RE QIN JUN

HCB 3231/2016

[2021] HKCFI 114

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS

NO 3231 OF 2016

________________________

________________________

________________________________

D E C I S I O N

________________________________

Introduction

1.  In this decision, unless otherwise specified page numbers in brackets are page numbers of Hearing Bundles C.

2.  In this case, Mr Qin Jun (“Qin”) was adjudged bankrupt on 27 July 2016 pursuant to a creditor’s petition.  He was the chairman of Up Energy Development Group Limited (the “List Co”), a company then listed in the Stock Exchange of Hong Kong, prior to his being adjudged bankrupt. 

3.  Qin is a first time bankrupt.  According to sections 30A(1) and 30A(2)(a) of the Bankruptcy Ordinance Cap 6 (the “BO”), Qin should have been discharged from bankruptcy on 27 July 2020 (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 Qin’s Trustees-in-Bankruptcy (the “Trustees”) seeking an order to suspend the running of the relevant period for calculating the Automatic Discharge of Qin (the “Relevant Period”), ie to extend Qin’s bankruptcy (the “Application”).  In the summons for the Application (the “Summons”), the Trustees referred to paras (b), (c), (d) and (g) of section 30A(4) of the BO which provide:

(1)  that the discharge of the bankrupt would prejudice the administration of his estate (Ground (b));

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

(3)  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)); and

(4)  that the bankrupt has committed an offence under section 129 or any of sections 131 to 136 (Ground (g)). 

5.  The Summons was supported by affirmations of Chan Pui Sze (“Chan”), one of the Trustees, filed herein on 4 June 2020 (“Chan’s Affirmation”) and 25 September 2020 (“Chan’s 4^th Affirmation”). 

6.  Qin opposes the Application and filed his affirmation in opposition on 5 October 2020 (“Qin’s Affirmation”).  Qin’s Affirmation had previously been exhibited to the affirmation of Wong Sin Ying filed herein on 7 September 2020.  

7.  On 13 July 2020 and by consent of the parties, I granted an interim order suspending the running of the Relevant Period pending determination of the Application or until further order.  As such, Qin is still under bankruptcy as at the date of this Decision. 

Procedural history of the bankruptcy proceedings

8.  On 6 May 2016, Win Wind Resources Limited (the “Creditor”) issued the bankruptcy petition against Qin (the “Petition”). 

9.  On 27 July 2016, the bankruptcy order against Qin (the “Bankruptcy Order”) was granted.  On 26 August 2016, the Trustees were appointed as the trustees of Qin’s estate in bankruptcy in a general meeting of creditors. 

10.  On 22 September 2016, Qin took out an application to annul the Bankruptcy Order (the “Annulment Application”).  The Annulment Application was dismissed by the Court of First Instance on 10 April 2017 (the “Annulment Decision”). 

11.  On 5 May 2017, Qin appealed against the Annulment Decision to the Court of Appeal.  The appeal was dismissed on 15 August 2018 (the “Appeal Decision”). 

12.  On 12 September 2018, Qin filed a Notice of Motion with the Court of Appeal seeking leave to appeal against the Appeal Decision to the Court of Final Appeal.  The aforesaid Notice of Motion was dismissed by the Court of Appeal on 16 November 2018. 

13.  On 14 December 2018, Qin filed a Notice of Motion with the Court of Final Appeal seeking leave to appeal against the Appeal Decision to the Court of Final Appeal.  The aforesaid Notice of Motion was dismissed by the Court of Final Appeal on 31 October 2019. 

14.  On 8 May 2020, the Creditor filed a Notice of Intention to Object to Bankrupt’s Discharge (ie Form 82) referring to all the grounds stated in section 30A(4) of the BO.  However, the Creditor did not take out any application under section 30A(6) of the BO to object to the Automatic Discharge of Qin.  The Creditor also did not participate in the Application. 

15.  On 4 June 2020, the Trustees also filed a notice in Form 83 giving notice of intention to object to Qin’s Automatic Discharge (the “Form 83”) referring to the grounds stated in paras (b), (c), (d) and (g) of section 30A(4) of the BO.  On the same day, the Trustees issued the Summons. 

16.  As at the date of Chan’s Affirmation (ie 4 June 2020), the Trustees had received seven proofs of debt claiming for a total sum of HK$2,483,387,615.61 against Qin’s estate.  The Trustees had recovered HK$97,889.10 for Qin’s estate.  In Chan’s 4^th Affirmation, Chan confirmed that the Trustees had also on 28 August 2020 received the net proceeds of sale of a property in Canada (the “Canadian Property”) jointly owned by Qin and his wife, Madam Wang Jue (“Wang”).  Qin’s case is that he and Wang had separated in August 2013.  

Applicable legal principles

17.  In Re Wong Hing Wah Michael (unrep, HCB 26018/2002, 12 October 2007) Barma J (as he then was) held at para 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.”

18.  In Fred Lee v Lau Chi Kam [2008] 3 HKLRD 627, the Court of Appeal held in para 10 of the judgment that the discretion 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. 

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

20.  It has 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.  I am of the view that the same principle shall apply to determine whether the post-bankruptcy order conduct of a bankrupt is unsatisfactory.    

21.  The appropriate period of suspension should 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))

22.  In this case, I shall first determine whether the Trustees have established any of the section 30A(4) grounds stated in the Form 83.  If so, whether I shall exercise my discretion to extend Qin’s bankruptcy period in the circumstances of this case.  If so, for how long?  

The Trustees’ case

23.  In the Form 83, the Trustees stated that after sale of the Canadian Property, CAD 689,500 was held by the Canada Revenue Agency (the “CRA”), the Canadian tax authority, as withholding tax (the “Withholding Tax”).  Qin had to file a tax return with the CRA before any overpayment of the Withholding Tax could be claimed back.  Qin’s estate would get 50% of the refund but Qin failed to file his tax return with the CRA as requested by the Trustees.  The Trustees contended that the discharge of Qin from bankruptcy would jeopardize the recovery of the overpaid Withholding Tax that could be refunded in respect of the sale of the Canadian Property and thus jeopardize the administration of Qin’s estate, ie Ground (b). 

24.  Ms Ng for the Trustees submits that in respect of Ground (b), where the bankrupt has failed to reveal the extent and whereabouts of his assets or answer the trustees’ queries promptly, the court had held that automatic discharge would prejudice the administration of the bankrupt’s estate since further investigation are necessary but the trustees are unlikely to gain any cooperation once the bankrupt is discharged.  Ms Ng refers me to Re Li Tat Kong [2000] 3 HKC 360 and Re Leung Yat Tung (the Bankrupt) (No 2) [2007] 4HKC 192.  

25.  In the Form 83, the Trustees referred to the following matters in support of their application under Grounds (c) and (d):

(1)  Qin failed to disclose his direct interest in the Canadian Property and resisted the Trustees’ attempt to take custody and dispose of Qin’s interest in the Canadian Property; 

(2)  Qin failed to cooperate with the Trustees in their investigation relating to two transfers made in August 2013 (the “Transfers”) of Qin’s interests in two properties in USA (the “USA Properties”) to Wang; and

(3)  Qin failed to assist the Trustees in their investigation into the affairs of Up Energy Capital Limited (“UECL”), a company incorporated in Belize of which Qin was the sole shareholder and director. 

26.  Ms Ng further submits that Qin’s late submission of the statement of affairs (“SOA”) and the annual statement of earnings and property acquired (“Annual Statement”) as well as his failure to provide information requested by the Trustees are also uncooperative and unsatisfactory conduct for the purpose of section 30A(4) of the BO. 

27.  In the Form 83, the Trustees referred to the following matters in support of their application under Ground (g):

(1)  Qin had committed offence under section 129(1)(c) of the BO for not delivering to the Trustees all books, documents, papers and writings under his control relating to his property and affairs (the “S129(1)(c) Offence”); and

(2)  Qin had committed an offence under section 129(1)(e) of the BO for fraudulently removing his property after the presentation of the Petition, ie transferring his shareholding in three companies (namely, UECL, Silk Road Outlets Limited (the “Outlets Co”) and Silk Road Culture Holdings Limited (the “Culture Co”)) to Wang (the “S129(1)(e) Offence”). 

28.  I shall first deal with the Trustees’ complaints against Qin in relation to his submissions of SOA and Annual Statements and the Trustees’ requests for information and documents.  These will set the background for the aforesaid grounds of objection put forward by the Trustees for the Application.  After that, I shall deal with each of the Trustees’ grounds of objection.  I shall deal with Grounds (c) and (d) before I deal with Grounds (b) and (g). 

Submission of SOA

29.  On 5 September 2017, the Trustees received by email from Khoo & Co (“K&C”), Qin’s then solicitors, an unsworn SOA dated 1 September 2017 (the “2017 SOA”). 

30.  The 2017 SOA stated that Qin had assets worth HK$600 million and total liabilities of HK$330 million out of which Qin only admitted HK$3.22 million.  According to the 2017 SOA, Qin had surplus assets worth HK$270 million.  Qin stated in the 2017 SOA that his expected income from self-employment for the next 12 months was HK$580 million.  

31.  In the 2017 SOA, Qin disclosed that he had assets worth HK$600 million comprising:

(1)  Qin’s shares in the Canadian Property worth about HK$10 million;

(2)  insurance policy held with Manulife worth about HK$12 million;

(3)  money owed by HEC Securities Ltd (“HEC Securities”) worth about HK$180 million;

(4)  investment in 307.HK CB (“CBs”) worth about HK$200 million (ie convertible bonds issued by the List Co);

(5)  a vehicle worth about HK$100,000; and

(6)  Silk Road Outlets BVI/HK Ltd worth about HK$200 million. 

32.  In the 2017 SOA, Qin disclosed that the Canadian Property was jointly owned by him and Wang and that Wang held another property in Canada and the USA Properties in her own name not on trust for Qin. 

33.  The 2017 SOA suggested that Qin was running a business which Qin expected to generate HK$580 million income to him in the next 12 months.  However, Qin provided no supporting documents in respect of his disclosed assets or his business. 

34.  On 3 December 2017, the Trustees received from Qin by email another SOA also dated 1 September 2017 but signed before a notary in China on 10 November 2017 (the “Notarized 2017 SOA”). 

35.  The Notarized 2017 SOA stated that Qin had assets worth HK$600 million and total liabilities of HK$3.22 million.  As such, Qin had surplus assets worth HK$596.78 million.  The Notarized 2017 SOA did not have the affidavit pages and List D (ie Statement of Expected Income). 

