EX PARTE THE TRUSTEE OF THE PROPERTY OF THE ABOVE NAMED BANKRUPTS, THE OFFICIAL RECEIVER v. SPRINGBOK SHIPPING (HK) LTD AND OTHERS

IN THE SUPREME COURT OF HONG KONG

IN BANKRUPTCY

NO. 69 OF 1992

AND

NO. 71 OF 1992

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DECISION

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1. These are two applications, which I have treated together, in Bankruptcy Nos. 69 and 71 of 1992. The application on the first part is made by the 1st to 7th Respondents in these proceedings and on the second part is made on behalf of Mr. Tan Cher Sia, Edward.

2. The applications are to discharge my order which was made on 15th December 1995. The applications are headed as being made under Order 32 r.6 and the inherent jurisdiction. It has been pointed out that subject to the Applicants for discharge showing that they are persons aggrieved, application could have been made under Section 83 of the Bankruptcy Ordinance, but no point has been taken about that.

3. The order which I had made on 15th December was unusual. It followed one which I had been asked to make earlier on a paper application in chambers. On that previous occasion I had asked for oral submissions. The application was that the Official Receiver and Trustee be at liberty to appoint Messrs. Newell and Associates, a firm of solicitors in Dunedin, New Zealand, to assist him in the performance of his duties regarding the bankruptcies of Tay Han Joe, Hung Chuen Yuen Salvio and Sze Chi Fong.

4. The application was framed as being made under Section 61(c) of the Bankruptcy Ordinance to which I will return in a moment. However, to start with, I should mention that my attention today has been drawn to Section 75 of the Bankruptcy Ordinance. Section 75(1) reads:

"The Governor may appoint an Official Receiver and such other officers to hold any of the offices specified in Schedule 2 as may be required to assist the Official Receiver in the performance of his duties."

Schedule 2 includes two parts: Part 1 relating to Assistant Official Receiver's Legal Assistant, Assistant Principal Solicitor, Senior Solicitor and Solicitor and Part 2 relates to persons such as the Assistant Director of Accounting Services down to the Assistant Official Receiver (Case Management) and Accounting Officer and so forth. Thus pausing there for a moment, a comparison of Section 75(1) with the wording of the order which I was asked to and did make, would show that what I was being asked to do and in fact did do, came in my view dangerously close to usurping the powers reserved for the Governor.

5. The background to the making of this order was that there was a senior solicitor (and I note at this point not a solicitor admitted in Hong Kong but a solicitor admitted in New Zealand) who had previously been working in the Official Receiver's office and who was about to return to New Zealand. He had handled the bankruptcies which were the subject of the order. They are, to a certain extent, complex and no doubt there are many facts involved in those bankruptcies of which I am unaware. Taking that into account, it seemed eminently sensible that the Official Receiver should tap into that fount of knowledge insofar as it was required in pursuing the Official Receiver's duties under the bankruptcies.

6. It was not my intention, however, that the solicitor involved should act as a solicitor and hence the wording of the order was simply "to assist the Official Receiver in the performance of his duties". Of course, the meanings of the word "assist" can be various.

7. Turning now to Section 61, there is a further matter to which I shall refer now. The material part of Section 61 reads as follows:

8. It was necessary to obtain the Court's sanction if Section 61 were to operate because there are in these matters no committees of inspection and hence, under Section 24(10), in cases where the sanction of the committee of inspection is required, sanction of the Court becomes relevant.

9. It seems to me that the order which I made in any event falls foul of the last paragraph which I have just recited in Section 61. The permission was clearly a blanket permission and not a specific permission. But turning to sub-section (c), this sub-section permits the Official Receiver or the Trustee to employ a solicitor, now clearly no permission was sought here to employ anybody to act as a solicitor. Then it goes on "or other agent to take any proceedings": there are no proceedings for which sanction was given. Finally, "or to do any business which may be sanctioned by the committee of inspection": leaving aside the last few words, Mr. Poon, Q.C., has submitted that there is no business which the solicitor has been asked to do other than business which is illegitimate for the Court to sanction him to do in these proceedings.

10. Giving it the construction which I consider is a proper one, I do not see that it is necessary for the Official Receiver to obtain the sanction of the Court (in place, of course, of the committee of inspection) to do anything which it is legitimate for the Official Receiver to do in respect of making use of the solicitor's fount of knowledge. I say that for this reason: as has been drawn to my attention, the provisions in the Legal Practitioners Ordinance and the rules made under it as to the prohibition of unqualified persons acting as solicitors are highly important. For example Section 49 reads as follows:

11. When the affidavit of Mr. Benny Wong is considered and in particular the correspondence which is exhibited thereto, it is abundantly clear that until March of this year, the solicitor was really effectively continuing to act in the same capacity as he was when he was employed in Hong Kong by the Official Receiver under the umbrella, of course, of Section 75 of the Ordinance. I note in particular that he signed a draft order which was submitted for approval. That as Mr. Smith, who appears on behalf of the Official Receiver, has very clearly conceded right at the outset, was wrong and the matter was rectified to that extent in March.

12. Thus it seems to me the position is this. The order which I had made was bordering on very difficult in the light of Section 75 of the Bankruptcy Ordinance; it was unnecessary in respect of Section 61 unless it went too far, in which case it was wrong. It was undesirable to the extent that clearly it was mis-interpreted by someone and the solicitor in question was permitted, it seems to me, to conduct the litigation rather than provide his knowledge of the facts which lay behind the bankruptcies, which was, in my view, the intention behind the order.

13. I consider that I have no alternative but to discharge the order which I made. At the moment I do not consider it necessary to re-impose any other order. I say so for this reason that I see no reason why the Official Receiver should not tap into the fount of knowledge of facts which this particular solicitor has with him. Insofar as the Official Receiver does so, he does so as he would in any other way in investigating facts in a case. Insofar as the costs of doing so are involved, that will be a matter which may or may not have to be determined by the Taxing Master in due course. It seems to me to be wrong to even embark on Section 61(c) and the inherent undesirability of doing so is demonstrated by what has happened previously.

14. I therefore discharge the order that I made on 15th December.