OFFICIAL RECEIVER v. WONG HON KAM

HCB21847/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCYPROCEEDINGS

NO. 21847 OF 2002

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J U D G M E N T

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1.  The bankrupt applied for petition for his bankruptcy on 25 October 2002.  He was adjudged bankrupt on 14 January 2003.  Therefore, by the operation of law under section 30A of the Bankruptcy Ordinance, the bankrupt - being a first time bankrupt - but for the application on 14 January 2003 by the Official Receiver, who acted as the trustee in this case, to object to the bankrupt’s discharge, should have been discharged from bankruptcy.

2.  Before the bankrupt was due to be automatically discharged from bankruptcy, the Official Receiver issued a summons dated 12 November 2006, together with a report in support of his application to object to the bankrupt being discharged from bankruptcy.  The ground being relied on by the Official Receiver is the provision under section 30A(4)(d) of the Ordinance, that is, the bankrupt’s conduct before and after the period of the commencement of bankruptcy had been unsatisfactory.

3.  The Official Receiver filed a further supplemental report on 2 March 2007.  These two reports set out the unsatisfactory conduct of the bankrupt.  Shortly put, the conduct being complained of was the failure by the bankrupt to provide to the Trustee his books and accounts in respect of his roast pork business, of which the bankrupt was a sole proprietor.  There were also complaints about the bankrupt having transferred his roasted meat business to his brother just shortly before his bankruptcy without receiving any consideration.  However the accounts of the bankrupt’s business for the two-year period of year 2002 and year 2001, and of year 2002 to year 2002, all show that this business had netted a net profit in excess of $100,000.  An explanation was requested from the bankrupt in respect of these conducts.  The bankrupt explained that he had made an effort to trace those accounts, however he was not able to find any.

4.  The bankrupt opposed this application by filing an affirmation in opposition dated 30 January 2007.  In it, the bankrupt explained that he was facing a very tight business cash flow at the time and he was very confused, and amidst the confusion, he lost his books and accounts of the business.  He further complained that the Official Receiver did not take earlier action in respect of the complaints against him and only waited until shortly before the expiry of the relevant period of automatic discharge.

5.  No appearance was made by the bankrupt today, and I am satisfied that the bankrupt had had due notice of today’s hearing.

6.  After having considered the submissions by Mr Lo, representing the Official Receiver today, and also the contents of the reports, I accept the complaints made in the report.  Having further considered the bankrupt’s affirmation, I do not accept the bankrupt’s explanation for his failure to produce books and accounts.  I find that no satisfactory explanation has been given by the bankrupt either for the loss of the books and accounts or for not receiving any consideration for the transfer of his roast meat business shortly before his bankruptcy.

7.  I am, therefore, satisfied that the ground being relied on by the Official Receiver under section 30A(4)(d) is validly made.  I further find that the conduct of the bankrupt before and after the commencement of bankruptcy in the circumstances is not satisfactory.

8.  Having come to this finding, I should exercise my discretion in deciding whether I should suspend the running of the relevant period of automatic discharge.  In the proper exercise of discretion, I shall, of course, according to the previous authorities in respect of this type of cases, take a balanced view, including the pre- and post-conducts of the bankrupt and the contributions that he has made to the bankrupt’s estate.

9.  In considering the relevant factors in this application, I should take note of the fact of the total sum of $94,000 proven debts, the bankrupt made no contributions to the bankrupt’s estate.  I further observe that the bankrupt has failed to appear to make submissions in opposition to the application. These factors are balanced against the fact that the period of discharge has been de facto suspended for a while by the interim orders granted by Masters before today’s hearing.

10.  Having considered all the circumstances of the case, and the spirit and principle behind this legislation, I come to the view that I shall suspend the period of discharge for a period.  The proper appropriate period, in my view, in the circumstances, is six months.  In light of the existing interim orders being in place, I shall, therefore, order the lifting of the suspension granted by the interim orders with effect from the date of the making of the interim orders, which was 10 January 2007.

(Discussion on the interim order)

11.  The two interim orders are discharged. I agree and adopt the reasoning in the case of Official Receiver, the trustee of the estate of Chan Kwok Keung, a bankrupt v Chan Kwok Keung, a bankrupt (unreported), HCB 20722/2002, Master Au Yeung, 5^th July 2007, a decision under  appeal.  I further order the bankrupt to pay for the costs of this application.

(Discussion on costs)

12.  The cost is gross sum assessed at $13,000.