36.  The Trustees subsequently received the original of the Notarized 2017 SOA and filed the same with the court on 12 September 2018. 

37.  On 14 September 2018, the Trustees received from Qin by email yet another unsworn SOA dated 7 September 2018 (the “2018 SOA”). 

38.  The 2018 SOA stated that Qin had assets worth HK$645 million and total liabilities of HK$3.22 million.  As such, Qin had surplus assets worth HK$641.78 million.  Qin stated in the 2018 SOA that his expected income from self-employment for the next 12 months was HK$100,000. 

39.  In the 2018 SOA, Qin revised money owed by HEC Securities to become money owed by “HEC Securities Ltd and HEC Finance 92” and the value was changed from HK$180 million to become HK$225 million.  This accounted for the difference in the asset value between the 2017 SOA and the 2018 SOA. 

40.  On 30 August 2019, the Trustees received from Qin by email yet another SOA dated 25 February 2019 and signed before a notary in China on the same day (the “Notarized 2019 SOA”).  The content of the Notarized 2019 SOA was identical to that of the 2018 SOA.  The Trustees said that they had not received the original of the Notarized 2019 SOA. 

41.  It can be seen from the above that Qin had altogether submitted four SOAs to the Trustees.  He claimed to have assets worth between HK$600 million to HK$645 million. 

42.  Ms Ng submits that pursuant to section 18(1) of the BO, Qin is obliged to submit his SOA within 21 days of the Bankruptcy Order. However, it was not until 5 September 2017, ie more than one year after the granting of the Bankruptcy Order, that the Trustees received from K&C the 2017 SOA which was unsworn. 

43.  The Notarized 2017 SOA subsequently received by the Trustees was incomplete in that it did not have the affidavit pages and List D.  The 2018 SOA was again unsworn and the Trustees had not received the original of the Notarized 2019 SOA. 

44.  Thus, Ms Ng contends that as at the date of hearing of the Application, the Trustees have yet to receive a verified complete SOA from Qin. 

45.  Section 18(1) of the BO provides that:

“(1) Where a bankruptcy order has been made otherwise than on a debtor’s petition, the bankrupt shall submit a statement of his affairs, which shall be verified by affidavit, to the trustee not more than 21 days after the day the order was made.”

46.  The Bankruptcy Order was made on 27 July 2016. According to section 18(1) of the BO, Qin should have submitted his SOA to the Trustees latest on 17 August 2016.  There is no dispute that Qin did not submit the 2017 SOA which was unsworn until 5 September 2017, ie late for more than one year.  Qin did not submit the Notarized 2017 SOA until 3 December 2016, ie another three months later.  Yet the Notarized 2017 SOA was incomplete. 

47.  Qin’s case is that he did not know that the Trustees were looking for him until he received an email dated 24 July 2017 from K&C.  As he was living in Xinjiang China, it took time for him to arrange for notarization of his SOA.  He had to make arrangements with his friends who would provide accommodation for him in Beijing before he could travel to Beijing to have the documents notarized.  He agreed that he had received the Trustees’ request on 28 September 2017 for notarized SOA but he was unable to travel to Beijing to arrange for notarization until December 2017 due to other personal engagements. 

48.  Qin was fully aware of the Bankruptcy Order latest by 15 August 2016 when he instructed K&C to take out the Annulment Application.  K&C filed their Notice to Act with the court on 15 August 2016 although the Annulment Application was not taken out until 22 September 2016. 

49.  Qin was legally represented by K&C in the Annulment Application.  Qin should have contacted the Trustees by himself or through K&C latest by August 2016 to deal with his bankruptcy affairs.  Yet Qin did not submit the 2017 SOA until more than one year after the granting of the Bankruptcy Order and he has until the hearing of the Application not yet submitted to the Trustee the original of a complete SOA duly verified by affidavit as required by section 18(1) of the BO. 

50.  Qin’s explanation for the incomplete Notarized 2017 SOA as set out in his email dated 8 February 2018 (p 124) was as follows:

“I did bring all the documents to the Notary Office in mainland China per my living in mainland China completely, however, the Notary Authority rejected to do notary service for some pages due to some restriction by mainland China laws and public policy.  I got some comments from the Notary Authority that they only can do notary for “signature” other than notary for “swear”, so that’s why they kept all the pages for signature and removed the pages including “swear”.  For the page D, it seems as the single independent page which does not belong to any part of documents.  Further, page D does not require the signature, so the Notary Authority can’t do the Notary service for this page according to the mainland China laws and public policy.”

51.  Qin’s aforesaid explanation was contradicted by the Notarized 2019 SOA which had included both the affidavit pages and List D. 

52.  Qin stated in Qin’s Affirmation that he did not receive any letter nor email from the Trustees and did not know that the Trustees were looking for him until K&C notified him by an email dated 24 July 2017.  (Para 18 of Qin’s Affirmation)  Qin’s statement was contradicted by a contemporaneous letter of K&C dated 6 October 2016 when K&C informed the Trustees of Qin’s address which was the address subsequently stated in Qin’s Affirmation (the “Xinjiang Address”) and that they had forwarded the Trustees’ letter dated 6 October 2016 to Qin (p 323). 

53.  Qin adduced no evidence from K&C to explain the content of their 6 October 2016 letter.  I see no reason why K&C would tell lie to the Trustees on this matter.  I do not accept Qin’s evidence and find that Qin had received the Trustees’ letters sent to him prior to October 2016 latest by October 2016.  In fact, the Trustees had all along sent letters to Qin at the Xinjiang Address.  (See the section on “The Trustees’ requests for information and documents” below.)  There is no reason why Qin did not receive letters sent to the Xinjiang Address prior to 24 July 2017 but did receive letters sent to the same address after 24 July 2017.  The explanations given by Qin for failing to submit verified SOA to the Trustees in accordance with the requirement of section 18(1) of the BO are simply excuses contradicted by contemporaneous documents. 

54.  The fact that Qin had applied to annul the Bankruptcy Order or that he was appealing against the Annulment Decision or the Appeal Decision is no excuse for not submitting his SOA to the Trustees.  As a bankrupt, Qin has to perform his duties as a bankrupt once the Bankruptcy Order has been made and remains in force.  The simple fact is that Qin had failed to comply with his statutory obligation stipulated by section 18(1) of the BO. 

Submission of Annual Statement

55.  On 5 September 2017, Qin also through K&C sent to the Trustees by email his Annual Statement for the first year of his bankruptcy (ie from 27 July 2016 to 26 July 2017) (the “1^st AS”).  In the 1^st AS, Qin put “N/A” for all items except an item for rental income of about HK$130,000 and an item for medical expenses of about HK$120,000. 

56.  Qin provided no supporting documents for his income and expenses reported in the 1^st AS.  By a letter dated 28 September 2017 sent to Qin at the Xinjiang Address, the Trustees required Qin to provide particulars and supporting documents for his reported rental income and medical expenses. 

57.  Qin’s replies by email dated 18 October 2017 were: “Kind of cash settlement of Canadian rent in mainland China” and “Traditional Chinese medical treatments and hard to get relevant receipts” (p 93).  No other particulars or documents were provided. 

58.  By a letter dated 6 November 2017, the Trustees asked for further particulars on his reported income and expenses.  No reply was received from Qin.  Reminders dated 15 November 2017, 29 November 2017, 4 December 2017 and 29 December 2017 were sent to Qin.  Qin did not reply until 8 February 2018 when he replied by email (p 124) saying that: “I did try my best to answer all your questions relying on my memory.  I do not have any information or documents related to your questions.” 

59.  Qin sent his second Annual Statement covering the period from 27 July 2017 to 26 July 2018 (the “2^nd AS”) by email to the Trustees on 14 September 2018.  In the 2^nd AS, Qin stated that he earned about HK$100,000 from self-employment and spent about HK$70,000 on family meals and HK$30,000 on family miscellaneous expenditure.  Again Qin did not provide any supporting documents nor particulars for his reported income and expenses.  By a letter dated 2 October 2018, the Trustees asked Qin to provide details on his reported income and expenses. 

60.  In his email dated 15 October 2018 (p 137), Qin relied that: “For the source of all my income, it was my part time consulting works for some investments chance in mainland China by the way of oral and cash deals.”  “For the items of expenditure, it was the expenditure of my personal daily normal meals and some traditional Chinese medicine.”  No further particulars or supporting documents had been provided. 

61.  Qin submitted his third Annual Statement covering the period from 27 July 2018 to 26 July 2019 (the “3^rd AS”) to the Trustees by email on about 30 August 2019.  In the 3^rd AS, Qin stated that he earned about HK$90,000 from self-employment and spent about HK$60,000 on family meals and HK$30,000 on family miscellaneous expenditure.  Again Qin did not provide any supporting documents nor particulars for his reported income and expenses. By letters dated 2 and 25 September 2019, the Trustees asked Qin to provide details and banking records for his reported income and expenses. 

62.  Qin replied by email dated 15 October 2019 (p 165) that: “For this kind of unsolid income, it was only for the basic daily cash expense, it seems no need for any bank movement.”

63.  To summarize, for the reported income of $320,000 and reported expenses of $310,000 for the first three years of Qin’s bankruptcy, Qin was unable to provide any supporting documents.  His explanations to the Trustees are far from satisfactory.  

64.  Qin has not submitted his fourth Annual Statement covering the period from 27 July 2019 to 26 July 2020 as at the date of hearing of the Application despite reminders dated 30 July 2020, 26 August 2020, 10 September 2020 and 24 September 2020. 

65.  Qin submitted his first three Annual Statements to the Trustees within two months’ of the relevant anniversary dates of the Bankruptcy Order. Some reasonable times shall be allowed for Qin to prepare his Annual Statement after the relevant anniversary date.  Although Qin was residing in Xinjiang at the material times, he could have submitted his Annual Statements to the Trustees earlier as they were submitted to the Trustees by emails.  Qin had not submitted his fourth Annual Statement as at the hearing of the Application on 5 October 2020 which was more than two months after the fourth anniversary of the Bankruptcy Order.  This is quite late. 

