FRED LEE AND ANOTHER v. WOO WOON LING CHRISTINA

HCB 9036/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 9036 OF 2003

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J U D G M E N T

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1. In this case, the bankrupt, Madam Woo, was adjudicated bankrupt by a bankruptcy order dated 3 July 2003.  Therefore, by the operation of law under section 30A of the Bankruptcy Ordinance, she should have been automatically discharged from bankruptcy four years from the date of the bankruptcy order, which would be 2 July 2007.

2. The trustee in this bankruptcy, however, before the bankruptcy order was due to expire automatically, issued the application in June 2007 to object the bankrupt to be automatically discharged, initially on four grounds.  That is, failing to co-operate, unsatisfactory conduct since the bankruptcy, failing to submit annual reports, and also having left Hong Kong and failed to report to the trustee on the day required.

3. An interim order to suspend the running of the relevant period has since been granted.  After several adjournments, the trustee has agreed to abandon the last ground in relation to the failing to return ground, and a due notice of abandonment has already been given to the creditors.  I am satisfied that the creditors have received the notice, and that no replies or objections have been raised by any of the creditors.  Therefore, so far as the present application is concerned, the grounds that are being relied upon by the trustee to object to the automatic discharge will be those three grounds I mentioned above.

4. Madam Woo was represented by Mr. Chan who informed me that Madam Woo would not be contesting this application, and Mr. Chan, apart from the matters stated below, has also not submitted any mitigation.

5. Mr. Chan submitted that Madam Woo had made effort to mitigate her conduct by submission of annual reports.  Initially Mr. Chan was not able to tell the court in certain terms as to whether or not his client had indeed submitted the reports, and if she did, when she actually submitted them.  I therefore stood the matter down for the parties to confirm this. After a short adjournment, Mr. Gopaoco has fairly and very helpfully drawn to my attention, and confirmed that Madam Woo had indeed submitted four annual reports for the past four years.  However, the submission was only on 31 May 2008.

6. According to the affirmation in support of the application, since the granting of the bankruptcy order the bankrupt has only attended the office of the trustee once, and that was shortly after the bankruptcy order, which was on 19 July 2003.  There was also one contribution made by Madam Woo towards the bankruptcy estate, which was in August 2007, in the sum of about $10,000.  After this initial contact with the trustee, Madam Woo informed the trustee that she needed to go to Canada to look after her children.

7. The trustee had asked Madam Woo to return to Hong Kong by 31 October 2003. Madam Woo, however, had not returned to Hong Kong. Neither had she made any contact with the trustee. According to the evidence, since the last contact in 2003, Madam Woo only made contact with the trustee some time in February this year (2008), after this application to object was instituted.

8. In the circumstances, the facts clearly support the grounds of objections.  I am satisfied that Madam Woo has indeed failed to co-operate with the trustee and to submit annual reports (although she had subsequently submitted them). She was, at the time of the application, clearly in breach of her duty in submitting the reports to the trustee.  In the circumstances, her conduct was clearly unsatisfactory.

9. I will now come to consider the appropriate period of suspension.  In this case, Madam Woo has only made one contribution which was very small when compared to the total amount of the proven debt, which was in a sum in excess of $700,000.  As a matter of fact, apart from her contribution of $10,000, the trustee has only managed to realise a total sum of about $22,000 towards the bankruptcy estate.

10. Madam Woo eventually, since the objection application, submitted annual reports for the past four years.  According to the information Mr. Gopaoco had gathered from his perusal of the reports, it appears that apart from perhaps one year, Madam Woo indeed  had income during most part of the past four years. It is therefore possible that had this fact or had her financial circumstances were made known to the trustee, she might have been required to make some contributions to the estate.

11. Her late submission of the reports, in my view, has not helped greatly with the administration of the estate.  As the reports were filed so late, the trustee was not able to conduct, in my view, a meaningful investigation into the financial situation of the bankrupt.

12. In this case, in my view, Madam Woo has clearly neglected her very important duty as a bankrupt to co-operate with the trustee in administering the bankruptcy estate.

13. As I indicated to Mr. Chan during the course of submissions that I accept that so far as this case is concerned, Madam Woo’s conduct would not belong to the most serious type of conduct.  However, her conduct is still serious, because for almost 3½ years Madam Woo simply did nothing to perform her duty as a bankrupt.

14. In view of the relatively small amount of the liability or proven debt, and that some effort Madam Woo has made to contribute to the bankruptcy estate, I think her conduct lies in the middle between the least and most serious types of conduct.

15. In the circumstances, I am inclined to impose a period of suspension of 2½ years, commencing from 2 July 2007.

Costs

16. I agree with Mr. Gopaoco’s submissions on costs, that any costs occasioned by the abandonment of the additional ground, i.e. the ground under section 30A(4)(e) should be no order to costs.  I would further add that the sending of the notices to the creditors should also be no order to costs.

17. Apart from the above, I order that the costs of this application shall be borne by the bankrupt, to be taxed if not agreed.

18. The bankrupt shall pay to the trustee’s costs of the application including all costs reserved, to be taxed if not agreed, and that there should be no order to costs in respect of the followings:

(1)   Costs of the hearings on 18 April 2008 and 20 May 2008.

(2)   Costs of sending notices of abandonment to creditors.  The costs of abandonment of the ground under section 30A(4)(e). For the avoidance of doubt, I order that all costs of and occasioned by abandonment of the ground under section 30A(4)(e) shall be no order to costs.

(3)   Further, in relation to the costs of the trustee, the trustee shall also not be allowed to recoup their own costs from the estate in relation to sub-paragraphs (1) and (2) above.