BROADFIELD INTERNATIONAL LTD AND ANOTHER v. LAU CHUN MING

HCB 16163/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO. 16163 OF 2002

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REASONS   FOR   DECISION

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Application

1.  I have before me an application for:

(1) A declaration that a resolution passed at a purported Creditors Meeting held on 29 June 2009 is null and void;

(2) Further or alternatively, an order to remove Messrs. Yat Ming Cheung and Rainier Hok Chung Lam, both of PricewaterhouseCoopers, the Joint and Several Trustees purportedly appointed by the ordinary resolution passed at the purposed Creditors’ Meeting held on 29 June 2009.

Background

2.  The Bankruptcy Order was made on 30 October 2002.  The Respondent is the largest creditor.  He has submitted a proof for HK$50,502,960 representing 73.35% of all debts in respect of which proofs of debt have been submitted.  It is not disputed that the sum owed to the Respondent represents the large majority of the Bankrupt’s debts.

3.  On 21 November 2002 Lai Kar Yan Derek and Darach E. Haughey were appointed as Joint and Several Trustees of the property of the Bankrupt (“original trustees”) at a creditors meeting comprising of the Applicants and the Respondent.  The period of automatic discharge of the bankruptcy was extended on the application of the original trustees to until 29 October 2009.  That period has been extended by order of Master Hui until October 2010.  That decision is currently the subject of a review application the date of which has not at the time of drafting this decision been fixed.

4.  By the end of 2008 the Respondent had become unhappy with the progress that the original trustees had made in a number of respects with the progress of the bankruptcy.  It appears that this lack of progress was at least in part due to the fact that the trustees had insufficient funds to progress the process of locating and realising the Bankrupt’s assets with the alacrity that the Respondent wished.

5.  It is not in dispute that in order for the bankruptcy to proceed further it is necessary for funds to be provided by creditors.  Ms. Law who appeared for the Applicants confirmed that the Applicants are not prepared to provide such funding.  The Respondent is prepared to provide further funding, but he wishes to have new trustees in whom he has more confidence than he has in the original trustees.

6.  It was for this reason that on 19 June 2009 that the Respondent sent a letter to the creditors copied to the Official Receiver convening a meeting to be held on 29 June 2009 in order to consider an ordinary resolution to remove the original trustees and replace them with Yam Ming Cheung and Rainer Hok Chung Lam of PricewaterhouseCoopers.

7.  The meeting took place on 29 June 2009.  It was attended by the 2^nd Applicant.  She objected to the resolution but it was passed.  It is pertinent to note that the 2^nd Applicant is the Wife of the Bankrupt and the Bankrupt’s Wife and Daughter own the 1^st Applicant.

The Applicants’ objection

8.  The Applicants raised 2 objections to what took place.  First, that the Respondent failed to provide the deposit required by Rule 172 of the Bankruptcy Rules.  Secondly, that the meeting was unfairly conducted.

9.  It is correct that a deposit was not provided, but as the meeting was convened and the creditors attended in my view this is no reason to treat the meeting as unlawful or improper.  As it is the Respondent had confirmed to the original trustees that he would pay the costs of the meeting and nobody took the point that a deposit had not been provided at the meeting itself so this is an artificial point.

10.  I do not think that there is any good ground for removing the new trustees.  It is understandable that the Respondent if he is going to fund future work wishes to feel comfortable with the professionals who will expend those funds.  As it is the Applicants are not prepared to fund the continuing bankruptcy and they self-evidently have a personal interest in stopping its progress until the bankruptcy is discharged.

11.  I dismiss the application and order that the Applicants pay the costs of the application to the Respondent.