RE CHU YING KIN

HCB 4013/2017

[2023] HKCFI 680

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS

NO 4013 OF 2017

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DECISION

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Introduction

1.  In this decision, unless otherwise specified, page numbers in brackets are page numbers of hearing bundles A to C. The bundle will first be identified and then followed by the page number.

2.  In this case, Chu Ying Kin (“Chu”) was adjudged bankrupt on 1 August 2017 pursuant to his own petition.

3.  Chu is a first time bankrupt. According to sections 30A(1) and 30A(2)(a) of the Bankruptcy Ordinance Cap 6 (the “BO”), Chu should have been discharged from bankruptcy on 1 August 2021 (the “Automatic Discharge”). However, section 30A(3) of the BO provides that:

“(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 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.  This is an application of Chu Chi Keung (“CCK”), a creditor of Chu, seeking an order to suspend the running of the relevant period for calculating the Automatic Discharge of Chu (the “Relevant Period”), ie to extend Chu’s bankruptcy (the “Application”). In the affirmation supporting the Application filed on 22 July 2021 (“CCK-1”), CCK referred to §§ (c) and (d) of section 30A(4) of the BO which provide:

(1) that the bankrupt has failed to co-operate in the administration of his estate (Ground (c)); and

(2) 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 (Ground (d)).

5.  On 30 July 2021, I granted an interim order suspending the running of the Relevant Period pending determination of the Application or until further order. As such, Chu is still under bankruptcy as at the date of this decision.

6.  The Application is supported by three affirmations of CCK, filed herein on 22 July 2021 (ie “CCK-1”), 4 November 2021 (“CCK-2”) and 19 July 2022 (“CCK-3”).

7.  Chu opposes the Application. He filed an affirmation in opposition on 29 September 2021 (“Chu’s Affirmation”) and sent four further statements in opposition to CCK’s solicitors and the court. These statements were subsequently affirmed before a notarial officer in the Mainland. Chu’s first statement dated 24 February 2022 (A/159–168) (“Chu-1”), second statement dated 11 July 2022 (A/169-177) (“Chu-2”), and third undated statement (A/187-189) (“Chu-3”) were all affirmed on 21 November 2022. Chu’s fourth statement dated 25 November 2022 (A/207-214) was affirmed on 25 November 2022 (“Chu-4”) (together “Chu’s Statements”). If there are discrepancies between Chu’s signed/unsigned statements and the statements affirmed before a notarial officer, the court will only consider the latter.

8.  The Official Receiver (the “OR”), the trustee-in-bankruptcy of Chu’s estate, filed a report on 2 December 2021 (the “OR-1”) and a supplemental report on 16 August 2022 (“OR-2”) in respect of the Application.

Procedural history of the bankruptcy proceedings

9.  On 30 June 2017, Chu presented a bankruptcy petition for his own bankruptcy.

10.  On 1 August 2017, the bankruptcy order against Chu (the “Bankruptcy Order”) was granted. By a summary procedure order dated 23 February 2018, the OR was appointed as the trustee of Chu’s estate in bankruptcy.

11.  On 15 March 2021, the OR sent notices to Chu’s creditors, including CCK, informing them that the OR did not intend to object to Chu’s Automatic Discharge (the “No Objection Letter”).

12.  On 22 July 2021, CCK filed a notice in form 82 giving notice of intention to object to Chu’s Automatic Discharge (the “Form 82”) referring to Ground (c) and Ground (d). On the same day, CCK issued the summons for the Application (the “Objection Summons”) and filed CCK-1.

13.  On 29 July 2021, CCK issued another summons seeking leave to extend the time to issue the Application (the “Time Summons”) as stipulated in section 30A(6) of the BO and rule 88(4) of the Bankruptcy Rules (Cap 6A) (the “Rules”).

14.  CCK filed the Affidavit of Kwan To Pui on 29 July 2021 (“Kwan’s Affidavit”) in support of the Time Summons.

15.  Chu did not file any affidavit/affirmation in opposition to the Time Summons.

Applicable legal principles for objection to discharge

16.  In Re Wong Hing Wah Michael (unrep, HCB 26018/2002, 12 October 2007) Barma J (as he then was) held at §14 of the judgment that:

“… … there are two stages involved when the court is considering the exercise of its powers under section 30A(3) [of the BO]. It is first necessary to determine whether one or more of the grounds mentioned in section 30A(4) has been established. If this is done, the court then moves on to consider whether or not, in the exercise of its discretion, a suspension of the automatic discharge that would otherwise have been available to the bankrupt should be ordered. It will not be in every case where a ground for suspension is made out that a suspension will be called for or imposed. In determining whether or not a suspension should be ordered, the court will have regard to all the circumstances of the case, including the nature of the acts complained of and the post-bankruptcy conduct of the bankrupt.”

17.  In Fred Lee v Lau Chi Kam [2008] 3 HKLRD 627, the Court of Appeal (the “CA”) held at §10 of the judgment that the discretion to suspend discharge of a bankrupt was to be exercised by considering two main objectives, namely:

(1) the rehabilitation of the bankrupt by allowing him to resume a normal life in society; and

(2) the public interest of ensuring that the return of the bankrupt to the commercial world will not carry with it the unacceptable risk to persons likely to be engaged in commercial relations with him and also that commercial morality is preserved.

18.  The above well-established principles guiding an application for suspension of discharge from bankruptcy had been confirmed by the CA in Re Lee Raymond Cho Min and Re Lee Priscilla Hwang (unrep, CACV 112/2014 and CACV 113/2014, 30 July 2014).

19.  It had been held in the Lau Chi Kam case (supra) that the test for determining whether the pre-bankruptcy order conduct of a bankrupt was “unsatisfactory” for the purpose of section 30A(4) of the BO was whether our society would be prepared to condone such conduct without any expression of disapproval. As stated in Re Qin Jun [2021] HKCFI 114 at §20, I am of the view that the same consideration shall apply to determine whether the post-bankruptcy order conduct of a bankrupt is unsatisfactory.

20.  The appropriate period of suspension shall commensurate with the gravity of the bankrupt’s conduct and 4 years is the maximum period under section 30A(3) of the BO for a first time bankrupt. (See Re Lok Wing Sang (unrep, HCB 1721/1997, 29 October 2002))

21.  In this case, I shall first deal with the Time Summons. If extension of time is granted, I shall then look into the complaints of CCK made against Chu to determine whether CCK has established any of the section 30A(4) grounds stated in the Form 82. If so, whether I shall exercise my discretion to extend Chu’s bankruptcy period in the circumstances of this case. If so, for how long.

The Time Summons

22.  Section 30A(6) of the BO provides that:

“Where the trustee or a creditor objects to the discharge of a bankrupt, he shall —

(a) notify the court; and

(b) in the case of a creditor, also notify the trustee,

not less than 14 days before the end of the relevant period under this section, stating the grounds of his objection and applying for an order under subsection (3).”

23.  In this case, the Bankruptcy Order was granted on 1 August 2017, the Relevant Period should have ended on 31 July 2021. As such, under section 30A(6) of the BO, CCK should have notified the court and the OR of the Application latest on 17 July 2021.

