Re Choi Sze Fai

HCB 1276/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 1276 OF 1997

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R E V I E W

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Review

1. On 16 May 2002, I ruled that the automatic discharge of Mr. Choi Sze Fai ("Mr. Choi") should be suspended for 3 years from 14 April 2002 under section 30A(3) of the Bankruptcy Ordinance, Cap. 6 ("the Ordinance"). Mr. Choi then, on 27 May 2002, pursuant to section 98(1) of the Ordinance, applied to review the said ruling. To summarize the grounds for review, Mr. Choi said that there should be no suspension of the automatic discharge as I should have accepted his case. Further or in the alternative, discretion should be exercised in his favour and the suspension should last for no more than 5 months from 14 April 2002, and hence I should not suspend the automatic discharge of his bankruptcy order any further upon the present review.

2. Ms. Mckenna, for the Official Receiver and Trustee (the "OR"), replied that there was no new evidence at the review before the Court and all the matters were canvassed by the parties on 24 April 2002. It was generous to suspend the automatic discharge for 3 years instead of 4 years in light of the conduct and behaviour of Mr. Choi. The OR nevertheless agreed to such decision and is taking active steps to administer the estate of Mr. Choi.

Two further cases

3. I agree with Ms. Mckenna that no new evidence has been adduced by the parties at the time of review, apart from 2 further cases referred to me by Mr. Choi, viz, Choi Sze Fai v. Pretty Full Development Ltd. & Others [1999] 3 HKC 261 and Re Li Tak Kong [2000] 3 HKC 360. I deal with them one after one.

4. For the former case, it is one of the two High Court proceedings that Mr. Choi commenced without obtaining any consent from the OR. In short, the defendants therein applied to strike out the action on the ground that, prior to commencement of the action, Mr. Choi had been adjudged bankrupt. A master agreed with the application and Mr. Choi appealed and it was allowed. The Hon. Mr. Justice Cheung, as he then was, held that if Mr. Choi were holding his interest as trustee for another person, he could sue as trustee under O.15 r.14 RHC without joining the beneficiary. However, afterall, this case cannot assist Mr. Choi in the present proceedings. First, the interlocutory ruling says that as a matter of law, Mr. Choi might commence the proceedings as trustee, but no finding of facts has been made that he is indeed a trustee. Further, it does not alter my ruling that Mr. Choi has failed to complete the Statement of Affairs properly.

5. Turning to the second case, it not only does not help Mr. Choi, but also reinforces that proper approach has been taken to exercise my discretion judicially. The applicable principle can be founded on p. 362 of the case report, namely:

"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."

Ruling

6. In the present case, I have ruled that Mr. Choi failed to complete his Statement of Affairs properly. His explanation offered was not accepted. He also failed to co-operate with the OR in administration of his estate. His conduct towards the OR was threatening, discourteous and unsatisfactory. So, Mr. Choi was not just adopting a purely passive or reactive role, it was found that there was indeed concealment as well as lack of co-operation on his part. Nonetheless, having considered the steps taken by the OR and the underlying principle of the legislation, an order for a 3 years' suspension of the automatic discharge was made. In the circumstances, I remain of the same view, and so the review is dismissed.

Costs

7. Ms. Mckenna, for the OR, indicated that she would not be asking costs in case that the application of review were dismissed. As such, there will be no order as to costs for the review application.