RE JAMES HENRY TING

HCB 7809/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7809 OF 2012

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REASONS FOR DECISION

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Introduction

1.  This was an application by the Petitioner (“Akai”) for an order that the Debtor (“Mr Ting”) do attend at the substantive hearing of the Petition and be cross-examined on his evidence, failing which no affidavit evidence filed by him be used as evidence. At the end of the hearing, this court made an order in terms of the application with reasons to be handed down later.

Background

2.  By a Petition dated 23 November 2012, Akai sought a bankruptcy order against Mr Ting, Akai’s former Executive Chairman and CEO, for debts exceeding US$1 million and GBP340,000 respectively. These debts arose out of three costs orders issued by the Judicial Committee of the Privy Council, the Supreme Court of Bermuda and the Court of Appeal for Bermuda against him in 2010 and 2011.

3.  At paragraph 1 of the Petition, the Petitioner said Mr Ting was domiciled in Hong Kong and had, within 3 years immediately preceding the presentation of the Petition, carried on business in Hong Kong.

4.  In his affirmation in opposition dated 20 March 2013, Mr Ting did not dispute the debts as such. Instead, he contended that the court did not have jurisdiction to grant the bankruptcy order against him, on the basis that, inter alia, his domicile was not Hong Kong. Nor had he carried on business in Hong Kong within 3 years immediately preceding the presentation of the Petition.

5.  On the subject of domicile, Mr Ting said this in his affirmation:

“3. I was born in Shanghai in 1950. My family moved to Hong Kong when I was 7 years old. I later moved to Australia to study and then moved again to be with my mother and sister in Canada in April 1973. I adopted Canada as my domicile of choice.

4. I obtained Canadian citizenship in 1981.  … Whilst I was living in Canada, I started the company Semi-Tech Micro-Electronics Inc. that ultimately became part of Akai. I moved to Hong Kong from Canada in 1985 to assist in the manufacturing side of the business.  Eventually the Hong Kong office became the head office of Semi-Tech Group which later became Akai Holdings Limited.  I did have a Hong Kong I.D. card as this was required in order for me to be able to work in Hong Kong.  When I came to Hong Kong, I did not intend it to become my permanent residence.  I never considered Hong Kong to be my home.”

6.  At paragraph 10 of the affirmation, Mr Ting further asserted that he never intended to adopt Hong Kong as his domicile.

7.  Akai did not accept Mr Ting’s assertion.  In the reply affidavit of Mr Borrelli filed on behalf of Akai, it contended that the preponderance of the objective evidence suggested Mr Ting had adopted Hong Kong as his domicile in the mid to late 1980s. Such evidence included inter alia the fact that for the whole period from 1985 to October 2000, Mr Ting resided in Hong Kong with his family. From its headquarters which were in Hong Kong, Mr Ting managed Akai as its Chairman and CEO, save for the last month of that period.

Discussion

8.  Section 4 of the Bankruptcy Ordinance, Cap 6, states that:

“Conditions to be satisfied in respect of debtor

(1) A bankruptcy petition shall not be presented to the court under section 3(1)(a) or (b) unless the debtor–

(a) is domiciled in Hong Kong;

….

(c) at any time in the period of 3 years ending with that day–

…

(ii) has carried on business in Hong Kong.”

9.  Mr Manzoni SC, on behalf of Akai, submitted that in order to resolve the parties’ respective contentions on Mr Ting’s domicile, the Court would have to determine whether, when Mr Ting moved to Hong Kong in the mid-1980s, he intended to make a home in Hong Kong for an indefinite period: see section 5(2) of the Domicile Ordinance, Cap 596.  To adjudicate upon this question, the court would be required to assess the credibility of Mr Ting’s assertions in his affirmation against the weight of the objective evidence as set out in Mr Borrelli’s affidavit. 

10.  Mr Manzoni SC further submitted that the present case was indistinguishable from Re Chow Kam Fai [2004] 2 HKLRD 260 where the debtor, like Mr Ting, did not challenge the petitioning debt but did challenge the jurisdiction of the Hong Kong court on the basis that he was domicile in Macau. The First Instance Judge granted an order that he should attend court to be cross-examined on his affidavits, failing which they would be excluded. The order was upheld on appeal where the Court of Appeal ruled that, in the circumstances of that case, to refuse cross‑examination of a debtor on his affidavit in bankruptcy proceedings where the question of domicile was at issue would be “clearly wrong”: per Rogers VP at [13].

11.  The Court of Appeal further held that, in accordance with RHC Order 38 r 2(3), if the deponent of the affidavit refused to attend for cross‑examination, the usual order would be that his affidavit could not be used at the hearing in question.

12.  RHC Order 38 r 2(3) provides that:

“(3) In any cause or matter begun by originating summons, originating motion or petition, and on any application made by summons or motion, evidence may be given by affidavit unless in the case of any such cause, matter or application any provision of these rules otherwise provides or the Court otherwise directs, but the Court may, on the application of any party, order the attendance for cross-examination of the person making any such affidavit, and where, after such an order has been made, the person in question does not attend, his affidavit shall not be used as evidence without the leave of the Court.”

13.  I agree with Mr Manzoni SC’s submission.

14.  It was clear from the parties’ respective affidavits that the question of domicile would be a critical issue at the substantial hearing of the Petition. This, in turn, involved the determination of the subjective intention of Mr Ting when he moved to Hong Kong in 1985 and started to build the Akai business empire from Hong Kong. From this court’s point of view, it would be wholly unsatisfactory if it had to adjudicate upon this critical issue on the basis of affidavit evidence alone, untested by cross‑examination. It would also be grossly unfair to the Petitioner.

15.  As Rogers VP said in Re Chow Kam Fai:

[13] “…Whatever might be said of the strengths or weaknesses of the various points which are made both for and against the conclusion as to whether the respondent had acquired a domicile of choice, clearly there was material for cross‑examination. Looking at it from the point of view of the petitioner, it appears to me that it would have been clearly wrong to have refused cross‑examination. Given the fact that subjective intention is a highly important ingredient in the question as to whether a domicile of choice has been acquired, and in this case forms the major issue in this regard, if the petitioner were put in the position of having to accept the respondent’s assertions made on affidavit without the possibility of cross-examination, it would be put at an unfair disadvantage, to say the least.”

…

[15] “In my view, the judge cannot be faulted in coming to the conclusion that this was an appropriate case in which to order the cross‑examination. Once it is decided that there should be cross‑examination on affidavit, if the person in question fails to attend for cross-examination then the usual order is that his affidavits cannot be used without leave of the court.” (emphasis added)

16.  In my view, the same can be said of the present case.

17.  For these reasons, this court was of the firm view that it would be appropriate to grant an order that Mr Ting do attend at the substantive hearing of the Petition and be cross-examined on his evidence, failing which no affidavit evidence filed by him could be used as evidence.