration of rehabilitation, but there are some conducts which the society is not prepared so to condone without expressing disapproval.  This is where the line is to be drawn as to what conducts are unsatisfactory and what conducts are not.  At the one extreme end of the spectrum are conducts which are clearly unforgivable or even criminal.  Preference over some creditors to the prejudice of the general pool of creditors, even if not fraudulent, is unforgivable and deserves some form of punishment to mark the society’s disapproval of such conduct.  Concealing assets or putting one’s asset out of reach of the trustee in preparation for bankruptcy is not forgivable.  Such conducts amount to abuse of the bankruptcy regime which the society would not condone.  Those conducts if committed with the necessary intent are criminal.  In general, conducts which amount to fraud are also unforgivable.  At the other end of the spectrum are conducts which, though related or contributed to the bankruptcy, arose out of poor judgment, misfortune, supervening events and circumstances beyond the control of the bankrupt for which the bankrupt ought fairly be excused rather than forgiven.  Those conducts are clearly not unsatisfactory.  In between those extremities are conducts which arose out of a mixture of those factors and perhaps coupled with human weakness, indulgence, rashness, recklessness, and irrational decisions which may or may not be forgiven.  Thus, while conduct resulting in genuine business loss due to poor judgment, misfortune or unforeseeable events are generally not regarded as unsatisfactory, conduct resulting in loss which is the result of excessive speculation or irresponsible assumption of risk might be unsatisfactory because society has to bear the financial consequence of the bankrupt’s irresponsible conduct.  But even then, some allowance ought to be given as speculation has become part of everyday life.  Calculated risk which turned out to be far greater than expected could be the result of poor judgment and may also be forgiven if the taking of the risk is not inappropriate to one’s means or which are not unduly hazardous.  Business loss should also be distinguished from consumer credits.  The former is more likely to be forgivable, while the latter is less likely to be so.  In the majority of cases, the court should not indulge itself in conducting too detailed a post mortem analysis of the conduct which contributed to the insolvency.  It should always assume that the bankrupt’s conduct was not unsatisfactory.  I think, in this regard, the threshold is very high rather than very low and broad. 

17.  Ultimately, the question of whether the conduct is unsatisfactory is whether the conduct is one which the society is prepared to condone without expressing disapproval.  This question is to be answered by the reasonable man’s test.  This hypothetical reasonable man has to bear in mind the overriding purpose of rehabilitation.  He has to take into account whether the debt is a business debt or consumer credit and consider the reasons for which the debt was incurred, the amount of the debt as compared with the bankrupt’s means and station in life, the blameworthiness of the bankrupt and all the circumstances in which the debt arose.  In addition, the reasonable man has to take into account human nature, its weakness, its readiness to indulge in extravagant spending and its readiness to engage in speculation and assumption of risk.  In the end, this is a question of fact for the reasonable member of the society.

Discretion under section 30A of the Bankruptcy Ordinance

18.  I now turn to examine the legal principles governing the exercise of the court’s discretion under section 30A(3) of the Bankruptcy Ordinance.  Under that section, if the trustee or the bankrupt’s creditors are able to prove to the satisfaction of the court any of the grounds of objection in section 30A(4), the court has discretion to order the relevant period to stop running for such period not exceeding four years in the case of a person who has not previously been adjudged bankrupt or not exceeding three years in the case of a person who has been so adjudged previously. 

19.  In Lee Fred (trustee in bankruptcy of the property of Leung Chin Yeung) v Leung Chin Yeung & Ors, Kwan J held at paragraph 37:

“37.  In considering the objection to automatic discharge, the public interest and the demands of commercial morality underpinning the bankruptcy laws must be weighed together with the interests of the bankrupt and his creditors (Totterdell v Nelson (1990) 97 ALR 341 at 343 to 344; Re Maher & Anor (1985) 61 ALR 592 at 598; Fletcher’s Law of Insolvency (3^rd Ed), para 11-012).  An application to object to discharge is never treated lightly by the court, it involves looking beyond the interests of the bankrupt and his creditors.  The exercise of the discretion was described in this manner by Smithers J of the Federal Court of Australia, General Division, Bankruptcy District of the State of Victoria in Re Zion; ex p: The bankrupt, unreported, 26 September 1986, at para 6:

