XCHRX SANO SCREEN MANUFACTURERS LTD. v. J & R BOSSINI TRADING LTD.

HCA12351/1998 and HCA 12352/1998
(Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12351 OF 1998

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D E C I S I O N

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1. This is the appeal of Law Ka Shing ("Law"), a former director of the Judgment Debtor (who has resigned on 1 November 1999). By an order dated 1 September 2000 made on the Judgment Creditors' ex parte application, Law was ordered to attend before the Master and be orally examined. Law applied to court for that order to be set aside. On 1 March 2001, the Master in effect refused that application and made an order regarding the production of documents (and other directions) in relation to the hearing of the oral examination. Law seeks in this appeal that the said orders of 1 September 2000 and 1 March 2001 be set aside.

2. The background leading to this appeal is undisputed :

(1) the judgment debt of these 2 consolidated actions arose out of the leasing of 2 warehouses by the Judgment Creditors (as landlords) to the Judgment Debtor (as tenant) under 2 tenancy agreements;

(2) the initial deposits and rental payments (except that for the last month in about May 1998) came from a J & R Bossini International Ltd;

(3) further, by reason of the following sub-paragraphs, the Judgment Debtor is in effect a subsidiary of Bossini International Holdings Ltd (a company incorporated in Bermuda);

(4) the 2 shares of the Judgment Debtor are held by Bossini Investment Ltd (registered in the BVI) and J & R Bossini Holdings Ltd respectively;

(5) the 2 shares of J & R Bossini Holdings Ltd are held by the Judgment Debtor and Bossini Investment Ltd respectively;

(6) Bossini Investment Ltd (one of the Judgment Debtor's 2 shareholders) is 100% directly owned by Bossini International Holdings Ltd;

(7) J & R Bossini Holdings Ltd (the other of the Judgment Debtor's 2 shareholders) is 100% indirectly owned by Bossini Internation Holdings Ltd;

(8) Law is the President of the Bossini Group, a description given in the 1999 to 2000 annual report of Bossini International Holdings Ltd.

3. Law accepts that as a former director of the Judgment Debtor, RHC Ord 48 prima facie applies to him. He contends that the court's discretion should, however, be exercised to refuse the application for his examination because :

(a) there are current directors who will have detailed knowledge of the affairs of the Judgment Debtor and therefore are the appropriate persons to be examined;

(b) Law deposed that he does not have in his possession any documents relating to the Judgment Debtor;

(c) Law deposed that he does not have recollection whatever of any important dealings or information of the Judgment Debtor.

4. It should be noted that:

(1) the period of the 2 tenancies (the subject matter of this action) fell generally within the time when Law was still the Judgment Debtor's director;

(2) Law has not deposed that he was not involved in the management of the Judgment Debtor or was otherwise involved in its affairs while he was its director;

(3) Law has not deposed that as the Bossini Group's President, he is unable to obtain possession, custody or control of the documents relating to the Judgment Debtor.

5. It is common ground that an examination under Ord 48:

(a) "is not only intended to be an examination, but to be a cross-examination, and that of the severest kind" : Republic of Costa Rica v Strousberg (1880) 16 Ch. 8;

(b) "is to permit the examination of officers connected with a corporation as to its property and assets" : Societe Generale du Commerce [1904] 1 KB 794, 797.

6. In a case where the former director is clearly and obviously not be in a position to assist as to the Judgment Debtor's property and assets, I agree that the discretion should be exercised to refuse an application for his examination. However, given the factual background of this case (set out above), I agree with the Judgment Creditors' argument in effect that this is not such a clear and obvious case and the examination of Law may provide useful information as to, for example :

(1) the relationship of the Judgment Debtor to the other companies in the Bossini Group;

(2) any (and, if so, what) movement of the Judgment Debtor's property and assets to and from the other companies in the Bossini Group;

(3) whether Law, as President of the Bossini Group, would have documents of the Bossini Group and/or companies in the Bossini Group which may be relevant to (1) and (2) above.

The ultimate aim of the examination is to find out the property and assets (if any) of the Judgment Debtor.

7. By reason of the matters above, I find that the 2 orders made respectively on 1 September 2000 and 1 March 2001 were correctly made. This appeal is dismissed.