66.  However, in view of the fact that the previous Annual Statements were only late for about one month and I do not have information as to whether Qin has now submitted his fourth Annual Statement to the Trustees, I shall not assign too much weight to the late submissions of Annual Statement by Qin in considering the Application.  This is not one of the matters raised in the Form 83 although I note that the late submission of the fourth Annual Statement had not yet occurred when the Trustees issued the Form 83.  In any event, the Trustees did not take issue in the Form 83 on late submissions of the 1^st AS, the 2^nd AS and the 3^rd AS.  

67.  However, the fact that Qin has failed to provide supporting documents for his reported income and expenses without satisfactory explanation is matter which I shall bear in mind when I have to consider the whole circumstances relevant to the Application.  

The Trustees’ requests for information and documents

68.  The Trustees had sent letters dated 6 and 22 September 2016 and 7 October 2016 to Qin at an address in Xinjiang same as the Xinjiang Address except that particulars of the floor and room number were missing (pp 50-51, 61 and 65) asking Qin to provide information on his assets to the Trustees.  As the address stated in those letters were without particulars of the floor and room number, I accept that Qin might not have received those letters.  

69.  Nevertheless, the Trustees had on 23 September 2016 sent another letter to Qin at the Xinjiang Address with full particulars asking Qin to submit his SOA and to provide details of all his property and assets, whether located in Hong Kong or in other jurisdiction (pp 62-63).  Qin was also required to contact the Trustees’ office to arrange for an interview and to deliver to the Trustees the following documents: 

(1)  copies of his tax returns, tax assessments issued to him and correspondence between Qin and the Inland Revenue Department (the “IRD”) for the most recent five years; and

(2)  any books and records that are relevant to his property, assets or claims by his creditors. 

70.  No reply was received from Qin.  Reminders were sent to Qin at the Xinjiang Address on 7 October 2016 (p 64).  Still no reply was received. 

71.  By another letter dated 25 October 2016 sent to the Xinjiang Address, the Trustees chased Qin for the outstanding SOA (p 64).  The Trustees further required Qin to provide the following information and documents to the Trustees by 9 November 2016: 

(1)  details of all of his property and assets in Hong Kong or overseas;

(2)  copies of bank statements of all bank accounts under his name from 6 May 2011 to the latest available date maintained in Hong Kong or overseas;

(3)  details of his employment history and payments received from his employment, especially termination payment and pro-rata bonus received from the List Co;

(4)  copies of his tax return and tax assessment issued by the IRD;

(5)  details of his annual income for the last three years including those derived in and outside of Hong Kong;

(6)  name and address of his present employer and copy of his employment contract;

(7)  copies of statements relating to his mandatory provident fund account;

(8)  copies of credit card statements for the period from 6 May 2011 to the latest available date;

(9)  any books and records that are relevant to his property, assets and claims by his creditors; and

(10)  confirmation whether he had opened any bank accounts after the date of the Bankruptcy Order in Hong Kong or overseas. 

72.  This letter had also been copied to K&C.  Again no reply was received. 

73.  By a letter dated 27 July 2017 sent to the Xinjiang Address with copy to K&C, the Trustees required Qin to submit by 10 August 2017 his Annual Statement for the period from 27 July 2016 and 26 July 2017. The Trustees also required Qin to submit his outstanding SOA and to contact the Trustees’ office to make arrangements for an interview (p 69). 

74.  No reply was received.  A reminder was sent to Qin at the Xinjiang Address on 17 August 2017 before the following reply was received from Qin on 29 August 2017 by email (p 71):

“Per your require, I do not have sufficient documents or information to fill the forms. In generally, I do not have any net earning or any property acquired in reporting year.”

75.  By an email dated 30 August 2017, the Trustees required Qin to submit his Annual Statement and sworn SOA.  He was also required to contact the Trustees’ office by 6 September 2017 to arrange for an interview (p 72).

76.  On 5 September 2017, the Trustees received from K&C the 1^st AS and the 2017 SOA. 

77.  On 6 September 2017, Qin sent an email to the Trustees requesting interview by teleconference as he was residing in China. 

78.  Qin attended a telephone conference with the Trustees on 21 September 2017 (ie more than 1 year after the Bankruptcy Order).  After the telephone conference the Trustees sent a letter dated 28 September 2017 (the “September 2017 Letter”) to Qin at the Xinjiang Address (pp 84-90). 

79.  In the September 2017 Letter, the Trustees asked Qin to provide information and documents relating to his assets.  The Trustees required Qin to provide information on the Transfers in relation to the USA Properties in August 2013 and the transfers or intended transfers of his shareholding in UECL, the Outlets Co and the Culture Co on 13 July 2016 to Wang.  The Trustees also asked Qin to explain various banking transactions involving substantial amounts from June 2014 to July 2016. 

80.  Qin sent an email dated 18 October 2017 (the “October 2017 Email”) to the Trustees purporting to answer the Trustees’ questions raised in the September 2017 Letter but provided not a single piece of document in support of his answers (pp 93-94). 

81.  In another email also dated 18 October 2017 (p 92) Qin stated that:

“Since the bankruptcy order against me has been issued, I lost my HK office and all the documents related to me, I do not have or keep the relevant documents you are required, and I believe you can recover the relevant documents you require with the power of the bankruptcy order.”

82.  The Trustees sent a letter dated 6 November 2017 to the Xinjiang Address to following up with Qin on his answers provided in the October 2017 Email.  No reply was received from Qin despite reminders from the Trustees by letters dated 15 and 29 November 2017 and by emails dated 4 December 2017, 29 December 2017 and 1 February 2018. 

83.  Qin eventually replied by email dated 8 February 2018 (p 124) as follows:

“I did try my best to answer all your questions relying on my memory. I do not have any information or documents related to your questions.”

84.  During the period from February 2018 to January 2020, there were further correspondence exchanges between the Trustees and Qin relating to Qin’s assets, income and expenditure.  Qin had provided some information to the Trustees by email but the Trustees found such information of little or no use.  Qin also did not provide supporting documents requested by the Trustees. 

85.  In the 2017 SOA Qin stated that HEC Securities owed him approximately HK$180 million but in the 2018 SOA Qin stated that HEC Securities and HEC Finance 92 (“HEC Finance”) owed him a total of HK$225 million.  Qin claimed that the difference was due to an additional claim against HEC Finance for HK$45 million.  Qin explained that when he was preparing the 2017 SOA, he was also preparing his appeal against the Annulment Decision on the ground that the loan agreement between the Creditor and him for the said HK$45 million was unenforceable for breach of section 18(1) of the Money Lenders Ordinance Cap 163.  Pursuant to the aforesaid loan agreement, he had authorized and directed the Creditor to issue a cheque for HK$45 million in favour of HEC Finance.  As he believed that the said loan agreement was unenforceable, he did not consider the cheque of HK$45 million issued in favour of HEC Finance was a loan owed to him.  Thus he did not include such sum in the 2017 SOA.  He included the sum of HK$45 million in the 2018 SOA as his appeal against the Annulment Decision was dismissed by the Court of Appeal on 15 August 2018.  However, Qin provided no supporting documents for this alleged additional claim.  No document on events leading to Qin’s instructing the Creditors to pay HK$45 million to HEC Finance had been provided by Qin to the Trustees.

86.  By a letter dated 2 October 2018, the Trustees asked Qin to provide breakdown of the actual amount owed by HEC Securities and HEC Finance to Qin with relevant supporting documents (pp 135-136).  By an email dated 15 October 2018 (p 137), Qin only asked the Trustees to refer to the judgment in CACV 109/2017, ie the Appeal Decision. 

87.  After perusing the Appeal Decision, the Trustees sent a letter dated 16 November 2018 to Qin requiring Qin to provide further information and documents to facilitate their investigation (pp 138-139).  However, Qin did not provide further information or documents to the Trustees but only urged the Trustees to take necessary legal action in his email dated 10 December 2018. The Trustees sent further letters to Qin on 31 July 2019 and 15 August 2019.  Qin replied by email dated 30 August 2019 providing no further information or documents.  Further letters dated 2 September 2019, 25 September 2019, 10 October 2019 and 17 December 2019 were sent by the Trustees to Qin requesting for documents and information on Qin’s alleged claim against HEC Finance.  No further information was provided by Qin to the Trustees. 

88.  In his SOAs Qin disclosed that he had CBs worth approximately HK$200 million issued by the List Co.  The Trustees’ investigation showed that Qin did not hold any CBs issued by the List Co. Instead UECL held CBs worth HK$237.5 million issued by the List Co and UECL had demanded repayment from the List Co under the CBs. 

89.  In the aforesaid letter dated 2 October 2018, the Trustees also asked Qin to provide details of the bank or financial institution which held the CBs under Qin’s name. 

90.  On 15 October 2018, Qin informed the Trustees by email that he was the ultimate 100% interest holder of UECL and therefore the CBs held by UECL was part of his assets.  Qin urged the Trustees to recover the CBs as soon as possible but did not provide supporting documents to the Trustees. 

91.  In his aforesaid email (p 137), Qin stated that: “I have no idea about where these CBs are, you may check with the CB registration and recover it ASAP.”

92.  The Trustees were able to locate CBs worth HK$100 million held in UECL’s bank account maintained with UBS AG Singapore but unable to locate the remaining CBs with the value of HK$100 million (as stated in Qin’s SOAs) or HK$137.5 million (as stated by the List Co’s announcements) (the “Unfound CBs”).  By an email dated 16 November 2018, the Trustees asked Qin to provide further information relating to the Unfound CBs.  In his email dated 30 December 2018 (p 274) Qin stated that: “I have no any idea about where are the physical CBs after many years and couple of times moving.  I can also confirm that these CBs never been deposited to any bank.”  

93.  Qin alleged in his email dated 2 October 2017 that HK$180 million disappeared from his account and the account of the List Co held with HEC Securities with no details. 

94.  By an email dated 5 October 2017 (p 240), the Trustees asked Qin to clarify whether the List Co was holding the account at HEC Securities on trust for Qin and asked Qin to provide documents on his depositing HK$180 million into the accounts held with HEC Securities. 

95.  By his email dated 7 October 2017, Qin only stated that HEC Securities should keep the related record documents and he might find some copy of the documents later.  By his email dated 3 November 2017, Qin asked the Trustees “to take all necessary legal actions to investigate and recover this account assets immediately” without providing any documents requested by the Trustees nor any supporting documents for his alleged claim. 

96.  Qin exhibited to Qin’s Affirmation his aforesaid emails sent to the Trustees dated 2 October 2017, 7 October 2017 and 3 November 2017 (pp 239-241 and 242) to show that he had repeatedly urged the Trustees to take actions to recover his alleged claims against HEC Securities and HEC Finance and under the CBs.  However, none of these emails provided the information and documents requested by the Trustees for their investigation in respect of those claims. 