‘In my view it is the policy of the law that bankruptcy should in most cases come to an end at three years and when there is an objection at the end of five years from the decree for sequestration of the estate, but that in a case where public interest so requires the discharge may be delayed or made conditional according to the requirements of the public interest in the circumstances of the case.  Public interest will require that a discharge be delayed or made conditional if the conduct revealed or the character of the bankrupt indicates that the return of the bankrupt to the commercial world in full freedom might involve unacceptable risk to persons likely to be engaged in commercial relations with him in the future.  In other words, it is for the applicant to show that balancing the policy of the law in favour of the return to commercial life of a bankrupt against the dangers that might accrue to the public from full commercial capacity of the applicant, it is appropriate that the discharge be granted.’ ”

I fully agree with Kwan J’s very cautious approach in considering an objection to automatic discharge.  But I think the risk to the commercial community is but one element of public interest to be considered and not the sole or determinant element. 

20.  There are other elements of public interest which the court must take into account in the exercise of its discretion.  One important element of public interest is that the bankruptcy regime should not be abused by being treated as a convenient debt clearing house, which I have already referred to above.  Another element is the need to preserve commercial morality.  Ready access to credit is the linchpin of a vibrant and dynamic economy.  Entrepreneurs and consumers alike rely heavily on credits.  Lending institutions lend on the basis of the information supplied to them by the borrowers.  Some of the information is impossible to verify.  Lending institutions rely heavily on the good faith of the borrowers in providing true answers to their questions which form the basis for approving the loan applications.  If this system is abused, borrowing would become more expensive to price in bad debts and would be tightened to minimise risk exposure.  This would not benefit the society and its economy as a whole.  In the case quoted above, Kwan J recognised misrepresentation in an application for credit could be a serious misconduct.  She said at paragraph 46:

“46.  Misrepresentation in an application for credit could be a serious matter.  If there is intention to defraud, this would constitute a criminal offence under the Theft Ordinance (Cap 210).  In Re Palenkas; ex p Raymor (Brisbane) Pty Ltd (1982) 66 FLR 115, the Federal Court of Australia held that fraudulent misrepresentations as to the debtor’s assets for the purpose of obtaining a loan could be unsatisfactory conduct so that leave should be given to the creditor to enter an objection to automatic discharge.” 

I think conduct involving fraud or misrepresentation in applying for credit which contributed to bankruptcy would invariably result in an abuse of the bankruptcy regime.  Save in exceptional cases, the court’s discretion should be exercised against bankrupts whose bankruptcy was related or contributed to by such conduct. 

21.  Thus, in the exercise of its discretion under section 30A(3), the court should take a balanced view.  It should balance the interest of the bankrupt, the interest of his creditors, the public interest in the bankrupt’s rehabilitation and the demands of commercial morality underpinning the bankruptcy laws.   It should take into consideration all the circumstances leading to the bankruptcy and not just the conduct complained of.  It should consider the seriousness of the conduct, the bankrupt’s conduct after the commencement of bankruptcy, the degree of co-operation he has shown with the trustee during the relevant period and the effort he has contributed to repaying his debt.  In an appropriate case, the court should consider the risk to the commercial community should the bankrupt be allowed to resume full commercial activity.  The discretion to suspend the running of the relevant period should not be lightly exercised.  But in its balancing exercise, the court should not allow the bankruptcy regime to be abused.

22.  As for the period of suspension, the court should bear in mind the overriding policy of the law is rehabilitation.  Any period of suspension should be minimal to enable the bankrupt to return to his normal life as soon as possible.  The purpose of suspension is also rehabilitative and solely to mark society’s disapproval of the type of unsatisfactory conduct but no more.  It is not to be used as a means of extracting more contribution from the bankrupt for distribution to his creditors.  The court should not be unduly concerned about the amount of the debt.  The period of suspension should reflect the seriousness of the conduct which the court has found to be unsatisfactory.  The court should also take into account the personal circumstances of the bankrupt, such as his age and family needs.

