RE LEE PRISCILLA HWANG

HCB 7452/2009
and HCB 7453/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7452 OF 2009

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(HEARD TOGETHER)

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J U D G M E N T

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Introduction

1. I have before me 3 summonses taken out in two bankruptcy proceedings, pursuant to Section 29 of the Bankruptcy Ordinance, Cap 6, and Rule 25 of the Bankruptcy Rules, Cap 6A. HCB 7452/2009 relates to the bankruptcy of Lee Priscilla Hwang also known as Priscilla Hwang Lee (“Priscilla Lee”), and HCB 7453/2009 relates to the bankruptcy of Lee Raymond Cho Min also known as Raymond Cho Min Lee and also known as Lee Cho Min Raymond (“Raymond Lee”).

2. Raymond Lee and Priscilla Lee are husband and wife.  On 31 August 2009, they were declared bankrupt by this court.

3. On 23 September 2009, John Robert Lees and Mat Ng of John Lees Associates (now known as JLA Asia Limited) were appointed joint and several trustees (the “Trustees”) of the properties of Raymond Lee and Priscilla Lee.

4. Raymond Lee and Priscilla Lee used to be directors of a Hong Kong company known as Oasis Consulting HK Limited (“Oasis”).  They ceased to be directors of Oasis upon their bankruptcy.  Raymond Lee is currently still a registered shareholder of 1 share in Oasis, but it appears that he holds it on trust for the benefit of a company known as ODE Asia Limited (“ODE”), pursuant to a Declaration of Trust dated 18 October 2001.

5. ODE is a subsidiary of another company known as M W Lee & Sons Enterprises Ltd, said to be one of the main operating companies of the “Lee Family”, of which Raymond Lee is a member.  ODE is currently the registered holder of all the remaining 774,999 shares in Oasis, having been transferred 697,499 and 77,500 of those shares by Raymond Lee and Priscilla Lee respectively on 18 October 2001, and was the corporate director of Oasis between 14 September 2009 and 14 May 2012.

6. Raymond Lee and Priscilla Lee are currently the Executive Vice President and Senior Vice President respectively of Oasis.

7. Richard Andrew Henry Gardener (“Gardener”) was until recently the general manager of Oasis.  He also assists Raymond Lee and Priscilla Lee with their personal affairs and represents them in their dealings with the Trustees.

8. Choi Shui Hung (“Benjamin Choi”) is a partner of a firm of solicitors known as Liu, Choi & Chan.  His firm acted for the executors of the estate of Raymond Lee’s grandmother, and various members of the Lee Family in relation to a global settlement agreement (“GSA”) dated 5 February 2004 which apparently was designed to settle a complex and long-running litigation originally initiated by one Samuel Tak Lee involving various members of the extended Lee Family.  Liu, Choi & Chan also act for Raymond Lee and Priscilla Lee in relation to an action brought against them by Oasis Mezzanine Funding Limited in HCA 320/2009.

9. The 3 summonses were all taken out by the Trustees on 20 January 2012.

10. In the summons taken out in HCB 7452/2009 (“the 1^st Summons”), the Trustees seek an order that, inter alia:

(1)  Oasis shall make discovery of the documents referred to in items (1) to (8) of the Schedule thereto (“the 1^st Schedule”);

(2)  Gardener shall make discovery of the documents referred to in items (9) to (10) of the 1^st Schedule; and

(3)  Gardener shall attend the court at such time and place as the court shall direct for the purpose of being examined under Section 29 of the Bankruptcy Ordinance.

11. In respect of the 1^st Summons, the parties are agreed that:

(1) Oasis will give discovery of the documents referred to in items (1) and (5) of the 1^st Schedule;

(2) there are no documents to be disclosed in respect of items (3), (4), (8), (9) and (10) of the 1^st Schedule;

(3) accordingly, the remaining issues to be determined are –

(a) whether Oasis should give discovery of the documents referred to in items (2), (6) and (7) of the 1^st Schedule; and

(b) whether Gardener should be examined under Section 29 of the Bankruptcy Ordinance.