97.  It can be seen from the above correspondence produced by Qin that Qin’s assertions that he had cooperated with the Trustees and provided information requested by the Trustees are nothing more than empty words.  Qin’s case is that he did not have documents relating to his alleged claims for HK$180 million against HCE Securities, for HK$45 million against HEC Finance and for HK$100 million under the CBs.  Thus, he was unable to provide further information and supporting documents to the Trustees on these assets worth together HK$325 million.  This is incredible and I do not accept Qin’s case. 

98.  The explanation put forward by Qin for not providing to the Trustees the requested information and documents was far from satisfactory.  I find him not cooperating with the Trustees in the administration of his estate in failing to provide the information and documents requested by the Trustees for their investigation. 

The Canadian Property

99.  The Trustees’ investigation revealed that Qin and Wang jointly owned the Canadian Property in equal shares at the date of the Bankruptcy Order. 

100.  The Trustees’ case is that Qin did not disclose to the Trustees his interest in the Canadian Property until 5 September 2017 when Qin submitted through K&C to the Trustees the 2017 SOA. 

101.  On 8 November 2016, the Trustees applied to the Canadian Court for recognition of the Hong Kong bankruptcy proceedings (the “Canadian Application”).  On 27 January 2017, Qin filed a response opposing the Canadian Application on the ground that he had taken out the Annulment Application in Hong Kong. 

102.  After the Annulment Application was dismissed by the Hong Kong court on 10 April 2017, the Canadian court granted an order on 10 May 2017 recognizing the Hong Kong bankruptcy proceedings as foreign non-main proceedings and appointed The Bowra Group (the “Canadian Receiver”) as the receiver of all assets, undertaking and properties of Qin in Canada, including Qin’s interest in the Canadian Property. 

103.  On 31 August 2017, the Canadian Receiver applied to the Canadian court for a partition and sale order in respect of the Canadian Property (the “Sale Application”).  Qin and Wang filed a response on 3 January 2018 opposing the Sale Application on the ground that Qin had filed an appeal on 5 May 2017 against the Annulment Decision. 

104.  The Canadian court heard the Sale Application on 1 May 2018 and granted an order for partition and sale of the Canadian Property (the “Sale Order”) but stayed the Sale Order until 31 August 2018 pending the result of Qin’s appeal against the Annulment Decision in Hong Kong. 

105.  On 15 August 2018, Qin’s appeal against the Annulment Decision was dismissed by the Hong Kong Court of Appeal.  On 8 November 2018, Qin applied to the Canadian Court to extend the stay of the Sale Order until the decision of the Hong Kong Court of Final Appeal on his application for leave to appeal against the Appeal Decision. 

106.  On 16 November 2018, the Hong Kong Court of Appeal dismissed Qin’s application for leave to appeal against the Appeal Decision to the Hong Kong Court of Final Appeal.  On 23 November 2018, the Canadian court dismissed Qin’s application for further stay of the Sale Order. 

107.  The Canadian Property was valued at CAD 4,700,000 in July 2017 but its value dropped to CAD 2,450,000 in April 2019.  It was eventually sold on 26 July 2019 for CAD 2,758,000. 

108.  The Trustees are of the view that Qin had not been cooperative and had resisted the Trustees’ attempts to take custody and dispose of Qin’s interest in the Canadian Property. 

109.  Ms Ng submits that Qin had been uncooperative and his conduct unsatisfactory in relation to the Trustees’ investigation of Qin’s interest in the Canadian Property in that he did not disclose his 50% interest in the Canadian Property to the Trustees until he submitted the 2017 SOA over a year after the Bankruptcy Order and Qin had applied to stay the execution of the Sale Order to impede the Trustees’ realization of his interest in the Canadian Property. 

110.  Ms Ng refers to the judgment delivered by the Court of Appeal in the Appeal Decision when the Court of Appeal dismissed the appeal against the Annulment Decision and awarded costs against Qin on indemnity basis.  Yet, Qin still sought leave from the Court of Appeal and the Court of Final Appeal to appeal against the Appeal Decision.  Ms Ng submits that the fact that the Court of Appeal had awarded costs on indemnity basis against Qin in both the appeal and the leave to appeal application showed that Qin’s appeal was without merits.  

111.  Ms Ng further submits that the persistence of Qin in pursuing his hopeless appeal goes to demonstrate that over and beyond exercising his right of appeal, Qin was, in truth seeking to impede the Trustees’ realization of his interest in the Canadian Property. 

112.  Qin agreed that he had opposed the Sale Application of the Trustees.  He said that the reason was to protect his assets while he was appealing against the Annulment Decision.  Qin submitted that if his appeal against the Annulment Decision was successful, the Canadian Property would not have to be sold. 

113.  Qin contended that he had not caused delay in the appeal against the Annulment Decision and he applied to extend the stay of the execution of the Sale Order was meant to protect his interest in the Canadian Property in the event that the appeal against the Annulment Decision was successful.  Qin submitted that he did not take further steps to oppose the sale of the Canadian Property after the Court of Final Appeal refused his application for leave to appeal against the Appeal Decision. 

114.  In the Reasons for Judgment and Decision on Costs for the Appeal Decision (unrep CACV 109/2017, 24 August 2018), the Court of Appeal stated in para 44 that: “The past litigation conduct of the debtor [Qin] is sufficiently unsatisfactory to justify an award of costs on a higher basis.”  The Court of Appeal ordered Qin to pay costs on indemnity basis.  

115.  Kwan JA (as she then was) when giving the decision of the Court of Appeal on costs on Qin’s application for leave to further appeal against the Appeal Decision to the Court of Final Appeal ([2019] HKCA 80) commented that the application for leave to appeal was entirely without merit and was part of an “extensive array of litigation both in Hong Kong and overseas” initiated by Qin despite the Bankruptcy Order.  (See para 4 of the decision)  Qin (funded by Wang) was again ordered to pay costs on indemnity basis for that leave application. 

116.  Despite the aforesaid adverse comments and costs orders made by the Court of Appeal against Qin, I am of the view that Qin has the rights to appeal against court decisions made against him.  The adverse costs orders made by the Court of Appeal against him have already reflected the views of the Court of Appeal on Qin’s appeals.  He shall not be further penalized by having his bankruptcy period extended because of his failed court applications. 

117.  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.” 

118.  Section 55 of the BO further provides that:

“Where the bankrupt is possessed of any property out of Hong Kong, the trustee shall require him to join in selling the same for the benefit of the creditors and to sign all necessary authorities, powers, deeds and documents for the purpose, and if and so often as the bankrupt refuses to do so he may be punished for a contempt of court.”

119.  As Yuen JA pointed out in the Lee Raymond Cho-Min and Lee Priscilla Hwang cases (supra), “not only should a bankrupt not resist the trustees in their efforts to get in his assets, he still fails in his statutory duty if he just remains inactive when called upon to act.  He has a positive duty to actively assist the trustees.”  (See para 16.4 of the judgment)

120.  After the Bankruptcy Order was granted, Qin should have cooperated with the Trustees to take custody of his properties including the Canadian Property.  But for Qin’s failure to submit his SOA within the time stipulated by section 18(1) of the BO and his failure to cooperate with the Trustees to take custody of the Canadian Property, the Trustees would not need to incur costs and expenses in commencing the Canadian Application.  As in the Lee Raymond Cho-Min and Lee Priscilla Hwang cases (supra), Qin “did not assist the Trustees but took an active part challenging [the Canadian Application], thus rendering the Trustees’ work more onerous and leading to more costs being incurred in the administration of [Qin’s estate].”  (See para 23 of the judgment)  

121.  I do not accept that Qin was trying to protect his interest in the Canadian Property in failing to submit SOA within the time stipulated by section 18(1) of the BO and resisting the Canadian Application and the Sale Application.  As I have pointed out in para 54 above, the fact that Qin had applied to annul the Bankruptcy Order or that he was appealing against the Annulment Decision or the Appeal Decision was no excuse for not submitting his SOA to the Trustees.  The fact that the Trustees took custody of the Canadian Property per se would not cause any prejudice to Qin which cannot be reverse if he was successful in the Annulment Application.  It is clear that Qin did not assist the Trustees, nor even stay neutral, but instead sought to challenge the Trustees’ actions which were taken in the performance of their statutory duty.  It is clear beyond argument that the Trustees had a statutory duty to obtain Qin’s property and Qin had a statutory duty to aid them.  (See the Lee Raymond Cho-Min and Lee Priscilla Hwang cases (supra))  The aforesaid conduct of Qin, to say the least, was uncooperative and unsatisfactory. 

122.  I agree that Qin’s actions to seek stay of execution of the Sale Order pending outcome of his appeal against the Annulment Decision to the Court of Appeal may be considered as actions to protect his property in the event that his appeal to the Court of Appeal might be successful.  However, he should not have resisted the Sale Application in breach of his statutory obligation under section 55 of the BO. 

123.  I find Qin’s conduct of failing to submit his SOA within the time stipulated in section 18(1) of the BO and resisting the Canadian Application and the Sale Application amounts to failure to cooperate with the Trustees to administer his estate and was unsatisfactory conduct although I agree with Ms Ling for Qin that the drop in the sale price of the Canadian Property was something beyond Qin’s control and he shall not be held responsible for the changes in the property market of Canada.  I find that objection based on Grounds (c) and (d) is established in respect of matters relating to the Canadian Property. 

The USA Properties

124.  The Trustees’ investigation showed that in 2010 Qin acquired the USA Properties.  One wholly owned by him and the other jointly owned with Wang in equal shares.  The consideration for the property wholly owned by him was US$7,800,000 while the consideration for the jointly owned property was around US$1,580,000.  In August 2013, Qin transferred his interest in both properties to Wang for no consideration (ie the Transfers).  

125.  The Trustees’ case is that Qin did not disclose his previous interest in the USA Properties nor the Transfers which occurred within 3 years prior to the Bankruptcy Order.  In the 2017 SOA, Qin stated that the USA Properties were under the name of Wang at the time when the Bankruptcy Order was made. 

126.  The Trustees’ investigation found that the Transfers were made under two Interspousal Grant Deeds for no consideration. According to appraisal reports obtained by the Trustees, the total value of the USA Properties as at the date of the Transfers was estimated to be around US$10,100,000.  The Trustees believe that the Transfers were void as transactions at undervalue. 