The background and the conduct complained of

23.  The Trustees’ complaint of unsatisfactory conduct is that Ms Tong applied for the last loan when she knew she was insolvent or had no means to repay and she grossly understated her financial ability when she applied for another three loans during a period of three months and within five months before filing petition for her own bankruptcy.  The Trustees filed four affirmations in support of the objection to Ms Tong’s automatic discharge from bankruptcy.  Ms Tong filed two affirmations to explain the circumstances of her loan applications.  The Trustees dispute Ms Tong’s assertions in her affirmations but have made no application to cross-examine Ms Tong on her affirmations.  The point which necessarily arises is how should the Court resolve the factual disputes raised in the affirmations.  Mr Chan submits that I should approach the affirmations as if in an Order 14 application and to find Ms Tong’s explanations incredible.  I respectfully disagree.  Enough has been said that the court shall not conduct a mini-trial on affidavit evidence where there are material factual disputes.  As the Trustees have seen fit not to apply for Ms Tong to be cross-examined on her affirmations, I shall accept Ms Tong’s affirmations on their face value, except where they are inconsistent with incontrovertible facts.

24.  Ms Tong is now fifty-seven years old.  She is married and has three adult children aged between twenty-two and twenty-eight.  She is a primary school teacher teaching Chinese and physical education.  She earns about $24,000 a month.  Her husband is a part-time security guard whose income is unstable.  She filed petition for her own bankruptcy on 6 November 2002.  A bankruptcy order was made against her on 27 January 2003.  She has not been previously adjudged bankrupt.  In the absence of objection from the Trustees or from any of her creditors, she would have been automatically discharged on 27 January 2007.

25.  As of the date of the bankruptcy order, twenty-six proofs of debts for the total amount of $1,459,367.13 had been filed against Ms Tong.  Ms Tong and her husband jointly owned two properties, one in Fortress Metro Tower (the “Fortress Property”) and one in Sunway Gardens (the “Sunway Property”).  The Fortress Property was purchased in July 1987 with a mortgage which was subsequently paid up.  According to the Trustees, Ms Tong and her husband pledged the Fortress Property as security for a mortgage loan from Hang Seng Bank Limited in July 2000.  But according to Ms Tong, she mortgaged the Fortress Property in 1996.  I think Ms Tong’s version is inherently incredible (see paragraph 29 below).  In February 1997, Ms Tong and her husband purchased the Sunway Property from her father-in-law for $1,000,000.  The purchase was financed by a mortgage from Hang Seng Bank Limited and a second mortgage from Rich Prosper Limited.  Subsequent to the bankruptcy order, Hang Seng Bank Limited exercised its power of sale and sold the two properties in June and August 2003 resulting in a shortfall of $277,035.24.  Excluding the shortfall, Ms Tong’s unsecured debts totalled $1,182,331.89.  This was made up of a debt of $432,616 under the thirteen loans owed to eleven banks or lending institutions.  The balance of $749,715.89 was owed under the twenty-six credit card accounts.  From April 2003 to November 2006, Ms Tong contributed a total of $117,355 to her estate.  Her last monthly contribution was $4,415.

26.  Of the thirteen loans, five were term loans with monthly repayment schedule, five were revolving loans or overdrafts and three were of unknown nature.  The particulars of those thirteen loans in chronological order are as follows:

Creditor	Loan Date	Principal	Monthly installment	Tenor (months)	Proved Debt
Pacific*	26.7.2002	$50,000	$1,758	36	$48,687
HSBC	2.7.2002				$41,501
SHK*	21.6.2002	$40,000	$4,139	12	$16,153
UA	20.6.2002	$5,000 #		24	$5,238
UA*	14.5.2002	$50,000	$3,791	18	$48,023
JCG*	18.4.2002	$40,000	$3,829	12	$20,990
HSBC	11.10.2001				$11,365
Citic	26.9.2001	$32,000	$1,289	36	$24,341
Asia	14.5.2001				$50,149
AEB	1.12.1999	$30,000 #			$21,077
Citibank	24.8.1998	$50,000 #			$51,659
Dah Sing	11.8.1998	#			$27,354
Hang Seng	2.3.1998	$65,000 #			$66,079
Total:			$14,806		$432,616

*   Loans complained of by the Trustees

#   Revolving loan or overdraft

27.  The Trustees’ complaint of unsatisfactory conduct must be considered against the background that at the time Ms Tong already had seven other loans totalling $252,024, twenty-six credit card debts of about $750,000 and three mortgages with monthly instalments in the total sum of about $14,000.  Ms Tong’s credit card debts would probably have been be less after discounting for the interest accruing since 18 April 2002, but not significantly less, say $745,000.