12. In the summons taken out in HCB 7453/2009 against Oasis and Gardener (“the 2^nd Summons”), the Trustees seek an order that, inter alia:

(1) Oasis shall make discovery of the documents referred to in items (1) to (11) of the Schedule thereto (“the 2^nd Schedule”);

(2) Gardener shall make discovery of the documents referred to in items (12) to (13) of the 2^nd Schedule; and

(3) Gardener shall attend the court at such time and place as the court shall direct for the purpose of being examined under Section 29 of the Bankruptcy Ordinance.

13. In respect of the 2^nd Summons, the parties are agreed that:

(1) Oasis will give discovery of the documents referred to in items (1), (3), (7) and (8) of the 2^nd Schedule;

(2) there are no documents to be disclosed in respect of items (4), (5), (6), (11), (12) and (13) of the 2^nd Schedule;

(3) accordingly, the remaining issues to be determined are –

(a) whether Oasis should give discovery of the documents referred to in items (2), (9) and (10) of the 2^nd Schedule; and

(b) whether Gardener should be examined under Section 29 of the Bankruptcy Ordinance.

14. In the summons taken out in HCB 7453/2009 against Benjamin Choi (“the 3^rd Summons”), the Trustees seek an order that, inter alia, Benjamin Choi shall make discovery of the documents referred to in items (1) to (6) of the Schedule thereto (“the 3^rd Schedule”).

15. In respect of the 3^rd Summons, the parties are agreed that:

(1) there are no documents to be disclosed in respect of items (5) and (6) of the 3^rd Schedule;

(2) consideration of item (3) of the 3^rd Schedule should be deferred pending the Trustees’ consideration of the documents to be discovered in respect of items (1) and (2) of the 3^rd Schedule, assuming that an order is made for their disclosure; and

(3) accordingly, the remaining issue to be determined is whether Benjamin Choi should give discovery of the documents referred to in items (1), (2) and (4) of the 3^rd Schedule.

The court’s approach in an application under Section 29 of the Bankruptcy Ordinance

16. There is no dispute between the parties as to the court’s approach in an application under Section 29 of the Bankruptcy Ordinance.

17. Section 29(1) of the Bankruptcy Ordinance states as follows:

“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.”

18. My attention has been drawn to the judgment of the Court of Appeal in Re Hau Po Man Stanley (In Bankruptcy) [2008] 1 HKC 256, in which the following guidance is given:

“20. It is common ground the power conferred by s. 29(1) is discretionary in nature. Its purpose is to enable:-

“… the court to help a trustee to discover the truth and circumstances connected with and to gather information about the bankrupt’s property, affairs and dealings, in order that the trustee may be able, as effectively as possible, and with as little expense as possible, to complete his function; to put the affairs of the bankrupt in order and to administer the bankruptcy in all its various aspects, including the getting in of any assets of the bankrupt” (emphasis supplied).

(para. 37 of the judgment below, citing Re Poulson, a bankrupt [1976] 2 All ER 1020; Williams and Muir Hunter in the Law and Practice in Bankruptcy, 9^th Ed., p. 113; Muir Hunter on Personal Insolvency, Vol. 1, July 2006, para. 3-2511 and Butterworths Hong Kong Bankruptcy Law Handbook, 3^rd Ed., para. 29-01 at p. 133).

21. There is also no dispute regarding how the discretion should be exercised:-

(a) the applicant must satisfy the court the essential condition that the provision of information or documents is reasonably required for him to carry out his functions;

(b) the applicant must also establish a prima facie case that the respondent is able to provide such information or documents;

(c)  if the above criteria are met, the court must carefully strike a balance between the applicant’s reasonable requirements and the need to avoid making an order which is wholly unreasonable, unnecessary or oppressive to the person concerned.  The burden is on the applicant to satisfy the court, after balancing all the relevant factors, there is a proper case for such an order to be made.”