127.  On 25 July 2017, the Trustees commenced proceedings in Hong Kong against Wang (ie HCMP 1655/2017) pursuant to section 49 of the BO to set aside the Transfers and to declare the Transfers void (the “S49 Proceedings”).  Wang opposed the S49 Proceedings. 

128.  On 1 August 2017, the Trustees applied to the court in the United States (the “US Court”) for recognition of the Hong Kong bankruptcy proceedings as foreign main proceedings and the S49 Proceedings as foreign non-main proceedings (the “USA Application”). 

129.  The Trustees said that Qin opposed the USA Application.  Chan stated in Chan’s Affirmation that on 27 October 2017, Qin filed an adversary proceeding complaint against the Trustees in the US Court seeking (1) a declaratory relief with respect to the rights of the Trustees to initiate actions to restore the Transfers and the application of the California law versus law of Hong Kong; and (2) an injunctive relief to prevent the Trustees and their representatives to continue the litigation against the USA Properties (the “Adversary Complaint”). 

130.  On 14 December 2017, the US Court made an order recognizing the Hong Kong bankruptcy proceedings as foreign main proceeding but denied the recognition of the S49 Proceedings as a foreign non-main proceeding as the US Court considered that the S49 Proceedings formed part of the Hong Kong bankruptcy proceedings and needed not be separately recognized. 

131.  The Trustees further said that on 12 January 2018, Qin proposed withdrawing the Adversary Complaint which was agreed by the Trustees. 

132.  Qin’s case is that the USA Properties were transferred to Wang pursuant to a marital settlement agreement dated 2 August 2013 (the “Marital Agreement”).  He believed that the Marital Agreement had been provided to the Trustees by Wang in around July 2017 when the Trustees commenced the S49 Proceedings against Wang.  However, Qin adduced no evidence to show that Wang had provided copy of the Marital Agreement to the Trustees in around July 2017. 

133.  Qin submitted that he had in the 2017 SOA disclosed Wang’s interest in the USA Properties.  He contended that solely because the Trustees believed that the Transfers were void did not undermine the fact that the USA Properties were already transferred to Wang in August 2013 and that at the time of making the 2017 SOA he did not hold interests in the USA Properties.  He maintained that he had not erred in stating that he did not have interests in the USA Properties when submitting the 2017 SOA.  He further contended that the 2017 SOA did not require him to voluntarily disclose any transfer of properties made two years before the Bankruptcy Order. 

134.  In respect of the Adversary Complaint alleged by the Trustees to have been filed by Qin in the USA Application, Qin said that he had no recollection nor information on such matter.  He also did not have recollection of his withdrawal of the Adversary Complaint as alleged by the Trustees. 

135.  If Qin had in deed filed the Adversary Complaint in the USA Application, I am of the view that such conduct also amounted to failure to cooperate with the Trustees in the administration of his estate and was unsatisfactory conduct.  However, knowing the stance of Qin on the Adversary Complaint, the Trustees did not produce any documents to support their contention in Chan’s 4^th Affirmation on this issue but merely made the bare assertion that: ‘The Bankrupt’s claims that he now has “no recollection nor information” regarding the Adversary Complaint Action are simply incredible.’ (Para 24 of Chan’s 4^th Affirmation)  The burden to prove that Qin had attempted to obstruct the Trustees’ investigation in respect of the Transfers lies with the Trustees.  Yet, the Trustees adduced no documentary evidence, which should be readily available, to substantiate their claim knowing the aforesaid stance of Qin on this matter.  I find that the Trustees have failed to prove on balance of probabilities that Qin had filed the Adversary Complaint in the UAS Application as alleged. 

136.  The Trustees criticized Qin for not disclosing in the 2017 SOA the Transfers and his previous interest in the USA Properties. The Transfer occurred in August 2013 which is more than two years prior to the presentation of the Petition.  Qin rightly pointed out that the SOA form did not require him to voluntarily disclose transactions occurred more than two years before the bankruptcy proceedings. 

137.  In the correspondence between the parties produced for the Application, there was no request from the Trustees asking Qin to disclose information on transactions prior to the Bankruptcy Order.  I note that cooperation is a positive concept as pointed out in Totterdell v Nelson (1990) 97 ALR 341 at 346 and that it is incumbent on the bankrupt to make full and frank disclosure and to proffer all pertinent information regarding his assets and financial dealings to his trustee (see Re Li Tat Kong (supra) at 377).  

138.  Qin’s case is that the Transfers were made pursuant to the Marital Agreement and were legitimate.  The Trustees adduced no evidence to challenge the genuineness of the Marital Agreement.  I do not see that Qin had failed to cooperate with the Trustees in their investigation relating to the Transfers in not disclosing the Transfers in the 2017 SOA.  In such circumstances, I do not agree that the Transfers and failure to specify the Transfers in the 2017 SOA constitute unsatisfactory conduct. 

139.  However, this does not mean that Qin may refuse to provide information to and cooperate with the Trustees in their investigation on the Transfers.  He still has to assist the Trustees in their investigation.

140.  Yuen JA had pointed out in Re Leung Yat Tung (supra) at para 72 of the judgment that:

“72. … … even if a bankrupt has successfully transferred his assets, so that they are no longer ‘his’ to hide, he nevertheless has an obligation to provide a full picture so that the trustee in bankruptcy would know whether certain provisions in the Bankruptcy Ordinance could be employed against third parties for the benefit of the estate, and so that a fully informed decision could be made whether to ‘throw good money after bad’.”

141.  The Trustees had by the September 2017 Letter asked Qin to provide details and supporting materials on any consideration that passed and the justification for the Transfers.  However, Qin only replied in the October 2017 Email that: “Do not recover the relevant documents yet; relevant documents will be found in US and Canada.” (p 93)  Yet, he produced copy of the Marital Agreement to Qin’s Affirmation filed herein to resist the Application.  It is no excuse for Qin to say that he believed that the Marital Agreement had been provided to the Trustees by Wang in the S49 Proceedings. Furthermore, Qin has adduced no evidence to substantiate his such belief.  It is his obligation to assist the investigation of the Trustees.  He should have provided the Marital Agreement to the Trustees prior to the Trustees commencing the S49 Proceedings.  He at least had copy of the Marital Agreement under his possession or control and yet told the Trustees that he did not recover the relevant documents.  It is clear that Qin had failed to cooperate with the Trustees in their investigation on the Transfers.  Qin’s failure to provide relevant documents in his possession or control to the Trustees is for sure unsatisfactory conduct. 

142.  I find that Grounds (c) and (d) are established against Qin on matters relating to the Trustees’ investigation on the USA Properties and the Transfers. 

The affairs of UECL

143.  The Trustees’ investigation showed that Qin was the sole shareholder and director of UECL. 

144.  According to public announcements made by the List Co on 15 January 2016 and 31 March 2016 (the “Announcements”), UECL held CBs worth HK$237.5 million issued by the List Co and UECL had demanded repayment from the List Co under the CBs. 

145.  Qin stated in his SOAs that he held the CBs which was in fact held by UECL.  I accept Ms Ling’s explanation that as UECL was 100% owned by Qin, it is understandable for Qin, as a layman, to treat the CBs as held by him.  Although such information provided by Qin had caused confusion to the Trustees, I accept that Qin did not try to conceal his interest in the CBs and he did not mislead the Trustees with intent.  However, this does not mean that Qin was blameless for difficulties encountered by the Trustees in their investigation into the affairs of UECL.  When the Trustees asked Qin to provide details of the bank or financial institution which held the CBs, Qin only replied by email dated 15 October 2018 (p 137) that: “I have no idea about where these CBs are, you may check with the CB registration and recover it ASAP.” 

146.  In the September 2017 Letter, the Trustees required Qin to provide the securities account number, name of the custodian bank and custodian bank account number in which the CBs were held.  Qin in the October 2017 Email only replied that: “Only remember in USB Singapore.”  The Trustees were only able to locate CBs worth HK$100 million held in UECL’s account maintained with UBS AG, Singapore.  When the Trustees followed up with Qin on the whereabouts of the Unfound CBs, Qin only stated in his email dated 30 December 2018 that: “I can also confirm that these CBs never been deposited to any bank.”  (See para 92 above) 

147.  It is incredible that Qin would have no idea on the whereabouts of the CBs worth HK$200 million (ie one-third of his total assets reported in his SOAs).  Qin was simply not cooperating. 

148.  On 27 September 2016, the Trustees wrote to Arias, Fabrega & Fabrega (Belize) Limited (“Arias”), the registered agent of UECL in Belize, requesting Arias (1) to confirm Qin’s shareholding in UECL; (2) not to record any transfer of Qin’s shareholding in register of members; and (3) to make an annotation in the register of members of UECL that Qin’s shares were vested in the Trustees.  Despite repeated requests made by the Trustees on 11 October 2016, 25 October 2016 and 1 November 2016, no response was received from Arias. 

149.  On 26 January 2017, the Trustees applied to the Belize court for an order against Arias to disclose information relating to the identity of UECL’s shareholder and director.  The Trustees’ aforesaid application was granted by the Belize court and Arias subsequently provided documents to the Trustees confirming that Qin was the sole shareholder and director of UECL. 

150.  On 2 March 2017, the Trustees sought recognition of the Bankruptcy Order from the Belize court.  On 30 May 2017, the Belize court granted an order recognizing the Trustees’ power to take into custody or control Qin’s property within Belize.  The Trustees then took into custody of Qin’s shareholding in UECL. 

151.  The Trustees’ further investigation showed that UECL maintained a bank account with The Hongkong and Shanghai Banking Corporation Limited (“HSBC”).  The Trustees were unable to obtain copies of the bank statements and transactions details concerning the bank account of UECL held with HSBC as HSBC said that it would only provide copies of the bank documents to the bank account signatories.  As the bank account held by UECL with HSBC had already been closed, HSBC could not process the change of bank signatories for UECL’s account. 

152.  Qin was the authorized signatory of UECL’s bank account held with HSBC.  The Trustees wrote 12 letters to Qin from 28 September 2017 to 15 August 2019 requesting him to sign an authorization letter enabling the Trustees to obtain information from HSBC.  In the October 2017 Email (p 93), Qin replied to say that he did not have the relevant information or document.  Qin changed to say in his email dated 30 August 2019 (p 159) that he was no longer a shareholder and director of UECL since the Trustees took control of UECL in about 2016 and since then, he did not think that he could represent UECL.  Qin did not sign the authorization. 