24.  Rule 88(4) of the Rules further provides that:

“Copies of the applicant’s report or affidavit under this rule shall be sent by him to the bankrupt, and where the applicant is a creditor, to the trustee, so as to reach them at least 21 days before the date fixed for the hearing.”

25.  The Objection Summons was first returned on 30 July 2021. According to rule 88(4) of the Rule, copies of CCK-1 should have been sent to Chu and the OR to reach them latest on 9 July 2021.

26.  Section 30A(6) of the BO has not stipulated a specific form for giving the requisite notice. The usual way is for the applicant to file a form 82 (objection by creditor) or form 83 (objection by trustee) or by issuing a summons. In this case, both the Form 82 and the Objection Summons were filed with the court and served to the OR on 22 July 2021. They were late for 5 days under section 30A(6) of the BO.

27.  In this case, CCK’s solicitors attempted to file the Objection Summons with the court on 16 July 2021 which was within the time stipulated in section 30A(6) of the BO. However, the court’s registry declined the filing of the Objection Summons in view of the 21-days service requirement of rule 88(4) of the Rules and required CCK to seek leave of the court to file the Objection Summons out of time.

28.  Hearing for the Application had to take place latest on 31 July 2021 as Chu would have been discharged on 1 August 2021, otherwise, “the hearing of the matter when it came on would have been pointless, because the bankrupt would have already been discharged.” (Jacobs v Official Receiver [1998] 3 ALL ER 250 at 252) It was impossible for CCK to comply with rule 88(4) of the Rules in this case as at 16 July 2021 even if the hearing for the Application was set to the last day of the Relevant Period, ie 31 July 2021.

29.  CCK’s solicitors then by letter dated 16 July 2021 (A/57-58), sought leave from the court to issue the Objection Summons. On 21 July 2021, I allowed CCK to issue the Objection Summons without prejudice to Chu’s rights to take issue on the Objection Summons not being issued within time.

30.  By a letter dated 23 June 2021, CCK’s solicitors had informed the OR that CCK intended to object to the Automatic Discharge of Chu (A/79). In her letter dated 28 July 2021, the OR noted that the Application was made out of time and that Chu had sent notice to the OR on 26 July 2021 disputing the Application. The OR left it to the parties to substantiate their own case and satisfy the court as to the appropriate order to be made. (C/18-19)

31.  As CCK had by his solicitors’ letters dated 23 June 2021 and 16 July 2021 notified the OR and the court respectively of CCK’s intention to object to Chu’s Automatic Discharge, I am of the view that CCK had complied with the requirements under section 30A(6) of the BO although the Objection Summons and the Form 82 were not filed until 22 July 2021.

32.  According to the affirmation of service of Yuen Chi Keung (A/38-39), CCK-1 was served to the OR and Chu on 22 July 2021 which was late for 13 days from 9 July 2021.

33.  According to Kwan’s Affidavit, on 26 July 2021, CCK’s solicitors received copy of an undated letter sent to the court by Chu responding to CCK-1 (“Chu’s Letter”). (C/1-17) I understand that the same had also been sent to the OR. CCK contends that his delay (if any) had not caused any prejudice to Chu.

34.  The court also received Chu’s Letter (with date dated 23 July 2021) on 26 July 2021. At the hearing of 30 July 2021, I allowed time for Chu to file and serve affidavit/affirmation to verify the matters stated in Chu’s Letter and his other grounds of opposition and adjourned the Application to a date to be fixed. Chu subsequently signed Chu’s Affirmation before a notarial officer in the Mainland with content similar to that of Chu’s Letter.

35.  Rule 204 of the Rules provides that:

“The court may, under special circumstances and for good cause shown, extend or abridge the time appointed by these rules or fixed by any order of the court for doing any act or taking any proceeding.”

36.  CCK-1 had been served and reached Chu latest on 23 July 2021 (the date of Chu’s Letter”), ie 7 days before the first hearing of the Application. Chu was able to respond to CCK-1 before the first hearing of the Application by Chu’s Letter and later by Chu’s Affirmation. At the first hearing of the Application, I adjourned the Application to a date to be fixed allowing further time for Chu to file and serve affidavit/affirmation in opposition not limiting to matters raised in Chu’s Letter and allowing Chu to make arrangements to attend hearing for the Application. It turns out that Chu did not attend any of the hearings for the Application despite ample advance notices of hearing being given to him.

37.  Practice Direction 3.6 notes that a trustee or a creditor may object to the discharge of a bankrupt as late as not less than 14 days before the end of the relevant period under section 30A(6) of the BO. CCK had within the time prescribed by the BO notified the court and the OR of the Application and Chu had been given reasonable time to respond to the Application. I agree that the delay in serving CCK-1 to Chu had not caused prejudice to Chu in resisting the Application.

38.  I allow CCK’s application by the Time Summons and retrospectively abridge the time for service of CCK-1 under rule 88(4) of the Rules to allow service of the same to the OR and Chu on 22 July 2021.

39.  I shall deal with the issue of costs for the Time Summons later in the section entitled “Costs” below.

CCK’s complaints against Chu

40.  CCK complained against Chu on five matters:

(1) Chu failed to inform the OR of his employment or business engagement with Playsteam Education Ltd (“Playsteam”) and failed to disclose in his Annual Statement of Earnings and Property Acquired (the “Annual Statement”) the income or remuneration he had received from Playsteam (Complaint 1);

(2) Chu failed to disclose his directorship, his involvement or his shareholding in Kedian Culture Creation (Nanjing) Co Ltd (“Kedian”) and failed to disclose in the Annual Statement the income or remuneration he had received from Kedian (Complaint 2);

(3) Chu failed to disclose his ownership of various bank or electronic payment accounts in the Mainland and overseas to the OR (Complaint 3);

(4) Chu failed to disclose his ownership of a trademark registered in the Mainland (the “Trademark”) which Chu intended to use for the business of Kedian (Complaint 4); and

(5) Chu failed to disclose his right to sue his ex-wife in legal proceedings in the Mainland in respect of a Mainland property (the “Property”) (Complaint 5).

41.  I shall first consider whether any of the aforesaid complaints have been established. If so, whether the established complaint(s) support an order extending Chu’s bankruptcy. If so, for how long.

(1) Complaint 1

42.  CCK based on information provided by factfinders to allege that Chu had been employed as Product Director and/or Chief Designer and/or “CEO” of Playsteam.

43.  CCK relied on the following matters to substantiate this allegation:

(a) copies of name cards said to have been handed out by Chu in toy fairs showing Chu’s name (ie Jason Chu) and his position as “Product Director” in Playsteam;

(b) copies of screenshots of an old version of Playsteam’s website indicating that an individual named “Jason” was Playsteam’s “Chief Designer”;

(c) Chu was witnessed to attend and participate in the following international toy fairs:

(i) toy fair in Nuremberg, Germany in 2018 (the “2018 Germany Fair”);

(ii) toy fair in New York, USA in 2018 (the “2018 US Fair”);

(iii) toy fair in Hong Kong in 2019 (the “2019 HK Fair”); and

(iv) toy fair in Nuremberg, Germany in 2019 (the “2019 Germany Fair”).