19. At paragraph 32 of the judgment, the Court of Appeal also said that what clearly is not permissible under Section 29(1) of the Bankruptcy Ordinance is a mere “fishing” expedition on the part of the applicant. However, that statement ought to be read in light of paragraph 31 of the judgment, in which the Court of Appeal said that a trustee should not make an application under Section 29(1) of the Bankruptcy Ordinance irrespective of costs or proportionality, but is expected to deploy commercial judgment.

20. Both parties agree that the principles relating to the court’s exercise of similar powers in the insolvency context under Section 221 of the Companies Ordinance are relevant to an application under Section 29 of the Bankruptcy Ordinance.  Section 221(1) and (3) of the Companies Ordinance states as follows:

“(1) The court may, at any time after the appointment of a provisional liquidator or the making of a winding-up order, summon before it any officer of the company or person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the court deems capable of giving information concerning the promotion, formation, trade, dealings, affairs, or property of the company.

…

(3) The court may require him to produce any books and papers in his custody or power relating to the company …”

21. The leading authority in Hong Kong regarding the proper exercise of the court’s powers under Section 221 of the Companies Ordinance is the judgment of the Court of Final Appeal in Joint and Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd (2006) 9 HKCFAR 766.  The following passages taken from the judgment of Lord Millet NPJ (with whom the other members of the Court of Final Appeal agreed) set out the position clearly:

“25. The section is a vital part of the statutory insolvency regime. It is designed to meet the difficulties faced by liquidators in finding out what has happened to the company’s assets and what has caused the failure of the company. It has often been observed that a liquidator is usually a stranger to the affairs of the company. He relies on orders for examination and production to reconstitute the knowledge of the company, in circumstances where the records are often inadequate, in order to be able to perform his duties in recovering the company’s assets and generally to enable him to carry out his functions effectively and with as little expense and as expediently as possible.

…

27. It has been repeatedly stated, and the legislative purpose demands, that the powers conferred on the court by the section or its overseas equivalents are wide, general and unlimited. The liquidator must satisfy the court that the information or documents sought are reasonably required to enable him to carry out his functions. In considering this question, the authorities establish that great weight should be given to the views of the liquidator, for he is an officer of the court and alone has the necessary knowledge of the problems facing him in understanding the affairs of the company and his reasons for seeking production of documents in the terms proposed; moreover, there are often great difficulties in seeing how the terms of the order can be cut down and remain effective: see In re Rolls Razor Ltd (No.2) [1970] Ch 576 at p.592 per Megarry J; In re Castle New Homes Ltd[1979] 1 WLR 1075at 1092, per Slade J; Cloverbay Ltd (Joint Administrators) v. Bank of Credit and Commerce International SA[1991] Ch 90 per Sir Nicolas Browne-Wilkinson V.-C. at p.104; and British & Commonwealth Holdings Plc v. Spicer and Oppenheim (supra).

28. The jurisdiction conferred on the court by the section is necessarily wide, and being of an inquisitorial nature it is capable of working with great severity against third parties: see Re North Australian Territory Co. (1890) 45 Ch D 87 at p.93 per Bowen LJ. The width and potentially oppressive nature of the jurisdiction, however, is tempered by the fact that it does not follow that the court is bound to make an order merely because it has jurisdiction to do so. It has a discretion to make or refuse the order sought or to modify or limit its terms…

29. In exercising its discretion, the court must endeavour to strike a balance between the liquidator’s reasonable requirements and the need to avoid making an order that is unreasonable, unnecessary or oppressive to the party from whom the documents or information are sought: see for example In re British & Commonwealth Holdings Plc (Nos 1 and 2)[1992] Ch 342 at p.370 perRalph Gibson LJ, and at p.384 per Woolf LJ; British & Commonwealth Holdings Plc v. Spicer and Oppenheim (supra)at p.439; Re BCCI (No.12)[1997] 1 BCLC 526 at p.537 per Robert Walker J. These cases have been consistently followed in Hong Kong: see for example the Chark Fungcase (supra).