28.  Ms Tong’s general explanation for her indebtedness as disclosed in her answer to a standard questionnaire of the Official Receiver was that she had to repay mortgages for the two properties, she was unable to rent or sell the properties and her debts accumulated to such a level that she could not handle.  In further answer to the Trustees’ inquiry, Ms Tong explained that she mortgaged her Fortress Property in 1996 in order to purchase her father-in-law’s Sunway Property.  Her father-in-law had promised to distribute the proceeds of sale of the Sunway Property to his two sons, but did not honour his promise.  Hence, she was fixed with the burden of having to repay mortgages for the two properties.  She further explained the difficulties she had in renting or selling the properties because of the downturn in the property market and financial crisis in 1997, etc.  I accept her explanation about the downturn in the property market and financial crisis, but not her reason for the mortgage of the Fortress Property. 

29.  According to her Statement of Affairs, the Sunway Property was subject to a mortgage in favour of Hang Seng Bank Limited with a balance of $944,548.36 and a second mortgage in favour of Rich Prosper Limited with a balance of $74,124.  The Sunway Property was purchased in February 1997 at $1,000,000.  Thus the purchase of the Sunway Property was fully financed by the two mortgages over that property.  Her explanation that she had to mortgage the Fortress Property to finance the purchase of the Sunway Property simply could not be true.  Furthermore, according to the Trustees, the Fortress Property was mortgaged in July 2000, three and half years after Ms Tong purchased the Sunway Property.  The outstanding mortgage of the Fortress Property was $1,318,430.  If the mortgage of the Fortress Property was indeed used to finance the purchase of the Sunway Property, there was no need for mortgaging the Sunway Property.  The overwhelming evidence is that the mortgage of the Fortress Property was raised in July 2000 for some other purposes.  While how Ms Tong wished to spend her money was her prerogative and not a matter I need to be concerned, the fact is that that part of her explanation is incapable of belief and she had disposed of about $1.3 million in July 2000, which is unaccounted for.  I am not suggesting that she was defrauding any of her creditors or had committed any bankruptcy offences or that there was anything sinister with her false explanation.  The money might have been unwisely spent, or spent for a good cause, or lost under circumstances in which Ms Tong ought fairly be excused or forgiven.  But if it was spent for a good cause or for whatever cause, she has not told me.  There is no suggestion that the indebtedness was caused by business loss.  I am, therefore, bound to reject her evidence that she was unwittingly burdened with a mortgage over the Fortress Property and another two mortgages over the Sunway Property.  The fact remains that she had disposed of about $1.3 million in July 2000 under unexplained circumstances in addition to her various other indebtedness.  That is something I have to take into account in assessing her pre-bankruptcy conduct.

30.  Against the above background, I now turn to consider the Trustees’ objections.

The Pacific loan

31.  Ms Tong applied for a loan of $50,000 from Pacific Finance (Hong Kong) Limited (“Pacific”) on 26 July 2002.  That was the last loan she applied for and obtained before petitioning for her own bankruptcy about three months afterwards.  At the time, she had three mortgages to pay, twenty-six credit card debts of about $745,000 and twelve other loans totalling $383,929.  She had to pay about $8,300 in respect of the mortgage over the Fortress Property and another unspecified amount, say about $6,000, in respect of the two mortgages over the Sunway Property.  She had to pay the minimum payment of 3% of all her credit card debts, which would be $22,350.  She had to pay a monthly instalment of $13,048 in respect of four other loans for which monthly instalments had to be paid.  The other five overdrafts and revolving loans totalling $171,407 could be kept rolling by payment of interest and re-borrowing.  Even at the interest rate of 1% per month, the interest payment for those five overdrafts and revolving loans were about $1,714.  She had another three loans of unknown nature totalling $103,015.  Assuming for her benefit that she was only required to pay 1% per month by way of interest to service those three loans, she needed another $1,030.  Altogether Ms Tong needed $52,442 per month just to service her various loans and mortgages.  The Trustees came up with a considerably less figure of $30,724 because they failed to include the two mortgage payments for the Sunway Property and miscalculated the minimum amount payable for the credit card debts.

