IP PUI LAM ARTHUR AND ANOTHER v. ALAN CHUNG WAH TANG AND OTHERS

HCB 3819/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 3819 OF 2011

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D E C I S I O N

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1. The respondents do not contest the production of documents sought under section 29 of the Bankruptcy Ordinance. The outstanding questions are the time for production of those documents and costs of the summons.

Time for production

2. Mr Szeto, acting for Mr Alan Tang of the 1^st respondents and the 2^nd respondents, has informed this court that there may be 100 to 130 boxes of documents involved which the respondents have to read before being able to make the affidavit sought or to produce the documents. I am satisfied that the court should allow them a period of two months in which to comply with the discovery sought.  At present, I understand the respondents are waiting for response from the partners of Grant Thornton to inform them as to the time for access to those documents.

Costs

3. Ms Wong, of the 1^st respondents, is acting in person.  She is retired and is concerned as to costs.  She has no opposition at any time to the summons and is willing to file the affidavit, although her position is that she has no documents to produce.  The matter could have been disposed of without a hearing but for the fact that she is acting in person.  Taking the circumstances into account, I am not satisfied that the court should make an order for costs against her.

4. The 2^nd respondents and Mr Alan Tang of the 1^st respondents ask for costs of the summons, and initially, for personal costs against the trustees.  The latter limb has now been abandoned; rightly, in my view.

5. Mr Chen, acting for the applicant trustees has referred me to various authorities in Hong Kong on costs in the present situation.  Amongst these is the case of The Joint and Several Liquidators of Kong Wah Holdings Limited and Akai Holdings Limited v Ernst & Young, CACV 356/2003, 17 March 2004.  In paragraphs 37 to 39 of the decision, Cheung JA declined to order payment by the liquidators to Ernst & Young other than the photocopying charges.

6. The application for production of documents was made in the context of a section 221 application in the Kong Wah Holdings case.  But there is nothing different in substance between section 221 of the Companies Ordinance and section 29 of the Bankruptcy Ordinance.  In fact, Ng J in the case of The Joint and Several Trustees in Bankruptcy of Nanik Dayaram, HCB 7651/2011, 6 November 2015, also made a similar costs order in a bankruptcy context under section 29 of the Bankruptcy Ordinance.  Accordingly, the respondents should not be entitled to costs in performance of the production order sought except for reasonable photocopying costs.

7. Mr Szeto refers me to a Privy Council decision of Singularis Holdings Limited v PricewaterhouseCoopers [2015] 2 WLR 971.  It was on appeal from the Court of Appeal of Bermuda in 2014.  The proposition relied on by Mr Szeto is in paragraph 25 of that decision:

“As with other powers of compulsion exercisable against an innocent third party, its exercise is conditional on the applicant being prepared to pay the third party’s reasonable cost of compliance.”

8. For the following reasons I decline to follow the Singularis Holdings case:

(a)  It is not a binding authority on the Hong Kong court. The Court of Appeal decision in Kong Wah Holdings is.

(b)  Singularis Holdings deals with a different question, set out in paragraph 8 of the decision, which is more complex than that before this court.  That question was whether the Bermuda court has the common law power to assist a foreign liquidation by ordering production of information in circumstances where (i) the Bermuda court has no power to wind-up an overseas company, such as Singularis; and (ii) a statutory power to order the production of information is limited to cases where the company has been wound-up in Bermuda.  The second issue was whether if such a power exists it is exercisable in circumstances where an equivalent order could not have been made by the court in which the foreign liquidation is proceeding.  The context is therefore completely different.

9. Applying the Kong Wah Holdings case, I accept the proposed order as to costs made by Mr David Chen for the trustees.

10. Mr Szeto also submits that there has been no pre-summons letter.  I have been referred by Mr Chen to the letter of Li, Wong, Lam & W I Cheung about four months before the summons was taken out.  That letter requested Mr Tang and Ms Wong, but not Ms Hou, to produce documents, and the substance of what was sought in the letter is largely similar to that in the summons now before this court.

11. Mr Szeto also refers this court to a letter from Li, Wong, Lam & W I Cheung offering to pay the 2^nd respondents’ costs.  That letter was dated 31 March 2017 and issued in the course of negotiation over disposal of the summons.  The offer was not accepted due to negotiation over other matters.  It was, in my view, far from saying that the trustees had conceded to pay the costs of the 2^nd respondents.  There was nothing in that letter to bar them from relying on the authorities, as they now do, as regards costs of the present application.

12. Further, Mr Chen has referred me to rule 87C of the Bankruptcy Rules. Sub-rule (2) provides that:

“Where a person in respect of whom an order has been made under section 29 of the Ordinance co-operates fully with the ... trustee in providing the necessary information, the court may order that that person be paid, out of the bankrupt’s estate, the reasonable costs incurred by him in providing such information.”

13. The time has not yet come to show that the respondents have co-operated fully with the trustees.  Accordingly, at this stage, I am not inclined to grant any order for costs in favour of the respondents, except to the extent agreed to as regards photocopying charges.  Those photocopying charges shall be paid out of the estate.

14. As regards costs of the summons, I have indicated that I make no order as to costs against Ms Wong.  This hearing was necessitated due to argument over costs of the summons, which the 2^nd respondents and Mr Tang have now failed.  I therefore order that costs of this hearing should be borne by Mr Tang and Ms Hou.

15. I will summarily assess those costs.

(Discussion re costs)

16. Costs are summarily assessed and allowed at $5,000.