30. Over the years the courts have laid down general principles governing the balancing exercise which the court is called upon to undertake. They are conveniently set out in the Cloverbay case (supra) at pp 102-103 per Sir Nicolas Browne-Wilkinson V.-C. and In re British & Commonwealth Holdings Plc (Nos 1 and 2) [1992] Ch 342 at p.372 per Ralph Gibson LJ and at p.392 per Woolf LJ. They can be summarised as follows:

(1) The liquidator must show that the documents are reasonably required to enable him to carry out his functions, not that they are necessary to enable him to do so;

(2) the case for making an order under the section in respect of a former officer is usually stronger than in respect of a stranger who owes no fiduciary duties to the company and who is not under a statutory duty to assist the liquidator;

(3) there is an element of oppression in requiring a party to provide information which exposes him to potential liability;

(4) an order for oral examination is likely to be more oppressive than an order to produce documents;

(5) it is oppressive to require a person suspected of wrongdoing to prove the case against himself on oath prior to proceedings being brought;

(6) an order is not necessarily oppressive because it is inconvenient for the party subject to it or causes him a lot of work or may make him vulnerable to future claims;

(7) in the light of the summary nature of the procedure and the need for expedition, the court cannot be expected to indulge in fine judgments as to the precise width of the order which should be made; and

(8)   the court must take care not to cut down the width of the order sought by the liquidator in a way which would risk making it ineffective.”

22. At paragraph 33 of the judgment, Lord Millet NPJ went on to contrast the powers of the court to order discovery in an ordinary civil litigation with the powers of the court under Section 221 of the Companies Ordinance and stated the following:

“The power of a court or arbitral tribunal to order discovery is very narrow, and narrower than the powers of the court under s.221 in at least two respects. First, discovery is limited to documents which “relate to any matter in question in the action” in circumstances where there are existing proceedings in which the issues have been defined by the pleadings.  Section 221 by contrast is concerned with documents “relating to the company” in circumstances where there is no dispute and there are no existing proceedings or issues defined by pleadings.  Secondly, a party seeking discovery is not entitled to the production of documents which may help him discover whether he has other claims not covered by the pleadings; he must not be engaged on a “fishing” or speculative expedition.  The liquidator, by contrast, is necessarily engaged in just such an expedition and the purpose of s.221 is to enable him to carry it out effectively.” (underlining added)

23. The above passage suggests that the liquidator may make an application under Section 221 of the Companies Ordinance even where the application may be regarded as a “fishing” or speculative expedition.  As earlier mentioned, the Court of Appeal in Re Hau Po Man Stanley (In Bankruptcy) considered that an application may not be made for such purpose under Section 29 of the Bankruptcy Ordinance, although what the Court of Appeal seemed to have in mind, when it referred to “a mere ‘fishing’ expedition”, was an application made irrespective of costs or proportionality. Whatever maybe the true position, there is no dispute that the trustees are required to show that the documents or information sought are reasonably required for them to carry out their functions, and this is the test that I shall apply when considering the present applications.

24. In Re Lai Kwok Ying (A Bankrupt), HCA 8750/2007, Kwan J (as she then was) stated at paragraph 5 of her judgment that the approach of the court in an application under Section 29 of the Bankruptcy Ordinance or Section 221 of the Companies Ordinance is as stated by the Court of Appeal at paragraph 21 of its judgment in Re Hau Po Man Stanley (In Bankruptcy), and at paragraph 6 the learned judge stated that in considering if the information or document is reasonably required to enable the trustees to carry out their functions, great weight would be given to the views of the trustees.

Item (2) of 1^st Schedule and Item (2) of 2^nd Schedule

25. The following documents are sought by the Trustees under Item (2) of the 1^st and 2^nd Schedules:

“Documents evidencing all payments made by [Oasis] on behalf of the Bankrupt in relation to the Bankrupt’s expenses from five years prior to the Bankruptcy of the Bankrupt and from 31 August 2009 to date”.