44.  CCK produced redacted copies of screenshots of WhatsApp conversation between others (said to be a former employee of CCK’s company (“4M”) and one of the customers of 4M) reporting sighting of Chu at the 2018 Germany Fair and the 2018 US Fair. No affidavit/affirmation was filed by the parties to the alleged WhatsApp conversations. Not even their names were disclosed. I find these screenshots produced by CCK are of little evidential value.

45.  CCK stated in CCK-1 that he was informed by factfinders engaged by his company to attend the 2019 HK Fair and verily believed that Chu was present at the booth registered by Playsteam’s affiliate toys manufacturer and distributor (“ZT Model”). According to CCK-1 the relevant factfinder was informed by representatives of ZT Model and Playsteam at the fair that Chu was their “CEO”. CCK stated that: “I further understood that the relevant factfinder had also had a meeting with the Bankrupt at the fair, who attended the meeting to discuss Playsteam products as Playsteam’s representative.” (A/31)

46.  The alleged factfinder did not make any affidavit/affirmation. His name was unknown. No particulars were provided in respect of the alleged “representatives” of ZT Model and Playsteam. Not even the names of such persons were disclosed. If the factfinder had had a meeting with Chu, alleged to be the “CEO” of Playsteam, at the 2019 HK Fair, I shall expect the factfinder to have obtained a copy of Chu’s name card showing that he was the “CEO” of Playsteam. However, no such evidence has been adduced. The evidence relied on by CCK was either hearsay or second hand hearsay evidence without particulars of the persons making the alleged statements. Such evidence has little evidential value.

47.  CCK-1 also produced some photos said to be showing Chu’s attendance at the 2019 HK Fair (the “Photos”). Again, the person who took the Photos has not filed any affidavit/affirmation to state where and when and under what circumstances the Photos were taken. Even the name of the person taking the Photos is unknown. In such case, the Photos are of little evidential value.

48.  CCK also referred to another legal proceedings (HCIP 63/2019) commenced by 4M against Playsteam and Chu (the “HCIP Action”) when Chu had requested to amend his pleadings to plead that he had business relationship with Playsteam instead of 4M. Chu subsequently withdrew the aforesaid amendment request in the HCIP Action. CCK submitted that: “The Bankrupt’s inconsistent versions suggested that he is more likely than not to have had business relationships with Playsteam.” (A/34)

49.  In Chu’s Affirmation, Chu admitted that he had acted as part-time sales agent (兼職中介人) for Playsteam (A/111). Chu further stated that he had not derived any benefits from such activities.

50.  Chu denied that he was the “Chief Designer” of Playsteam appeared in Playsteam’s website referred to in CCK-1 but admitted that he had handed out name cards with the title of “Product Director” of Playsteam (the “Name Cards”) at a toy fair held in Hong Kong in January 2018 (the “2018 HK Fair”) but not the 2019 HK Fair referred to by CCK. Chu stated that he was invited by his friend, who was a management staff of Playsteam, to participate in the 2018 HK Fair and the Name Cards were temporary name cards printed to facilitate his participation in the 2018 HK Fair. He further stated that unused name cards were returned to Playsteam after the 2018 HK Fair. Chu further denied that he had received any remuneration or reimbursements of travelling expenses from Playsteam for the 2018 HK Fair. Chu said that his expenses on that occasion was borne by his girlfriend, 承茗佳女士 (“Madam Shing”).

51.  Chu denied that he had participated in the 2018 Germany Fair, the 2018 US Fair, the 2019 HK Fair or the 2019 Germany Fair in relation to Playsteam but agreed that he had participated in the 2019 HK Fair with Madam Shing. Chu stated in Chu-1 that:

“在2019年的玩具展覽會，本人有陪同同是玩具和教育行業的女朋友，承茗佳女士一同參與。承女士到各處商談業務時，本人就到處溜達了解市場、找以前行業上的朋友聊天和替孩子購買特惠的玩具。” (A/112)

52.  Chu denied that he was the “CEO” of Playsteam. Chu stated that he had forgotten whether he had discussed Playsteam’s products with anyone in the 2019 HK Fair. He said that even if he had done so, it was only general discussion topic in a toy fair and did not mean that he was staff of Playsteam. (A/112)

53.  CCK in CCK-1 referred to an affirmation filed by a Mr De Rauw Alain Paul Marc in the HCIP Action (the “HCIP Affirmation”) stating that Chu was also seen in the 2018 Germany Fair, the 2018 US Fair and the 2019 Germany Fair. (B/159-179) CCK further referred to his another industry contact in Canada to show that Chu had been seen in the 2018 Germany Fair and also another toy fair in New York in 2019. CCK also referred to the amended defence and counterclaim filed by Playsteam in the HCIP Action to contend that Chu had attended the aforesaid toy fairs.

54.  My reading of the relevant paragraph of Chu’s Affirmation is that Chu did not deny that he had attended the 2018 Germany Fair, the 2018 US Fair, the 2019 HK Fair and the 2019 Germany Fair. Chu only denied that he had participated in these toys fairs in relation to Playsteam. His exact wording is as follows:

“本人只受邀參與 Playsteam Education Limited 於2018年1月份的香港玩具展覽會。並未再參與債權人在I, II , III , IV 中提及的，與 Playsteam Education Limited 有關的2018年德國展覽會，2018年紐約展覽會，和2019年的香港展覽會，和2019年德國展覽會。” (Emphasis added) (A/111)

55.  Chu referred to all four toy fairs in the aforesaid paragraph which include the 2019 HK Fair and in the next paragraph he referred to his attending the 2019 HK Fair with Madam Shing. It seems that in the quoted paragraph Chu only denied that he attended these toy fairs in any capacity relating to Playsteam in contrast to the 2018 HK Fair when he participated as part of Playsteam’s team.

56.  CCK further relied on the HCIP Affirmation to contend that Chu had handed out the Name Cards at the 2018 Germany Fair. CCK also produced a redacted copy of Playsteam’s amended defence and counterclaim filed in the HCIP Action. (B/67-75) In §60 of the amended defence and counterclaim, Playsteam pleaded that:

“60. [redacted] As mentioned above, the 2^nd Defendant [ie Chu] will be provided name cards “Janson Chu” under the title “Product Director” of the 1^st Defendant [ie Playsteam] so as to gather market feedback at major toy fairs. [redacted].”

57.  As the document was redacted, the above passage was quoted out of context. The passage is consistent with Chu handing out the Name Cards in toy fairs under the title of “Product Director” of Playsteam. However, my reading of the passage together with other passages not redacted suggests that Chu was not employed by Playsteam and that the provision of the Name Cards to Chu was sort of temporary measure for convenience to enable Chu to gather market feedback at toy fairs.

58.  I accept that Chu had been seen in various toy fairs during his bankruptcy, whether they were the four toy fairs referred to in CCK-1 is not important. However, this is neither here nor there. CCK stated in §34 of CCK-2 that: “I note that the Bankrupt has concealed from the ORO his attendance at international toys fairs as stated in paragraph 11(i) of [CCK-1]”. I am not aware of any legal requirements requiring a bankrupt to report all his activities (whether personal or business) to his trustee. The issue is whether Chu had earned any unreported income or remuneration.

