XCHRX RE C.A. PACIFIC FINANCE LTD. & C.A. PACIFIC SECURITIES LTD.

HCCW 36/1998, 37/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NOS 36 AND 37 OF 1998

____________

____________

________________________________________

DECISION ON APPLICATION FOR
ADJOURNMENT OF PUBLIC EXAMINATION

________________________________________

1. This is an application made in chambers by Mr Jason Wong But-sit for an adjournment of his public examination under Section 168IA(1) of the Companies Ordinance.

2. The grounds of Mr Wong's application appear in his affirmation filed on 12 November 2001. In paragraph 2 of that affirmation Mr Wong says that his criminal appeal CACC 72 of 2000 (on appeal from HCCC 364 of 1998) had been fixed for hearing on 3 May 2001, but due to the late filing of written arguments by his counsel, the court had ordered that a new hearing date be fixed and that new hearing date had been fixed for 30 October 2001. However, another adjournment had had to be granted because Mr Wong's counsel had been discharged from hospital a few days earlier. Stuart-Moore V-P had therefore granted Mr Wong's application for an adjournment of the hearing of the appeal scheduled for 30 October 2001 and the new hearing date for that criminal appeal is now 12 March 2002.

3. Mr Wong says in paragraph 2 of his affirmation that according to his knowledge and understanding, if he succeeded in his criminal appeal then he had "no obligation or any responsibility in the present proceedings", i.e. HCCW 36 of 1998 and HCCW 37 of 1998. He further says that "by law" if he faces a charge in both civil and criminal proceedings, the criminal case had priority and therefore he asks that the hearing date of his public examination be fixed after the conclusion of his criminal appeal in March 2002.

4. He further says in his affirmation that it would be unfair and unjust if the public examination were to take place before the conclusion of this criminal appeal. Although he has not stated in his affirmation how a public examination would work an injustice, he has expanded on that aspect in chambers today.

5. The first point that he has raised this morning is that a civil case mounted by CA Pacific Finance's Liquidators against him had also been adjourned until after the criminal appeal. In this regard, no materials have been put before me, although the Official Receiver has been informed that there has been no formal order or agreement for a stay or an adjournment until after the criminal appeal. In any event, in my view, the fact that an examination takes place before the criminal appeal followed by a civil case mounted by liquidators against him does not suggest any injustice or unfairness to me.

6. Secondly, Mr Wong says that he is confused by what would appear to be different approaches taken against him. He says that in his criminal trial, the prosecutor had said that he was not a director and that he had no authority, and yet in the examination for the purposes of considering disqualification proceedings, the Official Receiver has taken the approach that he was a de facto or shadow director.

7. In this regard, I do not see any injustice when he is simply being required to give answers in an examination applied for by the Official Receiver for the purposes of considering whether to institute disqualification proceedings on the basis that he was a de facto or shadow director. Should Mr Wong wish to take any point that he was not a de facto or shadow director, those would be points taken in any disqualification proceedings.

8. Thirdly, Mr Wong said that there has been adverse publicity since the publication of the fact that he is to be publicly examined. He says that he has been followed by reporters and he fears that this would affect the minds of any jurors in case on appeal, the appeal is allowed but with an order that there be a retrial.

9. In my view, this is not a weighty factor because his appeal may or may not be allowed, and even if it is allowed, a retrial may or may not be ordered. Even if a retrial is ordered, that would be some way off and it would appear to me that any publicity now would be likely to have very little effect on the mind of a juror one year or two years hence.

10. The fourth point that Mr Wong has taken is that the evidence that may be taken in a public examination could be used against him. This is a matter which has caused me some concern. In an examination, Mr Wong would be compelled to give evidence whereas in a criminal retrial, there would be no obligation on him to give evidence. The accused person's right to silence in a criminal trial is a fundamental right which the accused person enjoys in our courts. Therefore, I am concerned that if this were to continue by way of a public examination, the prosecution would be able to use the evidence given by Mr Wong by way of his answers and would be free to use his answers in the criminal retrial if one be ordered.

11. It seems to me that this objection would be met if a private examination under Section 221 is ordered against Mr Wong. In my view, the use of Section 221 by the Official Receiver to examine a "target director" is not excluded by the enactment of Section 168IA(1).

12. I have, in my ruling concerning Mr Alex Wong on 6 November 2001, set out my analysis of Section 221 and it seems to me that it would not be necessary to repeat it here. I had considered that a Section 221 examination order could be made at any time after a winding-up order has been made, on the Official Receiver's application, against any person and for any legitimate purpose of the Official Receiver in a winding-up. I had there considered that there is no exclusion of Section 221 merely by the enactment of Section 168IA.

13. In my view, Section 221 comes with what one might call certain factors which are of benefit to a potential examinee. One of those benefits is that he would be able to put forward to the court evidence that such an examination would cause him oppression. This would be so even after the setting aside of the "Rubicon" test by the judgment in Clover Bay Limited v BCCI [1991] Ch 90 and Re British and Commonwealth Holding Plc v Spicer & Oppenheim [1993] AC 426.

14. The fact that Section 168IA opens a second, wider doorway for a party wishing to conduct an examination does not, in my view, shut the narrower doorway that is provided by Section 221, in the absence of any express language to that effect and in the absence of any clear inference of the same. Accordingly, I take the view that an examination under Section 221 is not excluded by the enactment of Section 168IA.

15. The examination under Section 221 would protect the interest of Mr Wong in his apprehension that evidence might be used in the criminal trial against him. In a Section 221 examination, the examination is conducted in private and under Rule 62 of the Companies Winding-up Rules, only the Official Receiver or Liquidator or their counsel or solicitors employed for the purpose may attend the examination.

16. Further, Rule 62(2) provides that the notes of the depositions of a person examined under Section 221 shall not be filed or be open to the inspection of any person except the Official Receiver or Liquidator unless and until the court shall so direct and the court may, from time to time, give such general or special directions as it shall think expedient as to the custody and inspection of such notes and the furnishing of copies of or extracts therefrom. Therefore, there would not be any fear that the prosecution would simply by attending the examination be able to obtain the answers of Mr Wong to any questions that may be put to him in a Section 221 examination.

17. Further to that, the Official Receiver has offered an undertaking to the court to the effect that he would not disclose the contents of the private examination of Mr Wong, or any document disclosed by him in such examination, to any third party other than officers of his department and his legal and accountancy advisers except with the prior written consent of Mr Wong or the leave of the court. The Liquidators who are entitled to attend the private examination have also been contacted and they have also offered a written undertaking to the same effect.

18. In my view, an examination under Section 221 would serve the interest of justice best. It would enable the Official Receiver to get answers which he would then consider for the purposes of disqualification proceedings and which he would be able to use in any disqualification proceedings. I accept Mr Lam's submissions that there is some urgency in this matter in that if the appeal leads to a setting aside of the order of disqualification in the criminal case, then there would be all the more reason why the Official Receiver needs to consider the taking of disqualification proceedings. Balancing that is the effect of Section 221 on the protection of Mr Wong in his criminal trial; the restriction of the evidence to be taken in a Section 221 examination would not affect his right not to give evidence in the criminal trial.

19. No other point has been raised by Mr Wong as to why a Section 221 private examination would cause any oppressiveness to him. In the circumstances, I take the view that a Section 221 examination could be proceeded with in chambers against Mr Wong. I will now hear Mr Lam as to the drafting of the appropriate order.