26. At the hearing, Mr Paul Carolan for the Trustees confirmed that the Trustees would not be seeking documents relating to payments made by Oasis on behalf of Raymond Lee and Priscilla Lee during the period of 5 years prior to their bankruptcy, and would confine the applications to documents relating to payments made since 31 August 2009.

27. It appears from the Trustees’ First Report to the Court dated 20 January 2012 (“the First Report”) that Oasis has entered into a tenancy agreement with the landlord of a flat at 10/F Wing Way Court, 10 Kennedy Road, Hong Kong which has been used as the residence of Raymond Lee and Priscilla Lee, and has been paying the rents for that flat, after their bankruptcy.  It also appears from the 1^st Affidavit of John Lees that Oasis has been meeting other expenses on behalf of Raymond Lee and Priscilla Lee.  The Trustees consider that the provision by Oasis of documents evidencing payments of such other expenses may assist them, for example, in trying to determine the level of income or financial support that Raymond Lee and Priscilla Lee have been receiving during the course of their respective bankruptcy periods, which will in turn allow them to consider whether it would be appropriate to make an application for an income payment order in relation to income earned by them during their respective bankruptcy periods.

28. A number of objections to the Trustees’ request have been raised by Mr William Wong on behalf of Oasis, some of which are said to be general and applicable to other requests by the Trustees as well.

29. First, Mr Wong says that there is no suggestion by the Trustees that Raymond Lee and Priscilla Lee have not been cooperative in the provision of documents or information, and that the Trustees should have asked them for relevant documents and information first before turning to third parties such as Oasis or Gardener.  Whilst I am not saying that Raymond Lee and Priscilla Lee have not been truthful or forthcoming in the provision of documents and information to the Trustees, it seems to me that, generally speaking, a trustee in bankruptcy is entitled to seek information from different sources in order to thoroughly carry out his investigations, and is not confined to obtaining information from the bankrupt himself.

30. Second, Mr Wong says that the amounts of the indebtedness of Oasis to Raymond Lee and Priscilla Lee are not in dispute.  This is a matter which I shall come back later in this judgment. However, even if the amounts of the indebtedness are not in dispute, I do not see that to be an answer to the Trustees’ request for the documents sought under Item (2) of the 1^st and 2^nd Schedules.

31. Third, Mr Wong says that the Trustees have not explained why the documents sought are reasonably required.  I have set out the Trustees’ reason for seeking the documents above, which I have taken from the First Affidavit of John Lees.  I also consider that the Trustees have shown that the documents are reasonably required for them to carry out their functions, bearing in mind the weight which the court would accord to the trustees’ view in this type of application.

Items (6) of 1^st Schedule and Item (9) of 2^nd Schedule

32. The following documents are sought by the Trustees under Item (6) of the 1^st Schedule:

“Documentation relating to past loan(s) made by the Bankrupt to [Oasis] (including but not limited to Promissory Note: OCHK 001) and documents relating to any repayments made by [Oasis] to the Bankrupt in respect of these loan(s) and the status or purpose of these loan(s).”

33. It appears from the First Report that in 2008 and 2009, Priscilla Lee paid or advanced a total sum of about HK$5.5 million to Oasis.  In her statement of affairs dated 18 September 2009, Priscilla Lee stated that the amount owing by Oasis to her was only US$302,524 (equivalent to approximately HK$2.36 million).  This figure is consistent with what appears on a draft balance sheet of Oasis as at 30 September 2009. It would seem, therefore, that Oasis has repaid approximately HK$3.14 million to Priscilla Lee.

34. The Trustees have not, however, seen evidence of the repayment, notwithstanding a letter sent to Priscilla Lee dated 24 January 2011 asking for details of any repayment made by Oasis.

