RE CHANG HYUN CHI

HCB 5227/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 5227 OF 2006

________________________

_______________________

_______________

D E C I S I O N

_______________

1.  By a summon dated 31 December 2015 (Summons), the discharged bankrupt (Zhi) seeks the following declarations :

(1)  Section 29 of the Bankruptcy Ordinance, Cap 6 (Ordinance) is not applicable to him;

(2)  Section 29(1) of the Ordinance is unconstitutional and has no effect on him;

(3)  The invoking of s.29 of the Ordinance is an “abuse of system and ... commencement of proceedings by deceptive means”;

(4)  The Prohibition Order (PO) and Arrest (Arrest) made on him (back in May 2012) were “wrongful and void of due process”;

(5)  Section 27 of the Ordinance is unconstitutional and has no effect on him;

(6)  The invoking of s.27 of the Ordinance is an “abuse of system and ... commencement of proceedings by deceptive means”.

2.  Paragraph 7 of the Summons contains an annulment application, which no longer arises for determination because on 21 June 2016 Ng J had granted leave for its withdrawal.

Issues

3.  There are essentially 4 issues before the court :

(1)  The constitutionality of s.29;

(2)  There is also a challenge to an existing application by the trustees in bankruptcy (Trustees) under that section on the ground that it is a fishing expedition;

(3)  The constitutionality of s.27;

(4)  A challenge that the PO and the Arrest were wrongful and/or an abuse of the system.

Background

4.  The following facts are not in dispute[1]. Zhi is a South Korean national who came to Hong Kong in 1993 and has obtained Hong Kong permanent resident status in March 2000.  He is highly educated and has an excellent command of the English language.  He is also well-known to the court, having been involved in numerous litigations[2].

5.  On 3 July 2006, a bankruptcy petition (amended on 4 December 2006) was presented against Zhi in connection with the balance of a judgment debt in the total sum of about US$29.2 million (or HK$227.1 million).

6.  Zhi was adjudged bankrupt on 20 December 2006. At a general meeting of creditors on 3 April 2007, it was resolved that Mr Alan Tang (Tang) and Mr Wong Kwok Man be appointed as the Trustees.

7.  On 6 July 2011, Poon J (as Poon JA then was) granted leave to the Trustees to examine Zhi pursuant to s.29 of the Ordinance (Examination).  The Examination was to take place on 3 November 2011.

8.  Zhi failed to attend the Examination.  On 3 May 2012, pursuant to an ex parte application of the Trustees supported by the 2^nd affirmation of Tang, Master Ho made the PO barring Zhi from leaving Hong Kong and ordered his arrest.

9.  An arrest warrant (Warrant) was issued on 10 May 2012 on the grounds that: (1) there was probable cause to suspect and believe that Zhi had absconded (or was about to do so) with a view to avoiding the Examination; and (2) Zhi did without good cause fail to attend the Examination.  Zhi was arrested the same day as he entered Hong Kong from Macau.

10.  Zhi was brought before the court on 11 May 2012.  The PO and the Warrant were then discharged upon his undertaking to attend court on 30 May 2012.

11.  On 25 July 2012, the court adjourned the Examination sine die with liberty to restore, having been informed by Zhi that he intended to challenge the constitutionality of s.30A(10)(a) of the Ordinance, which concerned the automatic discharge of bankruptcy in respect of bankrupts who were absent from Hong Kong.

12.  On 26 July 2012, Zhi applied by summons for declarations that: (1) he had been discharged from bankruptcy since 21 December 2010 by virtue of the automatic discharge provision under s.30A(1) and 2(a) of the Ordinance; (2) s.30A(10)(a) was unconstitutional; and (3) s.29 had no application to him as he had been discharged from bankruptcy (2012 Summons).

13.  Chung J dismissed the 2012 Summons on 2 May 2013. 

14.  On 30 October 2013, Master Ho made an order for Zhi to provide information and documents which might lead to the identification of assets belonging to his estate.  A 1-page document was sent to the Trustees’ solicitors on 2 January 2014 by Zhi purporting to answer to the order. 