59.  I accept that Chu had business dealings with Playsteam, whether directly or through Kedian, and that he had handed out the Name Cards in some toy fairs. However, whether such activities had generated any income to Chu is a separate matter. There is no certainty that participation in trade fairs will definitely generate business or income, not to say profits, to the parties.

60.  In CCK-1, CCK further stated that:

“I verily believe that the Bankrupt attended the aforesaid toys fairs as representatives of Playsteam for which he or his nominees should have received financial remuneration. It is very likely that the Bankrupt was paid or reimbursed for all his travel expenses (air tickets, hotel fees and local transport).” (Emphasis added) (A/31)

61.  CCK’s aforesaid statement was full of uncertainties. The so call “evidence” adduced in CCK-1 as set out above is miles away from proving the aforesaid contention of CCK on balance of probabilities.

62.  CCK alleged that Chu was employed by Playsteam but even CCK was unable to say what was Chu’s position in Playsteam. Chu was said to be the “Product Director”, the “Chief Designer” and the “CEO” of Playsteam. These are different positions in a commercial entity with very different responsibilities. This is not surprising as CCK was speculating based on hearsay or second hand hearsay evidence. Contrary to what CCK wishes to achieve, the amended defence and counterclaim filed by Playsteam in the HCIP Action suggested that Chu was not employed by Playsteam.

63.  I find that CCK has failed to prove on balance of probabilities that Chu had been employed by Playsteam at the material times.

64.  CCK accused Chu of failing “to disclose any remuneration or income derived from his employment or engagement at Playsteam (if any) in his Annual Statement of Earnings and Property Acquired.” (Emphasis added) (A/32) Even CCK himself was not sure whether Chu had received any remuneration or income from Playsteam. CCK produced no evidence to show that Chu had received any remuneration or income from Playsteam or Kedian on business activities relating to Playsteam. CCK was speculating in making the aforesaid accusation against Chu.

65.  I find that CCK has failed in establishing Complaint 1.

(2) Complaint 2

66.  CCK claimed that Chu was the sole shareholder, sole managing director and legal representative of Kedian from 5 January 2017 until Kedian was wound up on 3 August 2020. CCK-1 produced a company register search record of Kedian retrieved from the National Enterprise Credit Information Publicity System. (B/60-65)

67.  CCK referred to the HCIP Action in which proceedings Playsteam pleaded in its amended defence and counterclaim that ZT Model had engaged Kedian as its marketing consultant and that Kedian had sent Chu to attend overseas toy fairs.

68.  Chu did not dispute that he was the shareholder and legal representative of Kedian but denied that he was a director of the company. He said that he was holding the share of Kedian for Madam Shing and that Kedian did not have any income. Chu said that he had provided the trust agreement and documents (相關的代持協議和文件) to the OR. (A/113-114). The OR did not take issue on Chu’s aforesaid evidence in her reports filed in respect of the Application. Thus, it is not right for CCK to say that: “the Bankrupt did not produce any documentary evidence to substantiate the trust relationship.” (§18(3) of CCK-2)

69.  Chu agreed that he had not disclosed his shareholding in Kedian to the OR until receiving the inquiry letter dated 26 August 2020 from the OR but said that it was because he had forgotten the existence of Kedian when he petitioned for his bankruptcy in 2017. (A/114-115)

70.  I accept that Chu was the sole shareholder and legal representative of Kedian and that there were dealings between Kedian and Playsteam. According to the aforesaid company register search, Chu was also the executive director (執行董事) of Kedian. (B/62)

71.  CCK went on to state in CCK-1 that: “I verily believe that the Bankrupt might have received income/remuneration for his work done for Kedian or derived income from his shareholding in Kedian.” “There were implications that the Bankrupt could have received director’s fees or other emolument and dividends and/or distribution of Kedian’s assets or profits from possible transfer of Kedian’s business prior to its winding-up, through his or his nominees’ accounts in Mainland China.” (Emphasis added) (A/32-33)

72.  In §18(2) of CCK-2, it was stated that:

“I note that the Bankrupt had been the sole shareholder, sole managing director and legal representative of Kedian from 5 January 2017 until it was wound up on 3 August 2020 and there were implications that the Bankrupt could have received director’s fees or other emolument or dividends and/or distribution of Kedian’s assets or profits from possible transfer of Kedian’s business prior to its winding up. I queried if the Bankrupt had produced all relevant accounting records or payroll records to the ORO for its investigation.” (Emphasis added)

73.  CCK seems to have forgotten that he is the applicant of the Application. He is not here to raise queries. He is here to adduce evidence to prove his allegations on balance of probabilities against Chu. No evidence has been adduced by CCK to show that Chu had received any income or remuneration from Kedian. No evidence has been adduced to showing that Kedian had made any profits, not to say declaring dividend to its shareholder. No evidence has been adduced to show that Kedian had transferred any of its business to any one, not to say to Chu or Chu’s nominees. Again CCK put forward his contentions without supporting evidence. This is nothing more than speculation.

74.  However, I agree with what CCK stated in §18(4) of CCK-2 that as Kedian was incorporated on 5 January 2017 and only a few months had lapsed before Chu applied for bankruptcy on 30 June 2017, it was very unlikely that Chu would have forgotten to declare Kedian affairs to the OR as he claimed.

75.  In a letter dated 12 June 2020 from the OR to CCK’s solicitors (B/88-89) (the “OR’s Letter”), the OR noted that Chu had not declared any shareholding in any companies in Mainland China. Chu had subsequently submitted documents to the OR on his holding share of Kedian for Madam Shing and the OR did not report that her investigation suggested the otherwise.

76.  I accept that Chu was holding share of Kedian on behalf of Madam Shing. As Chu was the registered owner of the share in Kedian, it was incumbent upon him to forthwith disclose his shareholding in Kedian to the OR after the Bankruptcy Order was granted and to satisfy the OR of the alleged trust arrangements. However, Chu did not inform the OR of his shareholding in Kedian until July 2020, ie almost 3 years after the granting of the Bankruptcy Order.

77.  I find that to the extent of proving Chu’s failure to inform the OR of his shareholding in Kedian, Complaint 2 is established. However, CCK has failed to establish that Chu had received any income, remuneration or benefits from his shareholding or positions held in Kedian.

(3) Complaint 3

78.  In CCK-1, CCK referred to Chu holding bank accounts as well as electronic payment accounts in Mainland China to contend that Chu might have failed to disclose his sources of income.