35. Mr Wong’s objection to this request of the Trustees is that the amount of the indebtedness owing by Oasis to Priscilla Lee has been admitted, and there is no dispute on the amount of the indebtedness, and thus the documents sought are not reasonably required by the Trustees.  Whilst it true that the Trustees have once made a statutory demand dated 16 August 2011 on Oasis for the amount of US$302,524 owing by it to Priscilla Lee, it is clear from the First Affidavit of John Lees that the Trustees do not accept that the true amount of the indebtedness is necessarily that which has been stated by Priscilla Lee.  Also, the Trustees wish to consider documentation relating not just to the loans totalling HK$5.5 million but also any other loans or advances which might have been made by Raymond Lee or Priscilla Lee to Oasis but which the Trustees are not presently aware of, and documentation relating to any repayments which might have been made by Oasis.  In my view, the Trustees’ request is a reasonable one which would assist them in carrying out their investigations and functions, and the documents sought are reasonably required by the Trustees for such purposes.

36. The following documents are sought by the Trustees under Item (9) of the 2^nd Schedule:

“Documentation relating to all loan(s) past and present made by the Bankrupt to [Oasis] (including but not limited to loans in the sum of HK$986,058.63 and US$79,500) and documents relating to any repayments made by [Oasis] to the Bankrupt in respect of these loan(s) and the status or purpose of these loan(s) (including but not limited to documents relating to any demands made by the Bankrupt to [Oasis] for repayment of loan(s) made by the Bankrupt to [Oasis])”.

37. The evidence regarding the current state of Oasis’ indebtedness to Raymond Lee is not straight forward.  In summary, Raymond Lee stated in an affidavit dated 29 January 2010 in connection with certain bankruptcy proceedings in the US that Oasis owed him a debt in the amount of US$79,500.  However, in the draft balance sheet of Oasis as at 30 September 2009, the amount of the indebtedness owing by Oasis to Raymond Lee and Priscilla Lee is stated to be HK$986,058.63.

38. In Liu, Choi & Chan’s letter dated 15 September 2011, it was said on behalf of Oasis that there was no record of any sum in the amount of US$79,500 due by the company to Raymond Lee. As regards the amount of HK$986,058.63, Liu, Choi & Chan said that although it was recorded as an amount due to Raymond Lee, it was not repayable or refundable because it was a payment made by Raymond Lee in the nature of “quasi-loan” or “loan capital” to Oasis and hence not refundable.  Liu, Choi & Chan also expressed the belief that the sum of US$79,500 was part of the sum of HK$986,058.63 and therefore there had been double‑counting of the amount due.

39. The above explanations offered by Liu, Choi & Chan are not accepted by the Trustees.  It seems clear that there is a dispute both as to the actual amount advanced by Raymond Lee to Oasis and as to whether any amount is repayable by Oasis to Raymond Lee.  In these circumstances, it is clear that the documents sought are reasonably required by the Trustees to carry out their functions.

Item (7) of 1^st Schedule and Item (10) of 2^nd Schedule

40. The following documents are sought by the Trustees under Item (7) of the 1^st Schedule and Item (10) of the 2^nd Schedule:

“The management accounts as of December 2011 and/or the latest audited accounts of [Oasis] for the year ended 2011 including documents evidencing the sources of income of [Oasis].”

41. As earlier mentioned, the Trustees are investigating into the actual amounts owing by Oasis to Raymond Lee and Priscilla Lee, as well as loans or advances which might have been made by Raymond Lee or Priscilla Lee to Oasis but which the Trustees are not presently aware of.

42. Oasis is on any view of the matter indebted to Priscilla Lee and it is possible that Oasis is also indebted to Raymond Lee, but it has been said by Liu, Choi & Chan that Oasis is insolvent.  Thus, the documents sought by the Trustees would enable them to determine the recoverability of the debts owing by Oasis to Priscilla Lee and/or Raymond Lee.  An application under Section 29 of the Bankruptcy Ordinance can properly be made to seek information for determining whether it is worth pursuing those debts against Oasis: see McPherson’s Law of Company Liquidation, 2^nd Ed, p.945; Gerah Imports Pty Ltd v The Duke Group Ltd (in liquidation) (1994) 12 ACSR 513.