15.  On 11 December 2014, the Court of Appeal (CA) allowed Zhi’s appeal against Chung J’s decision, declaring s.30A(10)(a) unconstitutional and that the bankruptcy was discharged on 21 December 2010. It was stated in the judgment of the CA (§24) that Zhi’s counsel accepted that in the event that s.30(10)(a) was held to be unconstitutional, Zhi would not challenge that he might still be required to attend the Examination.  Zhi only contended that the order of Poon J was made on the erroneous basis that he was an undischarged bankrupt. 

16.  On 17 June 2015, having found out that Zhi had launched a number of actions against Siberian Mining Group Co Ltd (SMG) and the allegations made therein by Zhi suggested that he was involved in multi-million dollar business dealings during the currency of his bankruptcy, the Trustees requested for a call-over hearing for further directions on the Examination.

17.  On 5 November 2015, the Court of Final Appeal (CFA) dismissed the Official Receiver’s (OR) appeal and upheld the CA’s judgment on s.30A(10)(a): see Official Receiver v Zhi Charles (2015) 18 HKCFAR 467.  Neither the legality of the Examination nor any other provisions of the Ordinance was addressed in that appeal.  In particular, it was noted by the CFA (§12, footnote 5) that the s.29 issue under the 2012 Summons was not pursued (Abandonment). 

18.  On 18 November 2015, Master Ho ordered a stay of proceedings of 42 days with liberty to the Trustees to restore the call-over hearing of the Examination after receiving confirmation of Zhi’s legal aid application.

19.  On 31 December 2015, Zhi initiated a fresh attack on the Examination by way of the Summons.

An overview

20.  With respect, I regret to say that this application is based on neither sound legal principle nor merits.  Zhi made no attempt to hide the fact that he has managed to outsmart the legal system, so far.  It is evident that Zhi feels encouraged by his success before the CFA. However, that may not be entirely justified.  Paragraph 65 of the CFA judgment stated as follows :

“Finally, it may be an inescapable conclusion that, if the Court were to conclude that s.30A(10)(a) is unconstitutional, this would result in an unmeritorious outcome on the facts of the present case. Ms Chan would seem to be correct in saying that the appellant has chosen to stay outside Hong Kong during the entire 4-year period following the making of the bankruptcy order against him and has neither performed any of the obligations imposed on him by the Ordinance nor rendered any assistance or cooperation to the Trustees. This has frustrated the Trustees’ attempts to make progress in the administration of his estate. The previous objection to discharge filed by the Trustees under s.30A(4) is now moot, since more than 8 years have elapsed since the making of the bankruptcy order. In short, the appellant has been able to walk away from his debts of over $255 million by the expedience of staying outside Hong Kong for a sufficiently long period of time. However, the constitutionality of s.30A(10)(a) is not to be measured on the basis of a just end justifying disproportionate means.”

21.  The observations made by the CFA are fully supported by the undisputed facts before this court.  Three points should be added :

(1)  During the currency of his bankruptcy, Zhi had actually entered and stayed in Hong Kong on numerous occasions.  However, for the vast majority of his trips, he only stayed in Hong Kong for a few hours. More likely than not, Zhi’s itinerary was designed to beat the system;

(2)  Zhi alleged that he was not aware that he was a bankrupt prior to the Arrest.  I agree with Ms Lee, appearing for the Trustees, that the allegation is untenable.  Zhi signed an Annual Statement of Earnings and Property Acquired and returned the same to the Trustees on 17 April 2008. Further, Zhi argued that he had properly answered the order of Master Ho dated 30 October 2013 with his 1-page document (see para 14 above).  Such a contention cannot be taken seriously.  These matters demonstrate that the court cannot simply accept Zhi’s words at face value;

(3)  Zhi has threatened “to go all the way to the CFA, if necessary, as I had done so with Section 30”.  It is laudable that the Trustees are not deterred from discharging their duties, notwithstanding the fact that there is no fund in the bankruptcy estate.