32.  At the time, Ms Tong was earning less than $24,000 as a teacher.  She claimed that she could earn $3,000 to $4,000 per month by giving private tuition.  The fact was she had never done so before she contracted that loan and she allowed her debts to grow.  The fact also remained that she never took up any private tuition after obtaining that loan.  I do not think taking up tuition to pay for her debt was what she genuinely intended to do at the time she applied for that loan.  Ms Tong claimed that there was a prospect that her husband could find employment.  Even if he could, their combined income would still have been insufficient to provide for the family expenditure and at the same time to service the loans assuming what was needed was just $30,724 as suggested by the Trustees and not $52,442 as I estimated.  Ms Tong also claimed that she could have actualised her Education Department Provident Fund which was in excess of $150,000 by resigning from her present employment and then taking up new employment at starting point salary.  That would not be a wise move.  That apart, she never resigned and it is obvious that she never intended to use her provident fund to repay her debt or to service the loans.  Ms Tong’s argument is thin in water. 

33.  Against the above background, the inference that could reasonably be drawn is that Ms Tong was prepared to work no harder to repay her debts or to service her loans but was happy to maintain her life-style by borrowing, allow herself to suffer bankruptcy and then emerge from bankruptcy free from liability for all her debts.  However, applying the reasonable man’s test, in particular taking into account the weakness of human nature and the tendency to seek new loans to cover old loans at times of stress, I do not consider this conduct in isolation unsatisfactory.

The JCG loan

34.  On 18 April 2002, Ms Tong applied for a loan of $40,000 from JCG Finance Company, Limited (“JCG”).  The Trustees’ complaint is that Ms Tong misrepresented her financial position when making the loan application. 

35.  According to Ms Tong, she happened to pass by the booth of JCG at an MTR station.  A customer services officer asked her if she needed financial facilities and she replied in the positive.  There were a few people queuing behind her applying for loans.  The officer helped her to fill in the loan application form.  The officer asked her about the credit facilities and loans which Ms Tong had applied for.  Ms Tong replied that she had two mortgages from Hang Seng Bank Limited to repay and had borrowed loans from Citibank (Hong Kong) Limited to refurnish her home.  Ms Tong did not remember whether she had told the officer about her other loans but she did mention that she had applied for loans from several banks and finance companies but were unsuccessful.  Ms Tong also told the officer that she had a lot of credit cards but did not know the exact number and the respective credit limits of the cards unless she went home to check.  The officer then asked Ms Tong to give a few examples.  Ms Tong told the officer about her Hang Seng Bank Limited credit card and Citibank (Hong Kong) Limited credit card.  In answer to the Trustees’ enquiries, Ms Tong admitted that she had read the loan application form before signing it.

36.  As I have already indicated, since the application was heard on the basis of affirmation evidence, I accept the circumstances under which Ms Tong applied for the loan were as stated in her affirmations as summarised above.  The circumstances were that she passed by the JCG booth in the MTR station and was lured into making the loan application.  The processing took a short time during which she was asked questions by the officer and Ms Tong answered.  In particular, the officer merely asked Ms Tong to provide just some examples of her credit cards.  Nevertheless, she admitted to the Trustees that she had read the loan application form before she signed it, even though that was done in a hurry.

37.  Ms Tong denied that she misrepresented her financial position when she made the JCG application.  Her argument is basically that she did what the officer told her and answered whatever questions she was asked.  But, even on her own case, she lied about her three mortgages.  She only disclosed two.

38.  On the application form is recorded the following question and her answer:

“Question:       

Have you ever applied for any credit facility/loan from any bank/finance company?  閣下是否在任何銀行/財務公司有信用貸款？

Answer:

在CIS Check到在17-04-2002在Promise申請，但客取消了，在16-04-2002在港基申請，亦取消了，15-04-2002客忘了申請之公司名字，但同樣申請未有成功，在08-04-2002在道亨之申請亦被客本人取消。”

Mr Kenneth Chan submits that the above answer is the best evidence that Ms Tong was frank in disclosing her indebtedness, especially in disclosing that her other loan applications had been rejected by other lending institutions which would have put JCG on guard.  With respect to the ingenuity of that submission, I find the situation was otherwise. On the loan application form, Ms Tong was asked in simple English and Chinese, if she had ever applied for credit facilities from other banks or finance companies.  At the time, she had seven other loans.  She chose to disclose none of those, but her unsuccessful or abandoned loan applications.  Ms Tong was making a loan application, in respect of which she was very experienced.  She must have known, given her age and experience in life, that her financial burden or her other operative loans were the material considerations in her loan application and not her unsuccessful loans for which she had no financial burden.  Similarly, she had twenty-six credit card accounts with debts totalling about $745,000.  Yet, she chose to give two examples at the officer’s request.  She knew the magnitude of her credit card debts.  She must have known that had she disclosed the number of credit cards and the amount of outstanding debt, her application would have been rejected. 