153.  The Trustees wrote to Qin on 2 September 2019 reiterating that HSBC would only recognize and take instructions from the authorized bank signatory but not the director or shareholder of UECL (pp 160-161). Despite reminders dated 25 September 2019, 10 October 2019 and 17 December 2019, as at the date of Chan’s Affirmation (ie 4 June 2020) Qin did not reply and did not sign the authorization letter requested by the Trustees.  

154.  Qin’s case is that Arias was the registered agent of UECL in Belize.  It was not his agent and was not under his control.  He had done nothing to cause or contribute to Arias’ failure to respond to the Trustees. 

155.  In respect of obtaining bank statements and transaction details concerning the bank account of UECL held with HSBC, Qin said that he did not find it appropriate to sign any authorization letter in the capacity of a director of UECL since he had already ceased to be the shareholder and director of UECL.  Qin contended that once he ceased to be a shareholder and director of UECL, it would be inappropriate for him to sign any documents in relation to the company or hold himself out as being in control of or represent the company.  He submitted that it was unfair for the Trustees to put the blame on him for not being able to obtain the documents of UECL from HSBC because of the bank’s internal policy.  

156.  Although Arias was not Qin’s agent but the resident agent of UECL in Belize, Qin was the sole shareholder and sole director of UECL before the Trustees took into custody Qin’s shareholding in UECL.  Arias would no doubt take instructions from Qin on matters relating to UECL before the Trustees took into custody Qin’s shareholding in UECL. 

157.  The Trustees’ case is not that Qin had refused the Trustees’ request to instruct Arias to provide information on UECL to the Trustees.  The correspondence between the parties produced for the Application did not show that the Trustees had previously required Qin to assist in the Trustees’ dealing with Arias in respect of UECL.  Without the Trustees requiring Qin to assist to deal with Arias, Qin would not have known that the Trustees had encountered difficulties in taking charge of his interest in UECL.  Qin should not be held answerable for the un-cooperation of Arias.  

158.  However, the Trustees had required Qin to sign authorization letter as authorized signatory of the bank account of UECL held with HSBC to enable the Trustees to obtain bank statements and transaction details of UECL’s account (p 90).  Qin was not required to sign as director of UECL or to hold out as having control of UECL.  The excuse putting forward by Qin for not signing the authorization letter is unacceptable.  He is simply refusing to cooperate with the Trustees in the administration of his estate. Such conduct is unsatisfactory. 

159.  UECL is not a self-company with no asset. According to the Announcements, it was holding CBs issued by the List Co worth HK$237.5 million.  In Qin’s SOAs, Qin reported the value of the CBs at HK$200 million.  There was a substantial difference of HK$37.5 million in the value of the CBs referred to in the Announcements and that reported in the SOAs. Furthermore, only CBs with the value of HK$100 million were located.  The whereabouts of the Unfound CBs worth HK$100 million to HK$137.5 million are still unknown.  The missing assets are assets of substantial value by any standard.  The Trustees need to investigate the bank account of UECL held with HSBC to check whether assets can be recovered for the benefits of Qin’s bankruptcy estate.  I find that the Trustees have established Grounds (c) and (d) relying on matters relating to the affairs of UECL. 

Refund of the Withholding Tax

160.  The Trustees’ case is that after the sale of the Canadian Property, the Canadian Receiver paid the Withholding Tax of CAD 689,500 to the CRA for Qin and Wang.  Qin’s share of the Withholding Tax is CAD 344,750 (being CAD 689,500 x 50%). 

161.  The Canadian Receiver advised the Trustees that the CRA would allow seller of property to claim back any overpayment of the Withholding Tax as the seller could deduct the cost of acquisition and the expenses incurred during the sale by filing a tax return.  The CRA informed the Canadian Receiver that the tax return of Qin had to be filed by Qin personally due to privacy reason. 

162.  The Trustees wrote to Qin on 20 March 2020, 15 April 2020 and 14 May 2020 requesting Qin to file tax return with the CRA in order to recover any overpayment of the Withholding Tax in respect of sale of the Canadian Property but Qin did not respond. 

163.  The Trustees estimated that if Qin filed his tax return with the CRA, a total of CAD 239,195.08 of the Withholding Tax paid on the sale of the Canadian Property would be refunded.  (See para 41 of Chan’s Affirmation)  The Trustees submitted that in such case the discharge of Qin would jeopardize the administration of Qin’s estate.  

164.  Qin does not dispute that he had not filed the tax return with the CRA in respect of the sale of the Canadian Property and he did not obtain any refund of the Withholding Tax.  His case is that he did not participate and was not involved in the sale of the Canadian Property.  He was being kept in the dark in relation to the amount of sales proceeds, as well as the costs and expenses involved.  Qin contended that he was not in a position to file a tax return which would require him to submit accurate figures and to verify them.  

165.  Qin submitted that even if he was discharged from bankruptcy, he would still be under the obligation to continue to give information in respect of his affairs and do such other things as the Trustees might require for the purpose of completing the administration of his estate. He contended that there was no correlation between his discharge and the administration of his estate being jeopardized. 

166.  The Trustees had produced their letter dated 20 March 2020 which set out the details of expenses incurred in the sale of the Canadian Property (pp 168-169).  Qin should have sufficient information to file the tax return to obtain repayment of any overpaid Withholding Tax.  In Chan’s 4^th Affirmation, the Trustees stated that they were informed by the Canadian Receiver by email on 15 January 2020 (p 318) that without the knowledge of the Canadian Receiver, Qin had informed the CRA of the disposal of the Canadian Property and requested the CRA to issue a certificate of compliance to him.  However, Qin has still failed to inform the Trustees whether he had filed his tax return to claim refund of overpaid Withholding Tax despite letters from the Trustees dated 20 March 2020, 15 April 2020 and 14 May 2020. 

167.  The Trustees submitted that whether administration of Qin’s estate would be jeopardized after the discharge of the Qin would depend on whether Qin would cooperate, provide information to the Trustees and assist the Trustees in recovering the pre-discharge assets of Qin.  The Trustees further submitted that the CRA would not disclose any information relating to Qin to the Trustees given privacy reasons and the Trustees would have no other means to confirm whether and when the excess Withholding Tax paid would be refunded to Qin. 

168.  Ms Ling contends that it is unclear what actual amount of refund is as that will be subject to assessment of the CRA.  Ms Ling’s aforesaid contention does not assist Qin.  She has rightly pointed out that whether there will be refund is to be determined by the CRA.  However, this does not relieve Qin from his duties to cooperate with the Trustees to file tax return with the CRA and to assist the Trustees to obtain refund of overpaid Withholding Tax (if any) for his estate. 

169.  Ms Ling agrees that the Trustees had provided figures of sale consideration and expenses incurred for the sale of the Canadian Property to Qin but contends that the Trustees had not provided supporting documents to Qin for him to verify the figures to file the tax return.  Ms Ling’s aforesaid contention is not supported by evidence.  In the letter dated 20 March 2020 sent by the Trustees to Qin, the Trustees had provided details of expenses incurred in the sale of the Canadian Property.  The Trustees expressly stated that copies of the relevant supporting documents could be provided if required by the CRA.  Qin has adduced no evidence to indicate that he had concerns on those figures or that he would require documents to verify the figures.  He simply refused to file his tax return with the CRA as requested by the Trustees.  In so doing, Qin had failed to cooperate with the Trustees in administering his estate.  His such conduct is also unsatisfactory conduct. 

170.  Ms Ling further contends that under section 30A(9) of the BO, the court may order Qin to contribute refund of the Withholding Tax to his estate after discharge of Qin.  I have difficulties to follow the logic of Ms Ling’s aforesaid contention.  The overpaid Withholding Tax is part of Qin’s bankruptcy estate.  It is not something which belongs to Qin.  How may Qin contribute to his estate property belongs to his estate? 

171.  Whether administration of Qin’s estate would be jeopardized after the discharge of Qin would depend on whether Qin would cooperate, provide information to the Trustees and assist the Trustees in recovering his pre-discharge assets.  I agree that a discharged bankrupt is still obliged to cooperate and assist the trustee to recover assets for his estate. 

172.  Qin claimed in his SOAs that his assets worth between HK$600 million to HK$645 million.  As at September 2020, the Trustees could only manage to realize less than HK$100,000 on top of the Canadian Property.  The real extent of Qin’s estate remains unknown.  His estate cannot be properly and fairly ascertained, gathered in and distributed for the benefit of his creditors without further in-depth investigation into his financial affairs.  The Trustees have encountered difficulties in claiming refund of the Withholding Tax solely because of Qin’s uncooperative attitude.  As the Official Receiver in the Leung Yat Tung case (supra), the Trustees in this case are “still in the midst of investigations which may lead to the disgorgement of very substantial assets.  Going by his attitude so far as a bankrupt, realistically it is unlikely that the [Trustees] would be able to gain any cooperation once [Qin] is discharged.”  (See para 74 of the judgment) 

173.  Even if the refund of the Withholding Tax issue may not by itself substantiate the Ground (b) objection, the overall position on administration of Qin’s estate together with the Withholding Tax issue do suggest that discharge Qin from bankruptcy now would likely prejudice the administration of his estate.  

Ground (g) objection

174.  Qin submitted that he had never been charged of any offence under section 129(1)(c) or (e) of the BO. 

175.  Ms Ling submits that Qin has not been convicted under section 129(1)(c) nor (e) of the BO.  She contends that in the circumstances, Ground (g) must fail in limine. 

176.  Ms Ling refers to Re Hau Po Man Stanley (unrep, HCB 924/2002, 26 June 2007) when Poon J (as he then was) opined at para 115 of the judgment that: “it is certainly arguable that on a proper construction of section 30A(4)(g) [of the BO], for the Trustees to show that [the bankrupt] had committed the [gambling] offence, there must be a conviction of him for that offence in the first place.” 

177.  In the Hau Po Man Stanley case, his Lordship had made it clear that he was not deciding on that point.  His Lordship only pointed out that such contention is arguable.  Whether such argument will succeed in court is another matter which his Lordship had expressly refrained from expressing any view. 