22.  By this application, Zhi endeavours to protect the fruit of his “ingenuity” in beating the system (so far).

S.27 of the Ordinance

23.  The relevant part of s.27 provides as follows :

“(1) The court may, by warrant addressed to any person or persons named therein, cause a debtor to be arrested, and any books, papers, money and goods in his possession or under his control relating to his affairs to be seized, and him and them to be safely kept as prescribed until such time as the court may order under the following circumstances—

(a) if after presentation of a bankruptcy petition by or against him, it appears to the court that there is probable cause for believing that he has absconded, or is about to abscond, with a view of avoiding payment of a debt, or of avoiding service of a bankruptcy petition, or of avoiding appearance to any such petition, or of avoiding examination in respect of his affairs, or of otherwise avoiding, delaying or embarrassing proceedings in bankruptcy against him;

...

(d) if without good cause shown he fails to attend any examination ordered by the Court;

...”

24.  There are a number of good reasons why this court should not entertain the constitutionality complaint in respect of s.27. I propose to set them out succinctly.

25.  Firstly, I agree with both Ms Lee and Mr Chan, appearing with Mr Ho for the OR, that the constitutionality complaint over the PO and the Arrest is academic.  Those matters took place nearly 5 years ago. The PO and the Warrant are spent.  Zhi was discharged from the Arrest, and there is no extant application for his arrest. 

26.  It is trite that the court will normally refuse to decide academic or hypothetical questions for declaratory purposes: see Hong Kong Civil Procedure 2017, rubric 15/16/2. 

27.  Further, I have been referred to the judgment of Ma CJHC (as Ma CJ then was) in Chit Fai Motors Co Ltd v Commissioner for Transport [2004] 1 HKC 465, §20(2) and (3), where the CA set out the principle that the court has a discretion whether or not to determine an issue even though there is no longer a lis.  Such discretion is to be exercised with caution and the court should only do so where there is good reason in the public interest. 

28.  I am unable to see any good public interest reason to determine the s.27 complaint in question given its academic nature (see also Kwok Cheuk Kin v Chief Executive of Hong Kong [2015] 6 HKC 22 at §20 (Au J)).  The examples found at 473C and 473D of Chit Fai Motors are not applicable in this case. 

29.  In respect of Zhi’s argument that he is potentially liable to another order made pursuant to s.27, I agree with Mr Chan that such an argument can be made in every case of bankruptcy, and it carries no weight.

30.  It should be added that Zhi has nothing to fear if he abides by his responsibilities under the Ordinance.  This is also the answer to his submission (made in the context of s.29) that he can be subject to the section sub specie aeternitatis.  Zhi’s creditors may legitimately ask why he should be allowed to cheat them by hiding his assets. I am unaware of any bankruptcy law which allows the bankrupt not to come clean with his assets.  The law protects not only Zhi, but also his creditors. 

31.  Secondly, I agree with Ms Lee, insofar as the constitutionality issue is concerned, that if Zhi had any ground to challenge the PO and/or the Arrest, he should have pursued them by the time he issued the 2012 Summons.  Zhi was legally represented at the material times.  To do so now amounts to an abuse of process under the Henderson v Henderson principle in that the constitutionality issue could and should have been litigated under the 2012 Summons.  I have also been referred to Ho Kin Man v Commissioner of Police [2014] 3 HKLRD 478 (CA) at §§14, 21 and 36-39.

32.  Thirdly, I am unable to see any substance in Zhi’s constitutional challenge, which is based on the alleged infringement of Article 7 of the Hong Kong Bill of Rights, Cap 383.  Art. 7 provides as follows :

“No one shall be imprisoned merely on the ground of inability to fulfil a contractual obligation.”

33.  I agree with Mr Chan that on its plain and unambiguous terms, Art. 7 is simply irrelevant (still less is it engaged) in the present context.  Art. 7 protects an individual’s right to be free from imprisonment where there has been an inability to fulfil a “contractual obligation”.