39.  Furthermore, Ms Tong admitted that she had read the loan application form before she signed it.  On the loan application form was written the following:

“The undersigned, having applied to JCG Finance Company, Limited (hereinafter called the Company) for a loan HK$40,000, for the purpose of having his/her/their ability to repay the same and including the Company to make the said loan, hereby acknowledges that the Company in making the said loan will rely on the above information which the undersigned declares to be true and also acknowledges that such information shall be the basis on which the said loan shall be made.  …

(意譯: 本人現向日本信用保証財務有限公司申請貸款40000元，以上各項資料均屬詳實，…)”

Thus, when Ms Tong signed the loan application form, she declared that the information she gave were true and acknowledged that JCG would rely on the information which would form the basis on which the loan application would be considered.  The Chinese version of that clause was much simplified, but was nevertheless unequivocal in that the signatory confirmed that the information on the loan application form was both comprehensive and correct (「詳實」).

40.  This is a classic case where what was undisclosed makes what was disclosed a misrepresentation of the truth.  I am satisfied that Ms Tong knowingly misrepresented her financial ability when she applied for the JCG loan.  Since that conduct contributed to her bankruptcy and involved misrepresentation, it clearly was unsatisfactory.  Furthermore, the facts of that loan application show that Ms Tong was a very impulsive borrower.  She readily submitted to temptation for easy money regardless of her financial ability to repay.

The UA loan

41.  On 14 May 2002, Ms Tong applied for a loan of $50,000 from United Asia Finance Limited (“UA”).  The Trustees complained that Ms Tong misrepresented her financial ability in the loan application.

42.  Ms Tong’s explanation is that at the time she saw a loan advertisement by UA about easy loan application and easy approval.  She went to the office of UA and was received by a male staff who filled in the loan application form for her.  She told the staff that she was borrowing money for the university fees for her younger son who was studying at the Hong Kong Polytechnic University.  The staff asked Ms Tong whether she had applied for other loans.  She told the staff that she had borrowed from several banks, finance companies and from many credit card facilities.  The staff asked her to give one example and Ms Tong told him about the mortgage with Hang Seng Bank Limited.  She told the staff that she had financial difficulties and the staff said he would try his best to help her.  The whole application took five to ten minutes.  She obtained the loan on the same day.  She said that UA was engaging aggressive marketing and the staff was not interested in knowing her financial situation, selectively recorded some of her answers and did not have the patience to fill in all the details of what she said.  Nevertheless, she admitted that she had read the loan application form before signing it.

43.  The loan application form contained the following declaration just above the space where Ms Tong put down her signature:

“The undersigned(s) in support of the application in UNITED ASIA FINANCE LIMITED (hereinafter called the “Company”) for the loan facilities stated hereinabove hereby acknowledge(s), agree(s) and state(s) as follows:

1.  All data and information stated in this application are true, accurate and complete.  These data and information are provided on a voluntary basis for the purpose of enabling the Company to consider this application in light of my/our personal and financial background.”

就下署人向亞洲聯合財務有限公司 (以下簡稱「貴公司」) 所作出的上述貸款申請，下署人謹此確認、同意、並陳述如下：

1.  本申請書所載一切數據及資料均屬真實、正確、及完整。此等數據及資料乃以自願方式提供，好使貴公司得以根據本人/吾等的個人和財務背景而審議此項申請。”

This declaration is an unequivocal acknowledgement that Ms Tong warranted that the information she provided on the loan application form was true, accurate and complete and that she knew the information formed the basis of UA’s consideration of her loan application.  In the loan application form, she was asked if she had applied for any credit facilities or loan from any bank or finance company.  She mentioned only the mortgage in respect of the Fortress Property and stated that the mortgage was to be repaid by her husband.  That information was untrue and Ms Tong knew it was untrue.  Not only that it was Ms Tong who paid the mortgage over the Fortress Property, at the time she had to pay two other mortgages over the Sunway Property.  She was also required to service eight other loans totalling $273,014 and credit card debts totalling about $745,000 by making minimum payment.  For the same reason as I gave in respect of the JCG loan application, what was not disclosed made what was said false and misleading.  What was recorded on the loan application form was a gross understatement of Ms Tong’s financial problem.  Thus, even assuming that UA was engaging in aggressive marketing and that the staff was not interested in writing down all the information she provided, Ms Tong knew the information on the loan application form filled in by the staff was so incomprehensive as to be misleading and understated her financial problem.  She knew the information formed the basis of UA’s consideration of her application.  She must have known that if UA had known of her true financial position, no matter how aggressive its marketing policy was, UA would not have granted her the loan.