178.  In Re Lay Man Yee, Mary (unrep, CACV 262/2008, 20 March 2009) (a case decided after the Hau Po Man Stanley case), the Court of Appeal when considering an alleged unsatisfactory post-bankruptcy order conduct of gambling had expressed the following view:

“35. [The bankrupt’s counsel] submitted that since gambling by a bankrupt is a criminal offence under the Bankruptcy Ordinance, it has to be proved beyond reasonable doubt. This applies with particular force to [the bankrupt’s] post bankruptcy conduct. But, we are not concerned with criminal prosecution, the appropriate standard of proof is proof on a balance of probabilities. Solicitor (24/07) v Law Society of Hong Kong [2008] 2 HKLRD 576. As Bokhary PJ explained:

“116 … The more serious the act or omission alleged, the more inherently improbable must it be regarded. And the more inherently improbable it is regarded, the more compelling will be the evidence needed to prove it on a preponderance of probability. …” ”

179.  It can be seen that for the purpose of section 30A(4) of the BO, if a bankruptcy offence is involved, a conviction is not a prerequisite.  It is not even necessary to prove beyond reasonable doubt that the alleged offence has been committed.  The applicant only has to prove on balance of probabilities with compelling evidence. 

The S129(1)(c) Offence

180.  The Trustees were of the view that Qin had failed to provide accurate information to assist the Trustees’ investigation of his affairs.  Qin also failed to deliver to the Trustees all books, documents, papers and writings under his control relating to his property and affairs. The Trustees submitted that Qin had breached section 129(1)(c) of the BO.  

181.  I have in the section dealing with “The Trustees’ requests for information and documents” above set out the futile efforts of the Trustees in getting Qin to deliver to the Trustees documents relating to Qin’s property and affairs and Qin’s unsatisfactory response. 

182.  When the Trustees asked Qin to provide information and documents on his alleged claim of HK$45 million against HEC Finance, Qin only referred the Trustees to the Appeal Decision (see paras 85-87 above). 

183.  As pointed out by French J in Re Barrie Andrew Knight (unrep, WB 307/1988, 14 August 1991) a decision of the Federal Court of Australia that: “It is not sufficient, I think, for a bankrupt to say in relation to the deficiencies which the trustee complains are unexplained, that it is all there in the transcript of evidence and auditor’s report put before the District Court in criminal proceedings.” (Cited by Le Pichon J (as she then was) in Re Li Tat Kong (supra) at 377 D-E)

184.  In the Li Tat Kong case (supra), Le Pichon J further 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.”

185.  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. 

186.  Qin did not dispute that he had not provided to the Trustees documents requested by the Trustees but said that in his emails dated 18 October 2017 and 7 January 2019 (pp 92-94 and 287) that he had explained to the Trustees that he did not have the documents requested as he lost the documents when the Bankruptcy Order was made against him.  He explained that some of the documents were in the United States and Canada and he was not in possession, custody nor control of the requested documents. 

187.  Qin said that he kept his books and documents in Hong Kong in his office at Admiralty which was the office of the List Co or in his home office.  He resigned from his position as a director of the List Co after the Bankruptcy Order was made against him and never went back to the Admiralty office and the List Co had relocated its office to North Point in around July 2016.  He believed that all document in his Admiralty office were gone. 

188.  Qin said that his apartment in Hong Kong was provided to him by the List Co.  He said that the documents kept in his home office were also lost when the List Co terminated the lease for the apartment upon his resignation.  Qin said that he left Hong Kong on 21 January 2016 and had never returned to Hong Kong. 

189.  For documents in the United States and Canada, Qin said that they were kept in his properties in these countries.  As the Canadian Property had been sold and the USA Properties had been transferred to Wang in 2013, he had no custody nor control over the documents therein.  As he had not visited the United States or Canada after the Bankruptcy Order, he did not have any opportunity to retrieve the documents which he had left there before they were gone. 

190.  Qin contended that he clearly had no intent to defraud which is a defence under section 129(1)(c) of the BO as he simply did not have in his custody nor under his control the documents requested by the Trustees.  

191.  The Trustees submitted that it was doubtful that one would leave personal belongings and personal books and records such as bank statements, share certificates, ownership documents in overseas landed property, insurance policy, etc, unattended when the person moved out of an office, a rented apartment or even relocated from one country to another. 

192.  Qin alleged that the documents in Canada were kept in the Canadian Property and were all gone following the sale of the Canadian Property.  However, according to the Canadian Receiver’s investigation, the Canadian Property had been rented out as early as 2013.  Qin should have removed all his personal documents from the Canadian Property when the same was rented out.  Qin’s bare assertion on this issue is simply unbelievable.  

193.  The Trustees also pointed out that while Qin alleged that he did not have custody nor control over the documents requested by the Trustees, he managed to proceed with his claim against HEC Securities in HCA 543/2016 as referred to in Qin’s Affirmation.  It is unbelievable for Qin to claim against HEC Securities for HK$180 million without any supporting documents.  

194.  The Trustees had on 6 November 2017 (pp 95-100) requested Qin to provide “a copy of the agreement between [Qin] and [Wang] regarding the reallocation of the family assets”.  On 8 February 2018, Qin replied that he did not “have any information or documents related to [the Trustees’] questions” (p 124) but in Qin’s Affirmation affirmed by Qin on 8 September 2020 he exhibited a copy of the Marital Agreement. 

195.  Qin said that he resigned from the List Co after the granting of the Bankruptcy Order.  However, he did not state when did he resign.  In any event, Qin was not expelled from the List Co in circumstances which did not allow him to collect his personal property from his office. Bearing in mind that Qin made the Annulment Application in September 2016, he was still aiming at keeping control of his own assets.  It is unbelievable that in such circumstances he would have abandoned all documents relating to his assets in his Hong Kong office or apartment.  Although he might have left Hong Kong as early as January 2016, he would certainly have made arrangements to ensure that he would have access to his documents to pursue the claim against HEC Securities and the Annulment Application and to resume control over his assets if he succeeded in the Annulment Application.  The fact that he could produce in September 2020 the Marital Agreement made in 2013 speaks for itself. 

196.  According to a letter dated 8 May 2018 from Chiu & Co (solicitors for Qin in the Application) to the Trustees, Wang had been providing funding for Qin’s appeal against the Annulment Decision (p 325).  It can be seen that Qin was in good terms with Wang at least up to May 2018.  If Qin had left documents relating to his assets in the USA Properties which had been transferred to Wang, he should have no difficulties to retrieve those documents with the assistance of Wang.  These documents are within his control.  If Qin did not get back these documents, it can only be the result of his own decision. 

197.  I find that Qin has failed to deliver to the Trustees all books, documents, papers and writings under his control relating to his properties and affairs. 

198.  Qin was all along legally represented since 15 August 2016 when K&C filed a notice to act for him and later lodged the Annulment Application for him.  The Trustees had sent letters to K&C on 5 September 2016, 20 September 2016 and 6 October 2016 requesting K&C to inform Qin of his statutory duties as a bankrupt.  K&C had in their letter dated 6 October 2016 informed the Trustees that: “Please be advised that your letter has been forwarded to the Debtor [Qin] and we have no instructions to prepare the statement of affairs on behalf of the Debtor for the moment.” (pp 319-323)  I find that Qin was fully aware of the Bankruptcy Order latest in August 2016 when he instructed K&C to make the Annulment Application and that he had been informed by K&C latest in October 2016 that the Trustees were looking for him.  It was his decision not to contact the Trustees until September 2017 after the Annulment Decision was issued which was more than one year after the Bankruptcy Order. 

199.  Section 129(1) of the BO provides that:

“(1) Any person who has been adjudged bankrupt shall in each of the cases following be guilty of an offence ―

(c)   if he does not deliver up to the trustee, or as he directs, all books, documents, papers and writings in his custody or under his control relating to his property or affairs, unless he proves that he had no intent to defraud;”

200.  Qin did not dispute that he did not deliver up to the Trustees all books, documents, papers and writings requested by the Trustees relating to his property or affairs.  He only denied that the documents requested were in his custody or under his control.  I do not accept his bare assertions for reasons stated above.  I find that the Trustees have proved on balance of probabilities that Qin did not deliver up to the Trustees all books, documents, papers and writings requested by the Trustees in his custody or under his control relating to his property or affairs.  After the Trustees established the aforesaid facts, it is up to Qin to prove that he had no intent to defraud.  Qin only denied that he had the documents requested in his possession or control which is not accepted by this court.  Qin has not proved on balance of probabilities that he had no intent to defraud. 

201.  I find that the Trustees have proved on balance of probabilities that Qin has committed an offence under section 129(1)(c) of the BO.  The fact that Qin has not been charged or convicted of an offence under section 129(1)(c) of the BO is neither here nor there.  Objection under Ground (g) is made out if the Trustees prove on balance of probabilities that Qin has committed the relevant offence.  He might not have been charged or convicted of the relevant offence for all sorts of reasons.  It is not a prerequisite for Ground (g) that Qin has to be charged or convicted of the relevant offence.  As such, I find that the Trustees have established their objection under Ground (g) against Qin relying on Qin’s failure to deliver up to the Trustees all books, documents, papers and writings requested by the Trustees in his custody or under his control relating to his property or affairs.  

The S129(1)(e) Offence

202.  The Petition was filed with the court on 6 May 2016 and the Bankruptcy Order was granted on 27 July 2016.  The Trustees’ investigation showed that Qin transferred or attempted to transfer his shareholding in UECL, the Outlets Co and the Culture Co to Wang between the date when the Petition was present and the date of the Bankruptcy Order in contravention of section 129(1)(e) of the BO. 

203.  The Trustees’ case is that when the Petition was presented on 6 May 2016, Qin was the sole director and sole shareholder of UCEL.  On 12 July 2016, Wang was appointed as the director of UECL in place of Qin.  On 13 July 2016, B transferred his shareholding in UECL to Wang. However, the aforesaid share transfer was not valid as the updated register of members and the share transfer documents were not provided to the registered agent of UECL before the Trustees took custody of Qin’s shareholding in UECL on 16 June 2017. 

204.  When the Petition was presented, Qin was also the sole director and sole shareholder of the Outlets Co and the Culture Co.   Both companies were incorporated in the British Virgin Islands (the “BVI”). 

205.  The Outlets Co was the sole shareholder of Silk Road Outlets HK Limited (the “HK Co”) which in turns owns 90% in a PRC company (the “PRC Co”).  The PRC Co had a development project in Xinjiang.  According to the 2017 SOA and the 2018 SOA, the Outlets Co and the HK Co had a total market value of about HK$200 million.  The Trustees’ investigation suggested that the aforesaid development project of the PRC Co had come to a halt (pp 333-335).

