The Joint and Several Liquidators of DAYS IMPEX LTD (In Liquidation) v. PITTY KWOK KWAI WAH

HCCW 298 & 299/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 298 OF 2011

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 299 OF 2011

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(Heard together)

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D E C I S I O N

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1.  There are two summonses issued by the respondent, (1) for production of documents, ie audit working papers for 5 years; (2) time summons to extend time for her to file an affirmation in opposition.

Background

2.  Days Impex Limited (“Days Impex”) and Days International Limited (“Days International”) were wound up on 12 December 2011.  The current liquidators were appointed on 22 August 2012.

3.  The liquidators’ case is that the operations and affairs of the 2 companies involved circular fund flows between them.  Funds applied for from various banks were channelled through different entities and companies, including Days Impex and Days International.  The funds were eventually used to repay loans previously obtained and part of the money was spent by companies within the Days Group or related individuals.  Their case was premised on false import or export loan applications by the Days companies. 

4.  Officers of the companies, Mahesh Dayaram and Nanik Dayaram, were convicted of conspiracy to defraud in relation to false invoices and other documents submitted for applying for bank loans.  The respondent, Ms Kwok, was acquitted in the criminal trial.

5.  The liquidators took out a summons on 9 March 2017, seeking a declaration that Ms Kwok was knowingly a party to the carrying on business of Days Impex and Days International, with intent to defraud creditors by procuring the companies to apply for substantial loans.  The liquidators also seek a declaration that Ms Kwok, as an officer of the company, was guilty of breach of duties, misapplication of the bank loans and an order for her to pay the liquidators such sums.

Production Summons

6.  Ms Kwok seeks audit working papers for 5 financial years, from 2005 to 2010.  Her purported defence is that she had signed the audited financial statements but never the working papers.  She does not now have documents to prove her case and she would need documents to prepare her affirmation in opposition.  The liquidators oppose the application for production on the ground of irrelevance. 

7.  I agree with the liquidators’ stance.  The liquidators’ claim against Ms Kwok was based on the period of March to September 2011, in which her alleged breaches of duties arose.  Accordingly, the audit working papers for the period 2005 to 2010 are irrelevant to the liquidators’ summons.  Further, if the alleged defence was true, all that Ms Kwok would need to do is to say she had never signed the supporting audit working papers, leaving the liquidators to produce any signed working papers to contradict her version.

8.  I dismiss the production summons on the ground of irrelevance.

Time Summons

9.  The respondent had already received the papers in June 2017.  She had been given one extension by the liquidators, by correspondence, for three months.  This accordingly is her second request for extension of time for another 3 months.  In the course of the oral submission, Ms Kwok even asked for an extension of 6 or 9 months.

10.  I appreciate that the case may not be easy for Ms Kwok.  She has no lawyers on record.  The reason for the time extension is that she needed to acquire documents from various sources, including transcripts, and she may have to read some of the 600 boxes of documents seized by the liquidators.

11.  Till this date, I have not seen Ms Kwok make attempts to obtain the relevant transcripts, whether from her former solicitors in the criminal trial or the court.  She estimated that out of the 60 days of criminal trial, about 10 to 15 days’ transcripts would be required.  However, she has done nothing to identify those 10 to 15 days.  She is well advised to proceed to obtain a CD of the proceedings in the criminal trial and pick the relevant days of transcript evidence to be transcribed by the court as soon as possible.

12.  As for the 600 boxes of liquidators’ documents, it is not for Ms Kwok to fish for evidence without even stating her affirmation in opposition.  The necessary documents in support of the liquidators’ case have already been given to her as exhibits to the liquidators’ affirmations.  I will not exclude the possibility that with a proper affirmation in opposition and with sufficient identification of relevant documents, the court will permit Ms Kwok to file a further affirmation or a further summons for production of documents should circumstances require.  But as of the present, I require Ms Kwok to file an affirmation in opposition to the liquidators’ summons as soon as possible.

13.  Appreciating the difficulties to her as a litigant in person and the volume of documents now relied on by the liquidators, I will give her 4 months’ extension but on an unless order basis.  In other words, unless, by 4 pm on 15 March 2018, Ms Kwok files and serves her affirmation in opposition to the liquidators’ summons, she will be barred from doing so.