44.  The surrounding circumstances show that Ms Tong never realised the seriousness of her financial problem.  She was still looking for easy loans.  Given her indebtedness at the time, she must have known that she did not even have the means to service her indebtedness, not to mention repaying them.  She must have known that there was no way she could repay the loan she was applying.  She knew she was providing misleading information to UA in her loan application.  Such conduct was certainly unsatisfactory. 

The SHK loan

45.  On 21 June 2002, Ms Tong applied for a loan of $40,000 from SHK Finance Limited (“SHK”).  Again, the Trustees complained that Ms Tong obtained the loan by providing misleading information about her financial ability. 

46.  Ms Tong’s explanation is essentially similar to the one she gave in respect of the UA loan application.  She saw a similar loan advertisement by SHK about easy loan application and easy approval.  She went to the office of SHK and was received by a male staff who filled in the loan application form for her.  The staff only asked her to give a few examples of her borrowing and credit card facilities.  She told the staff about a monthly mortgage instalment of $3,383 and a monthly instalment of $3,829 for the JCG loan.  The reason for the loan application she gave to SHK was that the Fortress Property had been mortgaged to Wing Heng Bank Limited and she wanted to transfer the mortgage to Hang Seng Bank Limited because of the lower interest rate.  Hence, she needed bridging finance from SHK to pay off Wing Heng Bank Limited.  Ms Tong admitted that she had read the loan application form before she signed it.  The loan application form contained a declaration which is identical to the one in the UA loan application form.  She also blamed SHK for adopting an aggressive marketing policy and its staff for being not interested in recording down all the information she gave.

47.  For the same reason as I gave in respect of the UA loan application, even if I accept that SHK was adopting an aggressive marketing policy and its staff was not interested in recording all the information provided by Ms Tong, when Ms Tong signed the loan application form she knew that she warranted that the information on the loan application form was true, accurate and complete and she knew that SHK would rely on the information in deciding whether to approve her loan application.  For the same reason as I gave in respect of the UA loan application, Ms Tong knew the information on the loan application form was so incomplete as to be misleading and as to grossly understate her financial problem.  The reason she gave for applying for the loan was utterly untrue because the Fortress Property had all along been mortgaged with Hang Seng Bank Limited since June 2000.  Even on her own case, she deliberately misled SHK.

48.  The factual circumstances surrounding that loan application were appalling.  Again, on her own admission, Ms Tong was looking for easy loan.  She gave false information in her loan application form.  She had three mortgages to repay, but she only disclosed one.  She had ten outstanding loans totalling $326,275.  She only disclosed the JCG loan.  She had twenty-six credit card debts totalling about $745,000 which she did not disclose.  She grossly understated her financial problem.  The amount of indebtedness she disclosed was insignificant compared with her total indebtedness at the time and she gave a false reason for her loan application.  She must have known that had she disclosed the true picture, her loan application would not have been approved.  She now put her blame on SHK for adopting an aggressive marketing policy and its staff for deliberately turning a deaf ear, when on her own evidence she was even lying about her mortgages and about the reason for the loan application.  Her conduct was unsatisfactory and appalling.

The discretion to be exercised

49.  I am satisfied that the Trustees have proved Ms Tong’s conduct in relation to the UA, JCG and SHK loan applications were unsatisfactory.  Those three loans totalled $130,000, not in any way significant in view of Ms Tong’s overall indebtedness.  Mr Kenneth Chan has repeatedly tried to impress upon me that Ms Tong’s case is a case of excessive credit only and she has been co-operative with the Trustees.

50.  However, at the time of each loan application, there was no doubt that Ms Tong knew she was insolvent and had no means to repay the loans.  She did not even have the means to service the then outstanding loans by making minimum payments.  She knowingly and grossly understated her financial problem and grossly misrepresented her financial ability to repay.  She must have known it was on the strength of her misrepresentation that the lending institutions granted her the loans.  Her conduct was grossly irresponsible. 