79.  In the OR’s Letter, the OR confirmed that Chu had not declared any Mainland or overseas bank accounts.

80.  Chu did not dispute that he had failed to disclose to the OR his bank account held with the Bank of China in the Mainland and his WeChat account until he received enquiries from the OR in July 2020 but said that his WeChat account was not linked to any bank account and had not been used for electronic payments. Chu said that he had been using one of Madam Shing’s WeChat accounts to pay for daily family expenses as he was financially supported by Madam Shing during his bankruptcy. Chu said that supporting documents (相關的使用證明，交易數據) for the WeChat payments had been provided to the OR on 18 July 2020. (A/116)

81.  Chu agreed that he had one bank account held with the Bank of China in Mainland (the “Account”) and that he had forgotten to report the Account to the OR until July 2020. He said that he had not used the Account for long time and had forgotten the existence of the Account. He had also provided information relating to the Account (相關的帳戶的交易情況和餘額) to the OR on 18 July 2020. (A/117-118)

82.  The OR did not take issue on the aforesaid evidence of Chu in her reports filed herein.

83.  However, failure to disclose a bank account does not necessarily mean failure to disclose source of income or assets. The OR had investigated into Chu’s bank account in the Mainland and the WeChat account used by Chu for electronic payments but did not report finding of undisclosed source of income or assets.

84.  CCK stated the following in §19(b) of CCK-2:

“The Bankrupt claimed that he had used the WeChat account of Ms.承茗佳after he was adjudged bankrupt on 1 August 2017 … … Yet, I understand that the Bankrupt had used the WeChat account in his own name for many years well before he was adjudged bankrupt on 1 August 2017. Indeed, I understand from my colleagues in Chi Tat (an affiliate of 4M) in Mainland China that the Bankrupt possessed a WeChat account registered under his own name and had used the same to communicate with Chi Tat colleagues at least until June 2018. It is therefore unlikely that the Bankrupt would immediately switch to use the WeChat account of Ms.承茗佳right after he was adjudged bankrupt on 1 August 2017 as he claimed.”

85.  In making the aforesaid submissions, either CCK himself had confused the communication function and payment function of a WeChat account or he was trying to confuse the court of these two distinct functions of a WeChat account.

86.  In CCK-2, CCK stated that:

“21. … … Given that the Bankrupt worked and lived in Mainland China for such a lengthy time, I consider it very unlikely that the Bankrupt would have forgotten to declare his said bank account in Mainland China to the ORO. Further, I consider it unlikely that the Bankrupt did not maintain any bank account in Mainland China. … …

22. … … I considered it implausible that the Bankrupt did not have any digital payment given that he lived and worked for more than 10 years in Mainland China as digital payment has been a prevalent means of payment settlement in Mainland China. … … I understand that the Bankrupt had run small businesses such as selling collector ornament stones on TaoBao website which would have required digital payment to receive sales revenue through its own digital payment system, Alipay. The Bankrupt must have possessed an Alipay account to make it plausible to receive sales revenue hereof.”

87.  Again, CCK forgot that he is here to produce evidence to prove his allegations and not to speculate. Yet, not a single piece of evidence has been adduced to show that Chu had kept other bank accounts in the Mainland or an Alipay account.

88.  I find that CCK has established that Chu had failed to report the Account to the OR. I accept Chu’s evidence that this was an inadvertent omission without the intention of concealing his assets. Furthermore, CCK has failed to prove that Chu had other bank accounts or electronic payment accounts whether in the Mainland or overseas which Chu should have reported to the OR. CCK also fails to prove that Chu had any undisclosed sources of income during his bankruptcy.

(4) Complaint 4

89.  There is no dispute that on 2 September 2016 Chu had applied to register a trademark: “SteamLearning.co” (the “Trademark”). The Trademark was officially registered on 7 November 2017 (PRC Registration No. 21187961) with protection term for 10 years (A/164) but Chu failed to report the registration of the Trademark to the OR until Chu received the OR’s enquiries in December 2021.

90.  CCK stated in §18(5) of CCK-2 that:

“I note that the said trademark was registered in September 2016 shortly before the Bankrupt incorporated Kedian in January 2017, this suggests that the Bankrupt may have been operating Kedian in the course of 2017 and intended to use the said trademark in the business of Kedian; … …” (Emphasis added)

91.  CCK’s aforesaid contention is again nothing more than speculation. In Chu-1, Chu described the aforesaid contention as: “這純粹為申請人捕風捉影”. (A/159) I agree. If Chu intended to use the Trademark in the business of Kedian, Chu would have assigned or transferred the Trademark to Kedian after the registration of the Trademark was completed in November 2017. Evidence adduced by CCK only showed that Chu was using the email footer related to the Trademark for his own affairs. (B/260-265)

92.  Chu submitted in Chu-1 that the Trademark had no commercial value. Chu admitted that he had not reported the Trademark to the OR but explained that he did not know that he had to report the Trademark to the OR. (A/160) He further admitted in Chu-1 that he had used the Trademark as follows:

“本人曾經使用此商標嘗試創業，此過程並不順利，繼後，就從未再使用此商標，本人也淡忘此商標的存在” (A/160)

93.  I do not accept Chu’s aforesaid explanation. Trademark is registered for commercial use. If the Trademark has no commercial value, why would Chu incur time and costs to register the same? Whether such commercial value can be subsequently realized is a separate issue. This is supported by Chu-4 when Chu stated that web names similar to the Trademark, such as “steamlearning.co” and “learningsteam.co” had been put up for sale by various web name agents (各大域名代理公司). (A/208-209) This confirms that the Trademark did have commercial value. The amount is irrelevant.

94.  In Chu-4, Chu tried to draw analogy between the Trademark and his other photographic/artistic/literal creations. (A/188) This is fallacious. His other creations referred to in Chu-4 were not produced for commercial purpose and did not have recognized market value whereas registration of a trademark can only be for commercial purpose.

95.  Pursuant to section 43A(1) of the BO, “the trustee may by notice in writing claim for the bankrupt’s estate any property which has been acquired by, or has devolved upon, the bankrupt since the commencement of the bankruptcy.” Pursuant to section 30 of the BO, the bankruptcy of a person against whom a bankruptcy order has been made commences with the day on which the order is made.

96.  In Chu’s case, his bankruptcy commenced on 1 August 2017. Registration of the Trademark was completed within 2 months after the Bankruptcy Order was granted, ie the registration of the Trademark was completed during Chu’s bankruptcy. The Trademark was a property acquired by Chu after the commencement of his bankruptcy.

97.  As such, Chu should have reported the registration of the Trademark to the OR forthwith upon its registration to enable the OR to consider claiming the Trademark for Chu’s estate. Whether the OR will consider the Trademark as a valuable asset and claim such asset for Chu’s estate is a matter to be decided by the OR, not Chu.

98.  Chu not only failed to report the registration of the Trademark to the OR, but admitted that he had in fact tried to use the Trademark to generate business in vain. The fact that Chu’s attempts to realize the commercial value of the Trademark failed is neither here nor there. The issue is that he should have reported registration of the Trademark to the OR and should not have used the Trademark before the OR has decided not to claim the same for his estate.