34.  As explained by Nowak: UN Covenant on Civil and Political Rights: CCPR Commentary, 2^nd edn, pg 255 (in the context of Art. 11 of the International Covenant on Civil and Political Rights, to which Art. 7 corresponds), this article “prohibits detention for debts, ie “debtors’ prison” as this institution was known under earlier legal systems”. I am unable to see any relationship between Art. 7 and s.27.  The latter serves to enforce the bankruptcy regime, which exists in any sophisticated society. 

35.  For completeness, much of the analysis below on the constitutionality of s.29 applies equally to s.27.  In particular, the issuance of an arrest warrant is subject to judicial scrutiny.  

36.  Fourthly, the constitutional challenge aside, I do not believe that the alleged abuse of process by the Trustees in respect of the PO and the Arrest is academic because Zhi was arrested, and if there was no legal basis for the Arrest he may be entitled to redress under the law. Further, the Henderson principle is, arguably, not infringed because the 2012 Summons was concerned with a constitutional challenge. 

37.  However, Zhi’s allegations are both serious (there are allegations of collusion by the Trustees with the creditors) and directed at the personal conduct of the Trustees.  I do not believe that it is appropriate to have these matters ventilated in a summons.  It is not the appropriate procedure for resolving factual disputes.  To resolve such disputes requires, eg, properly formulated allegations so that they may be adequately addressed by the Trustees.

S.29 of the Ordinance

38.  Dealing firstly with the allegation that the Examination is a fishing exercise, it is based on Zhi’s contention that because the Trustees know nothing about his affairs or what they are looking for, the Examination is necessarily a fishing expedition.  Apart from the fact that the contention is factually incorrect, it amounts to a debt dodgers’ charter.  I disagree with it. 

39.  The fishing allegation must be rejected in light of the undisputed evidence from the Trustees that the information they gained from Zhi’s legal action against SMG and other investigations suggest that “[Zhi] was very active in his own business and involved in a large number of significant transactions involving Hong Kong listed companies while he was an undischarged bankrupt, without reporting any of these to the Trustees”. Indeed, I believe that the Trustees would be failing their duties if they do not pursue the Examination with full vigour in light of such information.   

40.  Secondly, the Henderson principle applies more strongly here.  To begin with, the constitutional challenge over s.29 could and should have been made under the 2012 Summons.  Zhi not only failed to make the challenge, he conceded before the CA that he might still be subject to the Examination even if he succeeded in his appeal (see para 15 above), and the Abandonment was made in the CFA.  I therefore agree with Ms Lee that it is an abuse of process to make the challenge now. 

Constitutional challenge and Proportionality

41.  Where the constitutionality of a legislative provision is challenged, there is an established sequence of 3 questions to be addressed :

“The first question is concerned with the identification of a constitutional right and asks whether such a right is engaged. If not, the constitutional challenge fails in limine. The next question is whether the legislative provision or conduct complained of amounts to an interference with, or restriction of, that right. Again, if the answer is no, the challenge fails without further inquiry. If, on the other hand, the answer to that question is yes, then it is necessary to consider whether those rights are absolute, in which case no infringement or restriction is permitted and no question of proportionality arises, or, if not absolute, whether the relevant infringement or restriction can be justified on the proportionality analysis.”

See Official Receiver v Zhi Charles, §22 (Fok PJ and Stock NPJ)

42.  The proportionality test also involves a 3-step analysis :

(1)  Whether the restriction or limitation pursues a legitimate aim;

(2)  Whether the restriction or limitation is rationally connected to that legitimate aim;

(3)  Whether the restriction or limitation is no more than is necessary to accomplish that legitimate aim.

See Mok Charles v Tam Wai Ho (2010) 13 HKCFAR 762, §28 (Ma CJ)

43.  However, in the recent judgment of Hysan Development Co Ltd v Town Planning Board (2016) 19 HKCFAR 372, §§76-78 (per Ribeiro PJ), the CFA approved a fourth step to be added to the above analysis :

“... to examine the overall impact of the impugned measure and to decide whether a fair balance has been struck between the general interest and the individual rights intruded upon, ...”