51.  Ms Tong’s debts were not business debts.  I have rejected her explanation that she had to mortgage the Fortress Property to finance the purchase of the Sunway Property as the purchase of the Sunway Property was fully financed.  She failed to account for how the $1.3 million which she obtained by the mortgage over the Fortress Property was dissipated.  She incurred unexplained credit card debts totalling about $745,000.  Had she not incurred the twenty-six credit card debts and the thirteen loans, she could have adequate funds to pay for all the mortgages and reasonable expenses for the family even if her husband was unemployed.  Even excluding the shortfall arising out of the mortgage of the Sunway Property, Ms Tong’s debts amounted to about eight and half times her annual income.  The inference is that she must have incurred the debts by extravagant consumer spending which is inappropriate to her station in life. 

52.  Ms Tong had no insight to her financial problem and took a casual attitude towards her indebtedness.  She readily applied for loans.  She applied for loan every month between April and July 2002, the last loan being about three months prior to filing her bankruptcy petition.  She applied for a loan when she happened to walk past the booth of JCG in the MTR station.  She went to the offices of UA and SHK to apply for loan on seeing advertisements about easy loan application and easy approval.  She never directed her mind to the question of whether she could repay the loans.  Now, she even blamed the lending institutions for their aggressive marketing policy and their staff for not putting down all the information she provided on her loan application forms.  She argued that she would take up tuition to make extra money to repay the debts, but she had never actually worked any harder before or after obtaining the loans for the purpose of repaying her debts.  She was an impulsive, addicted and irresponsible borrower.  She had no insight to her financial problem, her extravagant spending and borrowing habits.  The explanation she now proffered shows that the four years in bankruptcy have not instilled in her any sense of responsibility for her own financial affairs. 

53.  Ms Tong engaged in a series of misconducts involving the use of misleading information in her loan applications.  Ms Tong was abusing the bankruptcy regime as if it were a debt clearing house for her.  In view of her age and the fact that it is unlikely that she would be engaged in business, the risk she would pose to the commercial community is low.  Having regard to the nature and gravity of her pre-bankruptcy conduct, her lack of insight then and now after four years and having balanced all the relevant considerations I mentioned in paragraph 20 above, I consider it appropriate to exercise my discretion under section 30A(3) of the Bankruptcy Ordinance against Ms Tong.

54.  This discretion is not exercised lightly.  I am mindful of the decision in Lee Fred (trustee in bankruptcy of the property of Leung Chin Yeung) v Leung Chin Yeung & Ors which is heavily relied on by Mr Kenneth Chan.  If I do not distinguish Ms Tong’s case from that case, Ms Tong would be left with some sense of grievance.  In that case, the bankrupt in HCB No 8779 of 2002 failed to mention one outstanding loan in his loan application.  In HCB No 8989 of 2002, the bankrupt failed to mention two outstanding loans.  In HCB No 9461 of 2002, the bankrupt had a long borrowing history with JCG of close to ten years and the staff had known him as an old customer.  He told the staff that his previous loans were more or less the same and he left it to the staff to complete the loan application form for him.  Fourteen loans and overdrafts had not been declared.  Kwan J held that those matters required investigation and rightly so.  In other words, in the absence of contrary evidence from the trustee, it was proper for Kwan J to accept what the bankrupt said at face value.  In the present case, I am able to make adverse finding of fact against Ms Tong based on her own admissions in her affirmations and on the loan application forms.  Ms Tong’s case is beyond compare.

55.  As for the period of suspension, I bear in mind the overriding policy of the law is rehabilitation and the factors I mentioned in paragraph 21 above.  Had Ms Tong not made the misrepresentation, her indebtedness would have been reduced by merely $130,000, which as I have said, was by no means significant in view of her overall indebtedness.  Ms Tong’s continued contribution would not bring about any significant increase in dividend.  Given her age and the balance of her working life, I think a suspension of six months sufficient to mark the Court’s disapproval of her pre-bankruptcy conduct and would not be too burdensome for Ms Tong.

Conclusion

56.  Accordingly, I allow the Trustees’ application and order that the relevant period under section 30A(3) of the Bankruptcy Ordinance shall cease to run for six months.  I make a costs order nisi that Ms Tong shall pay the Trustees’ costs of the application.  Such costs are to be taxed if not agreed.