(5) Complaint 5

99.  CCK stated in CCK-2 that on 12 September 2017 (ie less than 2 months after granting of the Bankruptcy Order), Chu in court proceedings no (2017) 粵03民終1211號sued his ex-wife at Shenzhen Intermediate People’s Court, Guangdong Province (the “Intermediate People’s Court”) concerning financial disputes after divorce (the “PRC Proceedings”). (B/203)

100.  Chu stated in Chu-2 that he did not own the Property, subject of the PRC Proceedings. Thus, he considered that it was not necessary to report the PRC Proceedings to the OR. (A/161)

101.  Chu’s aforesaid submission was contradicted by his assertions in the PRC Proceedings. In the civil judgment (民事判決書) issued by the Lo Wu District People’s Court in Shenzhen of Guangdong Province (the “District People’s Court”) in (2017) 粵0303民初4682號 (the “First Instance Judgment”), the District People’s Court set out Chu’s case in the PRC Proceedings as follows:

“原告朱英健 [ie Chu] 向本院提出訴訟請求：1. 請求判令平均分割原告與被告夫妻共有的位于深圳市罗湖区泰宁路北側百仕達花園 (四期西区) 4栋19E房产；… … 事實和理由：原、被告于2005年8月相识后确定恋爱关系，雙方于2007年3月27日共同出资首付以銀行按揭贷款的方式购买了涉案房产作為婚房，并將该房屋登记在被告名下。 … … 由于被告無業無經濟收入来源，该房屋的供楼款主要是由原告承擔，供楼款以被告的名義贷款并分期还款，原告每月将供楼款和家用款項給到被告后，由被告负责具体向銀行还款。… … 為此，为了維護原告的合法权益，向贵院提起诉讼，请求依法分割夫妻雙方共同共有的涉案房产所有权。” (A/172-173) (Emphasis added)

102.  It can be seen from the First Instance Judgment that Chu had contended in the PRC Proceedings that he had contributed to the purchase price of the Property and beneficially owned the Property jointly with his ex-wife. Whether Chu’s contentions were accepted by the Mainland courts is a separate matter.

103.  According to the First Instance Judgment, Chu and his ex-wife had confirmed to the District People’s Court that the market price of the Property as at 2017 was RMB5,500,000. (A/175) Chu asked the District People’s Court to “平均分割” the Property between he and his ex-wife. In such case, the value of Chu’s claim in the PRC Proceedings was about RMB2,750,000. This was a very substantial sum in view of the fact that the amount of Chu’s debts reported in his statement of affairs dated 28 June 2017 (the “SOA”) was only HK$406,197.50.

104.  The First Instance Judgment was issued on 22 May 2017. The District People’s Court dismissed Chu’s claim on the Property. Chu stated in Chu-2 that:

“本人約於2017年的8月獲知判決結果，是為呈請破產申請前。遂不存在故意隱瞞或不申報與財產相關的事宜。” (A/170)

105.  Chu’s aforesaid submissions might be right if the PRC Proceedings were concluded by the Frist Instance Judgment but they were not. According to CCK-2, on 12 September 2017, ie less than 2 months after the granting of the Bankruptcy Order, Chu appealed against the First Instance Judgment to the Immediate People’s Court. As such, as at September 2017, Chu was still asserting that he had 50% beneficial interest in the Property, such interest worth about RMB2,750,000 as at 2017.

106.  Section 58(1) of the BO provides that: “On the making of a bankruptcy order, the property of the bankrupt shall vest in the Official Receiver.” Section 2 of the BO defines “property” to include “money, goods, things in action, land and every description of property, whether real or personal and whether situate in Hong Kong or elsewhere”. As such, Chu’s interest in the Property including the right to sue to recover such interest (if any) should have been vested in the OR on 1 August 2017 when the Bankruptcy Order was granted. As at September 2017, the right to appeal against the First Instance Judgment had been vested in the OR. Chu might not appeal against the First Instance Judgment without approval of the OR.

107.  Chu does not dispute that he had not informed the OR about the PRC Proceedings until 2022 when the OR made inquiries to Chu after being alerted to Chu’s alleged interest in the Property by CCK-2. Chu not only failed to report to the OR of his alleged claim on the Property, he had in fact tried to deal with this valuable asset during his bankruptcy at the back of the OR. The OR has been kept in the dark of the PRC Proceedings until the same was uncovered in CCK-2. As at the date of OR-2 (ie 16 August 2022), Chu still had not informed the OR of the result of his appeal lodged with the Intermediate People’s Court on 12 September 2017. (§15 of OR-2) The OR was of the view that Chu had failed to cooperate with her in the administration of Chu’s estate. Chu’s such conduct also amounted to unsatisfactory conduct after commencement of his bankruptcy.

Other matters

108.  Chu had also admitted in §11(ii) of Chu-1 that he had also failed to disclose his 25% shareholding in 愛迪生創意科技有限公司 (“idvision Limited”), one of CCK’s companies. Chu was still holding the aforesaid shares of idvision Limited as at 27 September 2021, ie more than 4 years after the granting of the Bankruptcy Order. (B/229-236) CCK rightly pointed out in §32 of CCK-2 that this was another non-disclosure of assets on the part of Chu and that Chu’s purported disclosure of his shareholding in idvision Limited was made to the OR only upon the OR’s enquiry which clearly fell short of Chu’s duty of proactive disclosure.

109.  In CCK-3, CCK referred to another trademark “Science4you” (the “Mark”) which was also registered under Chu’s name. Chu admitted that he had also failed to report the Mark to the OR. Chu relied on the same explanations for failing to report the Trademark. (A/210-211) I have rejected those explanations. (See the section entitled “Complaint 4” above.)

110.  In CCK-3, CCK referred to emails dated 16 February 2017 and 15 March 2017 when Chu referred to a “Shenzhen office” or “my Shanghai office” to contend that: “the Bankrupt was likely operating his own business/office in early 2017” and that “the Bankrupt’s claim that he was taking care of his child full-time in 2017 is clearly implausible.” (Emphasis added) (A/196) In Chu-4, Chu stated that the “Shenzhen office” should be office of CCK’s company in Shenzhen and he had no recollection of such “Shanghai office”. Chu suspected that the email concerned was generated when he was accompanying Madam Shing on business trips in Shanghai area.

111.  Chu’s bankruptcy commenced on 1 August 2017, whether Chu was operating business/office in early 2017 or full-time taking care of his child was neither here nor there. If CCK tried to rely on his aforesaid speculation to prove that Chu had failed to fully disclose his assets or financial affairs to the OR, CCK has failed.

112.  Both CCK and Chu have raised in their affirmations and statements accusations against each other in respect of matters relating to the HCIP Action or their other disputes. These matters are irrelevant to the Application and should not have been included in their affirmations or statements for the Application. I wholly disregard these irrelevant matters in determining the Application. I shall take into account this factor when I consider the costs for the Application.

Findings on grounds of objection

113.  In §35 of CCK-2, CCK complained that:

“Despite my letters and reminders issued to the ORO as stated in paragraph 13 of [CCK-1], ORO has not provided me with any satisfactory or convincing explanation to reconcile or explain inconsistencies of the Bankrupt’s financial status with the above information. I have reason to believe that the Bankrupt may have provided incomplete or inaccurate information to ORO on its investigation and/or failed to proactively reveal his updated financial affairs to ORO or otherwise to explain or to address to ORO the apparent inconsistencies therein. I shall defer to the ORO to provide a response in its report to be filed and served to address on the alleged misunderstanding, I reserve my right to submit a further Affirmation in reply to the response of the ORO (if any).”