206.  The principal business of the Culture Co was unknown to the Trustees and Qin did not include his shareholding in the Culture Co as his assets in his SOAs. 

207.  On 12 July 2016 (ie 15 days before the granting of the Bankruptcy Order), Wang was appointed as the director of both the Outlets Co and the Culture Co in place of Qin.  On the next day (ie 13 July 2016) Qin transferred his shareholding in both the Outlets Co and the Culture Co to Wang. 

208.  As in the case of UECL, the transfer of Qin’s shareholding in the Outlets Co was also unsuccessful as the register of members filed with the Registry of Corporate Affairs in the BVI was not updated.  The Trustees applied to the BVI court for recognition of the Bankruptcy Order and took into custody of Qin’s shareholding in the Outlets Co on 10 February 2017.  However, the transfer of Qin’s shareholding in the Culture Co to Wang seemed to have gone through.

209.  Qin contended that the transfers of the shares in UECL, the Outlets Co and the Culture Co were all made in compliance with the Marital Agreement which was agreed two years before the Petition was presented against him.  He explained that the shares transfers were postponed to mid-2016 because he was then the Chairman and CEO of the List Co and was occupied with the business and affairs of the List Co since the signing of the Marital Agreement.  Qin submitted that the transfers were not made with the intention of fraud but to honour the Marital Agreement. 

210.  Chan submitted in Chan’s 4^th Affirmation that the shares in UECL, the Outlets Co and the Culture Co were not specifically named as “Property” or “Wife’s Separate Property” in the Marital Agreement and the shares transfers were all made on 13 July 2016, ie just two weeks before the making of the Bankruptcy Order on 27 July 2016. 

211.  Section 129(1)(e) of the BO further provides that:

“(1) Any person who has been adjudged bankrupt shall in each of the cases following be guilty of an offence ―

(e)   if, after the presentation of a bankruptcy petition by or against him or within 12 months next before such presentation, he fraudulently removes any part of his property to the value of $50 or upwards:”

212.  According to the available information as set out in paras 159 and 205 above, I accept that the value of Qin’s shareholding in UECL and the Outlets Co had value over HK$50.  Qin had transferred his shareholding in the Culture Co to Wang and had attempted (but failed) to transfer his shareholding in UECL and the Outlets Co to Wang.  Section 129(1)(e) of the BO requires Qin to “fraudulently remove” his property to commit an offence under that section. 

213.  As Qin’s attempts to transfer his shareholding in UECL and the Outlets Co failed, Qin cannot be said to have committed the S129(1)(e) offence in respect of his shareholding in UECL and the Outlets Co as the property has not been “removed” from him.  It was at most an “attempted to remove” which is not an offence under section 129(1)(e) of the BO.  I find that the Trustees fail to establish an objection under Ground (g) relying on Qin’s attempted transfer of his shareholding in UECL and the Outlets Co to Wang. 

214.  In respect of the transfer of Qin’s shareholding in the Culture Co, the Trustees’ case is that they did not know the business of the Culture Co (para 60 of Chan’s Affirmation).  The Trustees adduced no information on the value of Qin’s shareholding in the Culture Co which had been transferred to Wang.  In such case, whether the Culture Co had any business or assets is unknown.  This court has no basis to find that Qin’s shareholding in the Culture Co had value of HK$50 or upward at the date of transfer. 

215.  Furthermore, Qin’s case is that the transfer was pursuant to the Marital Agreement.  As pointed out in para 138 above, the Trustees have not taken issue on the genuineness of the Marital Agreement.  The Trustees contended that the words “Property” and “Wife’s Separate Property” in the Marital Agreement had not specifically referred to the shares.  Qin might be wrong in his understanding of the Marital Agreement but this does not amount to fraud. 

216.  Qin had produced movement records kept by the Immigration Department showing that he left Hong Kong on 5 January 2016 and did not return thereafter.  The statutory demand in this case was served to Qin by advertisement on newspaper published in Hong Kong on 21 March 2016 and the Petition was served to Qin by advertisement on newspaper published in Hong Kong on 17 July 2016.  Qin might or might not be aware of the bankruptcy proceedings as at 13 July 2016 when he effected transfer of his shares in the Culture Co to Wang.  The fact that the transfer occurred shortly before the granting of the Bankruptcy Order does not per se prove that the transfer was made “fraudulently”. 

217.  I find that the Trustees have failed to prove on balance of probabilities that Qin had “fraudulently removed” property to the value of HK$50 or upwards in respect of the transfer of his shareholding in the Culture Co to Wang.  I find that the Trustees fail to prove on balance of probabilities that Qin has committed an offence under section 129(1)(e) of the BO and thus fail to establish an objection under Ground (g) relying on the S129(1)(e) Offence.

Findings on grounds of objection

218.  I find that the Trustees have established objection under Ground (b) in respect of Qin’s failure to assist the Trustees to obtain refund of the Withholding Tax in the context of the overall administration of Qin’s estate.  The Trustees also establish Grounds (c) and (d) relying on Qin’s un-cooperative conduct in dealing with the Canadian Property, the USA Properties and the UECL affairs.  The Trustees have also established objection under Ground (g) relying on Qin’s failure to deliver to the Trustees all books, documents, papers and writing under his control relating to his property and affairs. 

219.  I find that the Trustees fail to establish objection relying on Qin having committed an offence under section 129(e) of the BO.

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

Other matters

221.  Qin said that he had made settlement offer to his creditors through the Trustees but met with no response.  This does not assist Qin.  The fact that Qin had made settlement offer to his creditors does not relieve him from performing his duties as a bankrupt. 

222.  Qin complained that he had urged the Trustees to take action to recover the HK$45 million loan from HEC Finance and payment under the CBs from the List Co but the Trustees took no action. 

223.  I have in the section on “The Trustees’ requests for information and documents” set out how Qin failed to provide information and supporting documents for the CBs and his alleged claim against HEC Finance.  The Trustees were unable to trace Qin’s such assets deal to his failure to cooperate with the Trustees to provide them with the necessary information and documents.  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 para 69 of the judgment)  The same applies to this complaint of Qin. 

224.  Qin also complained that the Trustees did not keep him informed on recovery for his estate. 

225.  How the Trustees will recover assets for the estate is a matter for the Trustees.  If Qin considers that his legal rights have been infringed, it is up to him to take appropriate actions to safeguard his interest.  However, it is no excuse for him not cooperating with the Trustees or not performing his duties as a bankrupt. 

226.  Qin further complained that Lam & Co acting for the Trustees in the Application are also solicitors acting for HEC Securities in HCA 543/2016 in which he had counterclaimed against HEC Securities.  Chan had pointed out in para 10 of Chan’s 4^th Affirmation that according to the amended defence and amended counterclaim filed in HCA 543/2016 on 14 July 2016, the counterclaim against HEC Securities was in respect of five convertible bonds issued by the List Co transferred by a company called “Up Energy Group Limited” (the “Group Co”) to HEC Securities.  The Group Co is beneficially owned by a discretionary trust set up by Qin’s father-in-law. 

227.  I see no relevancy between the alleged claim of the Group Co against HEC Securities in HCA 543/2016 and the Application.  In any event, whether Lam & Co have conflict of interest in handling the Application will not have impact on whether the grounds of objection to Qin’s Automatic Discharge have been made out. 

Whether to extend the bankruptcy period of Qin

228.  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)

229.  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.”

230.  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. 

231.  In the Lau Chi Kam case (supra) the Court of Appeal 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 para 18 above.

232.  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). 

233.  The debts owed by Qin was substantial.  The Trustees had received proofs of debts claiming for more than HK$2,483 million against Qin’s estate.  Yet Qin has failed to cooperate with the Trustees in recovering assets for his estate. 

234.  Qin has refused to sign the authorisation letter to enable the Trustees to obtain bank statements and transaction details of UECL’s bank accounts held with HSBC.  UECL is a company holding substantial asset worth HK$273.5 million.  Checking the bank transactions of UECL is an important part for the administration of Qin’s estate.  Qin’s failure to cooperate with the Trustees renders the Trustees unable to proceed with their investigation. 

235.  Qin claimed in his SOAs that he had assets worth about HK$600 million to HK$645 million but failed to provide supporting documents requested by the Trustees.  His conduct has rendered the Trustees unable to chase his substantial assets.  His creditors have for certain suffered. 

236.  Qin’s post-bankruptcy order conduct shows his total 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 Qin’s bankruptcy period.  

237.  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 para 76 of the judgment that the maximum period of suspension should be reserved for the most egregious cases. 

238.  Ms Ling for Qin refers to Totterdell v Nelson (supra) when 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.”

239.  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.”

240.  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 exercises 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) 

241.  In this case, the difficulties encountered by the Trustees in their investigation into the affairs and assets of Qin were largely (if not solely) caused by Qin’s failure to cooperate with the Trustees in failing and/or refusing to provide information and supporting documents in relation to his assets.  I see no injustice or unfairness in extending Qin’s bankruptcy period.  In the words of Le Pichon J (as she then was), Qin’s rehabilitation was delayed by his own failings.  (See para 228 above)

242.  In the circumstances of this case, I am of the view that extending the bankruptcy period of Qin for three years is appropriate. Accordingly, I order that the Relevant Period shall cease to run for three years commencing from 26 July 2020. 

Costs

243.  The Application is caused by Qin’s misconduct.  Qin instead of his creditors shall be held liable for his misconduct.   I make an order nisi that Qin shall personally bear the costs for the Application to be assessed by summary assessment and to be paid by Qin after his discharge from bankruptcy.  Such costs shall initially be paid out from Qin’s estate to the Trustees if there is sufficient fund in Qin’s bankruptcy estate and Qin shall forthwith reimburse his bankruptcy estate for such costs after his discharge from bankruptcy.  If Qin’s estate does not have sufficient fund to pay such costs, the balance is payable by Qin to the Trustees forthwith after his discharge from bankruptcy. 

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

245.  I further direct the Trustees to submit their statement of costs for the Application to the court with copy to Qin within 14 days after the aforesaid costs order nisi has becomes absolute.  Qin shall submit to the court with copy to the Trustees his comments (if any) on the Trustees’ statement of costs within 14 days thereafter.  The court will then assess the costs payable by Qin for the Application by summary assessment by way of paper disposal.