Items (1), (2) and (4) of 3^rd Schedule

43. Under Item (1) of the 3^rd Schedule, the Trustees seek the production by Benjamin Choi of a non-redacted and complete copy of the GSA.  It is not in dispute that Raymond Lee is a party to the GSA.  However, Benjamin Choi has said in an affidavit that Raymond Lee is not entitled to be paid anything under the GSA but was joined a party thereto in order to give comfort to Samuel Tak Lee’s side. It is also common ground that Raymond Lee has received 5 payments totalling more than HK$34 million from moneys derived from the GSA, but it is said by Benjamin Choi that such payments were made under a scheme set up by members of the extended Lee Family on the side of T Y Lee (Raymond Lee’s father) who have contributed to the litigation and negotiation process.

44. Since Raymond Lee is a party to the GSA, he is prima facie entitled to receive a copy of the GSA (although Raymond Lee has stated that he does not have a copy of it).  The Trustees have effectively stepped into the shoes of Raymond Lee by virtue of their appointment in relation to Raymond Lee’s estate in bankruptcy and thus there can be no question of any breach of confidentiality arising from the production of the GSA to the Trustees.  In my view, the Trustees are not bound to accept the explanations provided by Benjamin Choi and are entitled to ascertain for themselves the rights (if any) of Raymond Lee under the GSA by examining the provisions of the GSA.

45. Further, it appears from the explanations given by Benjamin Choi in respect of the GSA that one of the terms thereof was that Samuel Tak Lee would buy all the shares in Prudential Enterprise Limited.  Some of shares in Prudential Enterprise Limited to be purchased by Samuel Tak Lee (namely, 18 shares) were originally bequeathed to Raymond Lee under the will of his late grandmother, but they were later disclaimed by Raymond Lee pursuant to a deed of disclaimer and release dated 4 March 2005.  Although the legal title to the 18 shares was vested in the executors of the will of Raymond Lee’s late grandmother and not in Raymond Lee, he was joined as a party to the GSA in view of his interest in those shares under the will of his late grandmother and also in order that he would be bound by the provisions and covenants relating to the sale and purchase of the shares.  The Trustees consider that, in the circumstances, Raymond Lee might have divested himself of a valuable asset in favour of a third party or third parties, and require a copy of the GSA to review the circumstances in which the transfer and disclaimer took place.  It also seems to me that the GSA would be potentially relevant for the purpose of determining the value of the 18 shares in Prudential Enterprise Limited disclaimed by Raymond Lee.

46. Item (2) of the 3^rd Schedule, as amended by Mr Carolan orally at the hearing, relates to:

“Documentation evidencing the total of all payments to Raymond Lee from the settlement”.

47. The “settlement” here is a reference to the GSA.  The payments in question have been identified in the Trustees’ letter dated 11 October 2010 to Liu, Choi & Chan, being the 5 payments mentioned above.  It is apparent, however, from Liu, Choi & Chan’s letter dated 28 October 2010 in reply that the Trustees either had already obtained or were given the relevant cheques in respect of the 5 payments.  At the hearing, Mr Carolan said that the Trustees also sought documents relating to the “source” of those 5 payments.  However, this request is outside the scope of Item (2) of the 3^rd Schedule as amended, and in any event it must be apparent that the payments were sourced from moneys paid under the GSA.  On the materials before me, I am not satisfied that documents evidencing the “source” of the 5 payments are reasonably required by the Trustees to carry out their functions.

48. Under Item (4) of the 3^rd Schedule, the Trustees seek the production by Benjamin Choi of a non-redacted and complete copy of the Grant of Probate relating to the Estate of Raymond Lee’s late grandmother, Madam Lee Ng Chan Wa (“the Deceased”).  From the redacted version of the will of the Deceased, it is clear that Raymond Lee is a specific legatee under the will, and also a beneficiary of a discretionary trust of the residuary estate of the Deceased.  Apparently, Raymond Lee has already received various payments from the Estate of the Deceased.  Again, it seems to me that the Trustees are entitled to consider the full and complete version of the will to determine what rights or benefits Raymond Lee is entitled to in the Estate of the Deceased.