114.  CCK’s dissatisfaction to the OR’s replies to his complaints is not and cannot be ground objecting to Chu’s Automatic Discharge.

115.  After considering all the complaints raised by CCK and the answers of Chu to those complaints, I shall now turn to whether CCK has established any, if so which, ground(s) of objection as stipulated in the Objection Summons.

Ground (c) objection

116.  Under Ground (c), CCK contended that Chu had failed to cooperate with the OR in the administration of his estate.

117.  In Re Li Tat Kong [2000] 3 HKC 360, Le Pichon J stated at 377C-D that:

“What does co-operation mean? In Totterdell v Nelson (1990) 97 ALR 341, the Full Court of Australia observed (at 346):

Nor is it really right to say, because no evidence was led of specified requests ignored by the bankrupt, that there was lacking any evidence of non-cooperation. Co-operation is a positive concept.

I would respectfully agree. In my judgment, it is 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 trustee.”

118.  Cooperation being a positive concept has been expressly set out in the BO when the bankrupt is statutory required by section 26(3) of the BO to aid the trustees to the utmost of his power in the realization of his property.

119.  Section 26(3) of the BO provides that a bankrupt “shall aid to the utmost of his power in realization of his property and the distribution of the proceeds among his creditors.” A bankrupt shall pro-actively reveal the complete picture of his financial affairs to the trustee and he has a positive duty to actively assist his trustee. (See Re Leung Yat Tung (The Bankrupt) (No 2) [2007] 4 HKC 192 (CA) and the Lee Raymond Cho-Min and Lee Priscilla Hwang cases (supra))

120.  CCK had provided information to the OR in respect of Complaint 1 to Complaint 3. After investigation, the OR concluded that there was insufficient information to pursue against Chu under the BO. (§6 of OR-1)

121.  CCK stated in CCK-1 that:

“13. … … I have reason to believe that the Bankrupt may have provided incomplete or inaccurate information to ORO in its investigation and/or failed to proactively reveal his updated financial affairs to ORO or otherwise to explain or to address to ORO the apparent inconsistencies therein.

14. Based on the above and/or suspicious conducts and/or omission on the part of the Bankrupt, I verily believe that the Bankrupt has failed to co-operate with ORO in relation to the administration of the estate.”

122.  The OR is the best person to say whether Chu has failed to co-operate with her in relation to the administration of Chu’s estate. By the No Objection Letter, the OR notified Chu’s creditors that the OR did not intend to object to Chu’s Automatic Discharge. This means that the OR was of the view that Chu did not fail to co-operate with her in the administration of Chu’s estate as at the date of the No Objection Letter, ie 15 March 2021.

123.  The OR reported in OR-2 that throughout the bankruptcy period, Chu was requested to provide information and documents in response to the OR’s enquiries, including but not limited to matters relating to Complaint 1 to Complaint 3. Starting from August 2020, Chu was specifically required to update his employment status with the OR at the end of each month and report details of any property acquired during the period. Chu was responsive to the enquiries and the special request. Thus, the OR considered that Chu had cooperated with the OR in the investigation of his bankruptcy throughout the bankruptcy period. (A/8)

124.  Complaint 4 and Complaint 5 were made known to the OR only in the course of dealing with the Application. From the affirmations and statements filed by the parties in the Application, the OR discovered that Chu had failed to disclose the registration of the Trademark and Chu’s alleged interest in the Property.

125.  On 28 January 2022, the OR sent letter to Chu requesting him to clarify and provide information concerning Complaint 4 and Complaint 5. Chu sent Chu-1 to the OR which was received by the OR on 1 March 2022. However, up the date of OR-2 (ie 16 August 2022), no information or clarification had been provided by Chu to the OR in respect of his appeal case in the Intermediate People’s Court. (A/9)

126.  In Chu-4, Chu stated that:

“在敗訴後(已在之前的溝通提供該法院判決，遂不重複) 沒有再繼續在其他渠道申訴，破產管理署應該看的很清楚深圳市法院砍釘切鐵般認定離婚協議和該判決內容中本人是如何不可能再從中爭取任何利益，… …” (A/212-213)

127.  Chu signed Chu-4 before a notarial officer on 25 November 2022. He was still referring to the First Instance Judgment issued by the District People’s Court without dealing with his appeal case in the Intermediate People’s Court. He even alleged that he “沒有再繼續在其他渠道申訴”. This is inconsistent with the records of there being a case pending in the Intermediate People’s Court of Shenzhen with the case number (2017) 粵03民終1211號 which was likely an appeal from the First Instance Judgment and Chu gave no information on the aforesaid pending case to the OR or the court. Chu is still evasive in dealing with the OR’s enquiries on the PRC Proceedings.

128.  The OR in OR-2 was of the view that Chu had failed to cooperate in the administration of his estate during his bankruptcy by failing to report his ownership of the Trademark and provide information regarding the PRC Proceedings as requested by the OR.

129.  It now transpires that Chu has also failed to report his ownership of the Mark and shares in idvision Limited.

130.  A bankrupt has a pro-active duty to assist his trustee to administer his estate and to realize all his assets for the benefits of his creditors. A bankrupt has a duty to make full and frank disclosure of all his assets. If he claims that any of his assets are held on trust for others, he should explain the trust arrangements to his trustee with all supporting documents. It is not opened for a bankrupt to pick and choose which of his assets needed to be disclosed to his trustee.

131.  In failing to disclose all his assets to the OR, I find that Chu has failed to cooperate with the OR in the administration of his estate. I find that objection based on Grounds (c) is established.

Ground (d) objection

132.  Chu not only failed to disclose all his assets to the OR, he had in fact tried to use the Trademark to do business and had dealt with his claim on the Property without informing the OR until after those assets were uncovered in the course of the Application. I am of the view that Chu’s such conduct during his bankruptcy is unsatisfactory. I find that objection under Ground (d) is also established.

Findings on grounds of objection

133.  I find that CCK has established objection under both Grounds (c) and (d).

134.  I shall now consider whether I shall order the Relevant Period to cease to run. If so, for how long.

Whether to extend the bankruptcy period of Lau

135.  It has been pointed out by Le Pichon J (as she then was) in Re Hui Hing Kwok [1999] 3 HKC 683 that the purpose of sections 30A(1) and (2) of the BO aims at rehabilitation of the bankrupt. Her Ladyship observed at 687 that:

“Rehabilitation in 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 a bankrupt’s own failings.” (original emphasis)

136.  As pointed out by Barma J (as he then was) in Re Wong Hing Wah Michael (supra) that:

“14. … … In determining whether or not a suspension should be ordered, the court will have regard to all the circumstances of the case, including the nature of the acts complained of and the post-bankruptcy conduct of the bankrupt.”

“17. If it is concluded that the conduct complained of is unsatisfactory, the court moves on to the second stage of considering whether or not it should exercise its discretion to order a suspension of the automatic discharge of the bankrupt, and if so, what length of suspension is called for. At this stage, it will be appropriate to consider not only the conduct complained of, but also other factors such as the post-bankruptcy behaviour of the bankrupt.”