Analysis on constitutionality challenge

44.  The constitutional challenge is based on an alleged infringement of the right to freedom of travel protected under Basic Law, Art. 31 and Art. 8 of the Bill of Rights.  The relevant provisions are as follows :

S.29

“(1) The court may, on the application of the Official Receiver or trustee, at any time after a bankruptcy order has been made against a bankrupt summon before it the bankrupt or his spouse, or any person known or suspected to have in his possession any of the estate or effects belonging to the bankrupt or supposed to be indebted to the bankrupt, or any person whom the court may deem capable of giving information respecting the bankrupt, his dealings or property, and the court may require any such person to produce any documents in his custody or power relating to the bankrupt, his dealings or property.

...

(2) If any person so summoned, after having been tendered a reasonable sum, refuses to come before the court at the time appointed, or refuses to produce any such document, having no lawful impediment made known to the court at the time of its sitting and allowed by it, the court may, by warrant, cause him to be apprehended and brought up for examination.

...

(6) The court may, if it thinks fit, order that any person who if in Hong Kong would be liable to be brought before it under this section shall be examined in any place out of Hong Kong by a commissioner appointed for the purpose.

...”

[emphasis added]

Art. 31

“Hong Kong residents shall have freedom of movement within the Hong Kong Special Administrative Region and freedom of emigration to other countries and regions. They shall have the freedom to travel and to enter and leave the Region. Unless restrained by law, holders of valid travel documents shall be free to leave the Region without special authorization.”

Art. 8

“(1) Everyone lawfully within Hong Kong shall, within Hong Kong, have the right to liberty of movement and freedom to choose his residence.

(2) Everyone shall be free to leave Hong Kong.

(3) The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in this Bill of Rights.

(4) No one who has the right of abode in Hong Kong shall be arbitrarily deprived of the right to enter Hong Kong.”

No engagement of constitutional right

45.  I agree with Mr Chan that the challenge to s.29 falls at the first hurdle.  Correctly analysed, the provisions of s.29 do not restrict or interfere with the right to travel as protected under Art. 31 or Art. 8.

46.  If Zhi’s contention were right, every time when a person is summoned before the court in respect of any proceedings, it would be an infringement of his freedom to travel.  No legal system in the world can survive.  The argument needs only be stated to be rejected.  Properly analysed, s.29 may cause inconvenience to Zhi if he has a travel plan which clashes with the Examination.

No nexus between right and restriction

47.  For there to be a restriction on the right to travel, there must be a nexus between the exercise of the right and the restriction imposed.  In other words, the statutory provision under challenge must “[fasten] on the exercise of [Zhi’s] right to travel”: Gurung Kesh Bahadur v Director of Immigration (2002) 5 HKCFAR 480, §37 (Li CJ).  This, I believe, goes to the second question identified by the CFA in Zhi Charles (see para 41 above), and it requires an examination of the circumstances of the alleged interference. 

48.  In Gurung, it was held that the provision in the Immigration Ordinance which provided for the immediate expiry of any permission to land or remain in Hong Kong if the permittee departed from Hong Kong was an infringement of Art. 31 of the Basic Law when a non-permanent resident was refused permission to land even though his limited permission to stay had not expired.  Hence, the provision in the Immigration Ordinance was fastened to Gurung’s exercise of the right to travel or to leave Hong Kong. 

49.  The point is further illustrated by Official Receiver v Chan Wing Hing (2006) 9 HKCFAR 545, §39, the constitutionality of s.30A(10)(b)(i) of the Ordinance, which required a bankrupt to notify the trustee in bankruptcy of his travel itinerary and contact details before leaving Hong Kong with automatic sanction for failure to do so, was under challenge.  The CFA held that the exercise of the right to travel “triggered” the need to notify, and in turn the sanction where there was failure to notify.  Thus, interfered with the freedom to travel.