49. In all, I consider that the Trustees have established that they reasonably require the documents referred to in Items (1) and (4), but not Item (2), of the 3^rd Schedule to carry out their functions.

50. In respect of the above documents or classes of documents, it has not been suggested that they do not exist or that Oasis or Benjamin Choi are unable to produce them.  Also, I do not consider their production to be unreasonable, unnecessary or oppressive to Oasis or Benjamin Choi. I would therefore exercise my discretion to order production of the items in dispute, save in respect of Item (2) of the 3^rd Schedule.

Examination of Gardener under Section 29 of Bankruptcy Ordinance

51. The Trustees wish to examine Gardener on matters previously put to him in the form of a list of questions sent to him under cover of Deacons’ letter dated 22 July 2011 and possibly on other matters arising from the documents obtained through the present applications.  Gardener declined to meet the Trustees or answer the questions on the basis that the questions put to him related to matters which might have come to him in his capacity as an employee of Oasis and were confidential.

52. Mr Wong submits that it is well established that an order for examination is more oppressive than an order for the production of documents, particularly where the person to be examined is a third party and where the Trustees can obtain the same information from the bankrupts themselves.  However, Gardener was formerly the general manager of Oasis and has been dealing with the Trustees on behalf Raymond Lee and Priscilla Lee.  It is apparent that he is able to provide answers to the questions which the Trustees wish to put to him, but is unwilling to do so.  I do not consider that the Trustees are confined to seeking answers from the bankrupts only. 

53. Mr Wong also submits that the questions which the Trustees wish to put to Gardener relate to the affairs of Oasis and are thus not relevant.  However, Oasis is indisputably a debtor of Priscilla Lee and possibly of Raymond Lee, and there are disputes as to the amounts of the indebtedness.  Having looked at the list of questions proposed to be put to Gardener, I consider that they are relevant to the Trustees’ exercise of their functions.

54. Next, Mr Wong says that Raymond Lee and Priscilla Lee are neither directors nor beneficial shareholders of Oasis and they themselves are not entitled to seek information from Oasis.  I do not see how this is relevant to the question of whether the Trustees ought to be entitled to examine Gardener to elicit information for the purpose of carrying out their functions.

55. Lastly, Mr Wong submits that the Trustees are seemingly trying to ascertain the financial position of Oasis through examining Gardener “so as to gain an upper hand in their negotiations with [Oasis]”.  However, as mentioned above, an application under Section 29 of the Bankruptcy Ordinance can properly be made by the Trustees for the purpose of determining whether it is worth pursuing against Oasis for the debts which it owes to Raymond Lee and/or Priscilla Lee.

56. In all, I would exercise my discretion to order that Gardener be examined under Section 29 of the Bankruptcy Ordinance.

Disposition

57. In respect of the 1^st Summons, I make an order that Oasis shall produce the documents referred to in items (1), (2), (5), (6) and (7) of the 1^st Schedule as sought (subject to Mr Carolan’s clarification mentioned in paragraph 26 above), and in terms of paragraphs (3) and (4) thereof.

58. In respect of the 2^nd Summons, I make an order that Oasis shall produce the documents referred to in items (1), (2), (3), (7), (8), (9) and (10) of the 2^nd Schedule as sought (subject to Mr Carolan’s clarification mentioned in paragraph 26 above), and in terms of paragraphs (3) and (4) thereof.

59. In respect of the 3^rd Summons, I make an order that Benjamin Choi shall produce the documents referred to in items (1) and (4) of the 3^rd Schedule as sought.

60. I also make a costs order nisi that the Trustees shall have the costs of these applications, including all costs reserved, to be taxed if not agreed and paid forthwith.