“19. … … Whether a suspension is merited will, I think, depend in part on the nature of the conduct in question and in part on such factors as whether or not the bankrupt has been cooperative with his trustee, whether or not he has complied with his obligation under the [Bankruptcy] Ordinance, and his general conduct of his affairs during his bankruptcy. … …”

“20. That said, bearing in mind the policy of rehabilitation, I would accept that save in very serious cases, a suspension of automatic discharge in respect of unsatisfactory pre-bankruptcy conduct is likely to be for a shorter period than might be ordered in a case in which a bankrupt had been guilty of other, post-bankruptcy ground for suspension, where a longer period of suspension may well be called for so as to ensure that the bankrupt properly complies with his obligations.”

137.  If a bankrupt wishes to obtain the opportunity of rehabilitation provided by our bankruptcy system, he/she has to properly perform his/her duties as a bankrupt during his/her bankruptcy period. Otherwise, our bankruptcy system cannot work properly.

138.  In the Lau Chi Kam case (supra) the CA pointed out that in exercising the discretion to suspend the automatic discharge of a bankrupt the court shall bear in mind the two main objectives of our bankruptcy system referred to in §17 above.

139.  Thus in the Lee Raymond Cho-Min and Lee Priscilla Hwang cases (supra), Yuen JA affirmed that when considering whether or not, in the exercise of the court’s discretion, a suspension of discharge should be ordered the court should have regard to all the circumstances of the case, including the nature of the acts complained of and the post-bankruptcy order conduct of the bankrupt and bearing in mind the two main objectives of this part of the BO as set out in the case of Lau Chi Kam (supra).

140.  Chu’s claim on the Property was very substantial comparing with the debts disclosed in the SOA. Yet Chu did not disclose this substantial asset to the OR but dealt with it by himself at the back of the OR shortly after the granting of the Bankruptcy Order. Chu stated in Chu-1 that: “如若本人在此案件勝訴，獲得任何的經濟利益，勢必需要報告破產管理人。” (A/161) Chu was fully aware that the fruit of the PRC Proceedings (if any) belonged to his estate. Yet he chose to deal with the PRC Proceedings after commencement of his bankruptcy without reporting the same to the OR. His aforesaid statement cannot be taken at its face value.

141.  Chu’s failure to cooperate with the OR renders the Trustees unable to ascertain the full extent of his properties.

142.  Chu’s overall post-bankruptcy order conduct shows his lack of commercial morality. I am of the view that our society will not be prepared to condone such conduct without expression of disapproval. As such, in exercise of my discretion, I shall suspend the running of the Relevant Period and extend Chu’s bankruptcy period.

143.  When determining the appropriate period of suspension, I bear in mind that the period should commensurate with the gravity of the bankrupt’s conduct with 4 years being the maximum for a first time bankrupt. (See Re Lok Wing Sang (supra)) In the Leung Yat Tung case (supra), Yuen JA stated in §76 of the judgment that the maximum period of suspension should be reserved for the most egregious cases.

144.  In Totterdell v Nelson (supra) the Federal Court of Australia cited at 344 the following observation of Burchett J made in Re Weiss: Ex parte Official Trustee in Bankruptcy (unrep, Federal Court of Australia, 27 June 1986):

“There may be cases where it would be unfair to a bankrupt to delay his discharge by reason of an incomplete investigation, lethargically pursued, to the torpor of which he has not contributed.”

145.  However, in that very paragraph of Re Weiss cited, the learned judge went on to say that: “But no such unfairness may appear where there has been concealment or lack of cooperation on [the bankrupt’s] own part.” Burchett J further observed in the same paragraph that:

“An essential part of the reciprocal provisions made by the bankruptcy law for the benefit of each of creditors, debtors, and the community itself, is that there should be an adequate investigation of the conduct and affairs of the bankrupt. In a case presenting features which call for an exercise of discretion upon the question when and on what terms the bankrupt should be discharged, the investigation should generally be carried to a conclusion before a discharge is granted or permitted to occur.”

146.  The approach of the Australian court was approved by Le Pichon J (as she then was) in the Li Tat Kong case (supra) when Her Ladyship held that when the court exercised its discretion to suspend the automatic discharge of a bankrupt, 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 his trustees. 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 trustees were 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 cooperation on the part of the bankrupt, it would not be unfair to delay his discharge. (See [2000] 3 HKC 377D-378C)

147.  In this case, the OR has to start new investigations on the Trademark and the Property after Chu’s bankruptcy period should have been completed because of these assets not being disclosed until after the Application has been taken out. The OR may also need to investigate into the Mark and the shares held by Chu in idvision Limited. To-date the OR is still unable to complete the administration of Chu’s estate due to Chu’s failure to make full disclosure of his assets to the OR forthwith after the granting of the Bankruptcy Order. As pointed out by Yuen JA in the Leung Yat Tung case that: “Where the bankrupt has only disclosed information in dribs and drabs, it lies ill in his mouth to complain of delay on the part of the OR … …”. (See §69 of the judgment)

148.  I see no injustice or unfairness in extending Chu’s bankruptcy period. In the words of Le Pichon J (as she then was), Chu’s rehabilitation was delayed by his own failings. (See §135 above)

149.  In the circumstances of this case, I am of the view that extending the bankruptcy period of Chu for one year and nine months is appropriate. Accordingly, I order that the Relevant Period shall cease to run for one year and nine months commencing from 31 July 2021.

Costs

150.  In respect of costs for the Time Summons, as Chu has not incurred any costs to deal with the Time Summons, I make a costs order nisi that there be no order as to costs for the Time Summons.

151.  In the Application, CCK succeeds in proving some accusations against Chu but fails in his accusations against Chu in relation to Chu’s alleged employment or engagement with Playsteam generating income or remuneration to Chu. This is the focus of CCK’s complaints against Chu. The matters found by this court against Chu were mostly unveiled after the Application has been taken out. CCK’s various accusations against Chu in relation to Playsteam were mostly based on speculation. He fails in those accusations which were his main contentions when he took out the Application.

152.  As pointed out in §112 above, both parties had included irrelevant matters in their affirmations and statements leading to unnecessary costs being incurred. In such case, I am of the view that a fair costs order between CCK and Chu shall be no order as to costs. Costs of the OR shall be paid out of Chu’s estate. The Application is caused by Chu’s failure to properly perform his duties as a bankrupt. If Chu’s estate does not have sufficient fund to pay the costs OR for the Application, the shortfalls shall be paid by Chu to the OR forthwith after his discharge from bankruptcy. I make a costs order nisi to these effects.

153.  The aforesaid costs orders nisi shall become absolute 14 days after the date of this decision unless application is received within this 14 days’ period from any party to vary the same.

154.  I further direct the OR to submit her statement of costs for the Application to the court with copy to Chu within 14 days after the aforesaid costs orders nisi have become absolute. Chu shall submit to the court with copy to the OR his comments (if any) on the OR’s statement of costs within 14 days thereafter. The court will then assess the costs payable to the OR for the Application by summary assessment by way of paper disposal.