50.  I agree with Mr Chan that the position with s.29 is fundamentally different.  In contrast with s.30A(10)(b)(i), s.29 imposes no prohibition or restriction on a bankrupt from leaving Hong Kong :

(1)  He is entirely free to travel as he pleases unless and until summoned by the court under s.29.  There is no condition or sanction attached to the exercise of the freedom to travel by virtue of s.29: see Chan Wing Hing, §80 (Ribeiro PJ) and Official Receiver v Zhi Charles, supra, §33 (Fok PJ and Stock NPJ).

(2)  By virtue of s.29(2), s.29(1) does not operate automatically.  Where the bankrupt summoned before the court for examination “refuses” to comply, he and/or his legal representative will be given an opportunity to explain (“make known”) his position to the court.  If there is a “lawful impediment”, the non-compliance may be excused without adverse consequence to the bankrupt. 

(3)  Importantly, pursuant to s.29(6), the examination needs not be conducted in Hong Kong.

51.  In light of: (a) the way in which the provisions operate; and (b) the court’s control over both the summoning of the bankrupt to attend an examination and the consequence of any non-attendance, s.29 is not inherently contrary to, and does not as a matter of substance interfere with or restrict, the constitutional right to travel or freedom of movement protected under Art. 31 and Art. 8.

Proportionality

52.  If I were wrong on both the first and second questions, I am of the view that any interference or restriction arising from s.29 to the rights under Art. 31 or Art. 8 is justified on a proportionality analysis.

53.  First of all, the right to travel or freedom of movement is not absolute, and may be subject to proportionate restrictions: Zhi Charles, §34.

54.  Secondly, I have no doubt that the restriction by s.29 serves a legitimate aim and an important public interest: maintaining an effective bankruptcy regime in Hong Kong and protecting the interest of creditors.  It must be accepted that no sophisticated society, let alone a key financial centre like Hong Kong, can function without an effective bankruptcy regime. 

55.  I agree with the basic objectives of insolvency law quoted in a Report of the OR dated 22 November 2012 at §§13-14 :

“It is a basic objective of the law [of bankruptcy] to support the maintenance of commercial morality and encourage the fulfilment of financial obligations ...

The law of insolvency takes the form of a compact to which there are three parties: the debtor, his creditors and society. Society is concerned to relieve and protect the individual from the harassment of his creditors, and to enable him to regain financial stability and to make a fresh start. It accords him this relief in return for:

(a)  such contribution, not only from the realisation of his assets but also from his future earnings, as can reasonably be made by him without reducing him and his family to undue and socially unacceptable poverty and without depriving him of the incentive to succeed in his fresh start;

(b)  the obligation to give an account of the reasons for his failure and, if required, to submit the conduct of his affairs to impartial investigation; and

(c)  subjection to such disabilities as may be appropriate in all the circumstances.”

56.  I agree with Mr Chan that there is a clear societal aim, for the benefit of the wider public good, of ensuring that a debtor assists and continues to co-operate in the bankruptcy process from realisation of his assets to submitting his affairs to impartial investigation.

57.  Thirdly, the rational connection between the legitimate aim and the restriction is clear.  It is plainly necessary for the trustees to ascertain the whereabouts and details of all the bankrupt’s assets so that they may take control of, and realise, the assets to pay the creditors.  The bankrupt is normally in the best position to assist the trustees and provide all relevant information.  The provisions of s.29 help to ensure that the bankrupt would fulfil his obligations under the bankruptcy regime.

58.  With respect, the case before this court serves to highlight the connection in question.  Any restriction to Zhi’s rights under Art. 31 or Art 8 arising from s.29 is a result of his failure to discharge his obligations under the bankruptcy regime and the need to enforce such obligations.  It should also be said that the restriction is self-inflicted.

