XCHRX THE JOINT LIQUIDATORS OF CHARK FUNG SECURITIES CO. LTD. AND OTHERS v. CHAN KWONG HUNG

HCCW362/1998, HCCW364/1998 and
HCCW365/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS
NOS.362, 364 AND 365 OF 1998

-------------------

------------------------

D E C I S I O N

------------------------

1. This is the application by the applicant to examine the respondent pursuant to section 221(2) of the Companies Ordinance. The respondent is the former director of the three limited companies now under liquidation. The examination was in respect of the affairs of these companies.

2. When the matter first came before me in December 1999, the parties agreed to adjourn the matter on the understanding that the applicant would serve the questions on the respondent who would then answer the questions. The questions were served on 26 January 2000. They were not answered until recently on 11 September 2000. It is admitted that the answers were not full and complete because, according to the respondent, there was limited information he had in hand and he had to go through the large volume of documents of the companies which were being kept by the applicant. Further, he needed the staff of the companies to explain and assist him to answer some questions. He said he had given all his efforts to comply with the request at this stage.

3. This is, of course, not the proper forum to examine in detail each of the answers provided, but clearly the respondent must be in a position to answer in detail some of the extraordinary transactions, such as :-

1. Payment of $16 million to family members.

2. Payment of $57 million to the three companies of the respondent.

3. $99 million worth of transactions which was said to cover the faulty transactions of the staff of the three companies.

4. Payment to parties who maintained no contract with the three companies, two of these parties in fact are related to gambling casinos.

5. $5 million paid to three individuals.

As someone in control of the companies, it would be extraordinary for the respondent to provide such sketchy answers. Having considered these answers, his answer to the shortfall of the stocks of the three companies is particularly evasive. The inevitable inference is that he is deliberately refusing to answer the questions. The only way forward is to order examination of the respondent on oath on these matters. I will order the examination to be conducted before a master. I will further order that the questions to be asked of the respondent together with the relevant documents are to be supplied to the respondent one month before the examination.