RE CHUNG WINSTON

HCB 4005/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4005 OF 2012

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D E C I S I O N

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1.  This is an application by the Trustees in Bankruptcy for an order for private examination of the bankrupt, Mr Chung. The summons has been served on the bankrupt and he has chosen not to appear so this court is content to proceed with this application.

2.  Section 29 of the Bankruptcy Ordinance provides that the court may order a bankrupt to attend a private examination.  In the case of Hau Po Man Stanley (in bankruptcy) and Others v The Joint and Several Trustees, CACV 211/2007, 17 December 2007, the Court of Appeal laid down the following principles to apply under section 29 to enable the court to exercise the discretion:

“21(a) the applicant must satisfy the court of the essential condition that the provision of the 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.”

3.  In the case of Re Carmen Go HCB 235/2004, 22 March 2006, Kwan J (as she then was) granted an order for examination where the bankrupt has failed to co-operate with the Official Receiver in failing to reply to the Official Receiver’s inquiries and failure to make full and frank disclosure of her financial affairs to the Official Receiver.  In the case of Re Lai Kwok Ying HCB 8750/2007, 7 August 2009, Kwan J also stated that great weight should be given to the views of the trustees.

Application of the Principles to the Present Case

4.  When trying to resist the petition for bankruptcy, Mr Chung stated in his IVA proposal what substantial assets he claimed to have with a net book value of millions of dollars.  Even the forced sale value was to the tune of HK$100 million.  Among his assets were shares in listed and private companies which owned substantial properties and businesses.  The companies are BVI companies. Their judgment debt, I am told, is over HK$229 million.

5.  After the bankruptcy order was made, Mr Chung had not been co-operative with the trustees.  One only needs to look at his statement of affairs and preliminary examination questionnaire.  For a substantial part of those two documents, the details he provided would not enable anyone to understand his financial affairs.  The list of assets he provided did not tally with the assets he stated in his IVA proposal.  Many of the answers were left blank.  He stated that he would provide information later for some of the answers.  For others, he stated that he would provide the answer after checking against information.  Needless to say, he failed to keep his promise.

6.  At the meeting on 13 June 2013, the bankrupt failed to answer questions put to him by the trustees.  The trustees described his attitude as appalling, to which I agree.  He promised to submit again the statement of affairs and preliminary examination with full information and supporting documents, only to breach that promise again. 

7.  As pointed out by Mr Chong, counsel for the trustees, the letter dated 13 November 2013 purportedly given to this court through Messrs C L Chow & Macksion Chan on behalf of Mr Chung reiterated that the bankrupt’s stance is that he had good reasons for not being able to re-submit the documents requested by the trustees and that he hoped to explain the same by way of affidavit evidence.  Apparently, he is not going to be co-operative in providing the documents necessary for administration of the estate.

8.  The bankrupt claims to be residing and working in the Mainland.  His business is in the Mainland and, I am told, also in the US, and most of his companies are BVI companies.  So unless assisted by the bankrupt, it is almost impossible for the trustees to administer the estate with the information at hand.  It is virtually impossible to discover the truth and circumstances connected with the bankrupt’s property, affairs and dealings.

9.  The trustees have satisfied the court that the private examination is necessary in order to obtain relevant information from the bankrupt to carry out the trustees’ functions.  Clearly, the bankrupt is in a position to provide information and documents had he co-operated.  There are no circumstances which make it unreasonable, unnecessary or oppressive if an order were granted by this court.

10.  In the premises, I make an order in terms of paragraphs 1 to 3 of the summons taken out by the trustees.

(Submission on costs)

11.  Trustees’ costs of this application be paid out of the estate.  Seven days for the trustees to file and serve a statement of costs.