59.  Fourthly, on the issue whether the restriction is no more than is necessary to accomplish the legitimate aim, I have been referred to Zhi Charles, §53 :

“This case has proceeded on the footing that s.30A(10)(a) restricts the freedom to travel.  Since that is a fundamental right, the restriction can only survive constitutional scrutiny if it meets the minimal impairment test, the burden of showing which is on the party seeking to justify the restriction.  That is not to say that the restriction must be the very least intrusive method of securing the objective which might be imagined or devised.  What “minimal impairment” means in this context is that:

‘... the law must be carefully tailored so that rights are impaired no more than necessary. The tailoring process seldom admits of perfection and the courts must accord some leeway to the legislator. If the law falls within a range of reasonable alternatives, the courts will not find it overbroad merely because they can conceive of an alternative which might better tailor objective to infringement ... On the other hand, if the government fails to explain why a significantly less intrusive and equally effective measure was not chosen, the law may fail.’”

60.  In Hysan, §83, Ribeiro PJ emphasised that the words “no more than necessary” do not lay down a strict, bright line test. Instead, it is “a test of reasonable, not strict, necessity”.

61.  I am satisfied that the restriction in question satisfies the above test for the following reasons :

(1)  Unless the Ordinance provides a right for trustees to apply to examine a bankrupt (or any other person with knowledge in relation to the bankrupt, his dealings or property), they (generally not knowing much, if anything, about the bankrupt’s affairs) will be severely hampered in ascertaining the whereabouts of the bankrupt’s assets.  See also the dicta of the CFA in Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd (2006) 9 HKCFAR 766, §§23 to 28 (Lord Millett NPJ) on the scope and purpose of s.221 of the Companies Ordinance, Cap 32, which is the equivalent of s.29 for corporate insolvency.

(2)  Given the enforcement purpose, I can think of no less restrictive means to achieving the legitimate aim of the bankruptcy regime other than by way of a broad power of examination under s.29.  In any event, I have no doubt that the provisions fall within a “range of reasonable alternatives” (Zhi Charles, §53) accorded to the legislature.

(3)  As Ribeiro PJ explained in Hysan, §112, the “extent of interference with the right is obviously relevant” in the proportionality analysis.  There can be no suggestion that s.29 directly prevents a bankrupt from exercise his right to travel.  In truth, it is a matter of inconvenience to his travel plan, if he has one.  On any view, this is a reasonable restriction.

(4)  The application of s.29 is subject to the control and discretion of the court.  Before the discretion can be exercised, the law requires that the court be satisfied that:

(a)  the provision of information or documents is reasonably required for the trustees to carry out their functions;

(b)  the trustees are able to establish a prima facie case that the person against whom the order is sought is able to provide such information or documents; and

(c)  the order sought strikes a balance between the trustees’ reasonable requirements and the need to avoid making an order which is wholly unreasonable, unnecessary or oppressive to the person concerned.

See Hau Po Man Stanley (in bankruptcy) v Joint & Several Trustees [2008] 1 HKC 256, §§20-21 (Chung J, sitting as an additional judge of the CA)

62.  Finally, in respect of the fourth step in the proportionality analysis :

(1)  The starting point is to note the dictum of Ribeiro PJ that “in the great majority of cases, [the application of the fourth step] would not invalidate a restriction which has satisfied the requirements of the first three stages of the inquiry” (Hysan, §73).  Ribeiro PJ went on to cite an example where the fourth step would not be satisfied – the taking of a human life for the purpose of protecting private property. 

(2)  This case is plainly within the majority of cases.

(3)  Given the important legitimate aim, the minimal intrusion of the rights and the safeguard of judicial scrutiny, I am in no doubt that a fair balance has been struck, ie, the fourth step is satisfied.

Conclusions

63.  For these reasons, the Summons is dismissed with an order nisi that the costs of and occasioned thereby be paid by Zhi, to be taxed if not agreed.  I accede to Ms Lee’s submission that such costs be assessed on indemnity basis.  The same basis should also apply for the OR’s costs.  I grant a certificate for 2 counsel in favour of the OR.

64.  Last but not least, I am grateful for the assistance, especially that on the constitutional issues, rendered to the court.