XCHRX STANDARD LONDON (ASIA) LTD. v. HO WAI KIN, ROBERT

IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE

IN BANKRUPTCY NO. 1023 of 1998

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JUDGMENT

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1. This is an appeal against the discharging of a prohibition order by Master Jones on 12 October, 1998, yesterday. The original order, granting the prohibition had been made by him ex parte on 26 September 1998.

2. The petitioning creditor is a bank. It presented a bankruptcy petition against the alleged debtor, a Mr Robert HO, on 28 September in fulfilment of its undertaking to the Master on the obtaining of the ex parte order. The petition is based on the failure of the alleged debtor to meet his liabilities under a guarantee. Those liabilities total, as far as this creditor is concerned, in excess of HK$25 million. They relate to a number of companies of which the alleged debtor is director and/or shareholder. It is not seriously contended that he is not liable under the guarantees.

3. He is an Australian passport holder and has business interests in Australia. It is feared that he will leave for Australia and not return. It is a fact that he wishes to travel to Australia and to the Mainland. In Hong Kong, the Wah Tung group of companies with which he is concerned, has substantial liabilities. It, or they, are likely to be put into liquidation. His presence in Hong Kong will certainly be material to that, as well as to an examination of his own affairs.

4. Whether the prohibition order may be made on the strength of the presentation of a bankruptcy petition is the main issue. Does the court have jurisdiction to make it? Section 21B of the High Court Ordinance give the court jurisdiction to make a prohibition order, "to facilitate the enforcement, securing or pursuance of inter alia

(c) a civil claim (other than a judgment)

(i) for the payment of money; or

(ii) for the delivery of any property or the performance of any act."

5. I have little difficulty in concluding that a bankruptcy petition comes within the definition of "a civil claim" of the nature set out in the sub subsection.

6. Section 99(1) of the Bankruptcy Ordinance (Cap.6) provides:

"that the rules and practice of the High Court for the time being for regulating the ordinary civil procedure of the court shall, so far as the same may be applicable and not inconsistent with the provisions of this Ordinance, be applied to bankruptcy proceedings and every order of the court made in connection with bankruptcy proceedings may be enforced in the same way as a judgment of the court made in respect of any other civil proceedings may be enforced".

7. To my mind, this section is wholly consistent with Section 21B of the High Court Ordinance.

8. Turning now to Order 44A, under rule 1(ii), "Application of the prohibition order to an intended action", we find that:

"An order shall not be made unless the plaintiff at the hearing of his application for such an order a) produces at the hearing of the application, a draft writ; and b) undertakes to the judge to issue the writ on the next day on which an office of the court is open".

9. Mr Giles for the creditor, Mr Ho, contends that the specific reference to "writ" in this order precludes bankruptcy proceedings from forming the basis of an application for such an order. There is certainly an inconsistency, on the face of it, between this order and the section from which it derives its force. I think the order is unhappily drafted and I share the reservations of the Court of Appeal and of Barnett J as to the draftsmanship of the Ordinance and rule, as expressed in the two Bank of India cases against Murjani.

10. In particular, I think the draftsman of Order 44A "must have nodded". The order and rule cannot, in my view, cut down on the ambit of the section and limit "a civil claim" to proceedings begun by writ of summons. Accordingly, "writ" should be given its widest meaning, or at least treated as being no more than an example by which proceedings are commenced. To do otherwise, and to confine the construction of the rule to its strict wording would be to ignore the broader concept of claims and proceedings envisaged in Section 21B(1)(c). I therefore hold that this court has jurisdiction under Order 44A and Section 21B to make a prohibition order against the debtor.

11. The second point is the question of merit. To some extent, the factual background gives an indication as to where these lie. It is common ground that Mr HO wants to leave the jurisdiction. Given the overall state of indebtedness of the companies and of himself under the guarantee or guarantees, I consider that there is good reason to fear his failure to return. Family and other connections with Hong Kong are no guarantee of his return. There is no evidence of any real prospect of injection of capital into or viable existence of the businesses. There have been, in the affirmations, general assertions of possible commercial interest, discussions as to the possibilities of association and survival, and of his need to go to Australia to lend force to these and to secure positive opportunities. I see, at present, no substance in these assertions.

12. The overriding need, as far as the interest of the petitioning creditor and perhaps others, is to have him here so that the liquidation of the companies can proceed, or whatever alternative solution can reasonably be devised, and his own position can properly be dealt with. He meets, in my view, the requirements under Section 21B(3).

13. This appeal is therefore allowed and the prohibition order restored. Order for costs for the plaintiff to be taxed if not agreed.