RE LEE SIU FUNG SIEGFRIED

HCB 345/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCYPROCEEDINGS NO. 345 OF 2001

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J U D G M E N T

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1.  This was an application by Mr Alan Chung Wah Tang, one of the joint and several trustees in bankruptcy (“the Trustee”) of Mr Lee Siu Fung Siegfried (“the Bankrupt”) seeking a declaration that the relevant period for the Bankrupt’s discharge from bankruptcy has ceased to run pursuant to section 30A(10) of the Bankruptcy Ordinance (“the Ordinance”), as it was said that the Bankrupt had departed Hong Kong shortly after the making of the bankruptcy order against him on 8 May 2001, without providing the Official Receiver (who was then his trustee in bankruptcy) with his itinerary and a contact address, as required by section 30A(10)(b)(i) of the Ordinance.

2.  The Bankrupt having been made bankrupt on 8 May 2001, and this being the first occasion on which he had been made bankrupt, his bankruptcy would ordinarily have come to an end by his being automatically discharged on 8 May 2005, four years after the making of the order (see sections 30A(1) and (2) of the Ordinance).  However, on 5 May 2005, the Trustee took out an application by summons seeking two forms of relief.  First, under paragraph 1 of the summons (as amended pursuant to my order of 26 May 2006), the Trustee sought a declaration as to the period for which the relevant period had ceased to run, pursuant to section 30A(10).  Second, under paragraph 2 of the summons, the Trustee sought an order that the relevant period should cease to run for a period of four years or such other period as the court might think fit, on the eight grounds stated in that paragraph of the summons.

3.  When the matter first came before Master S Kwang on 23 June 2005, he adjourned paragraph 1 of the summons to a date to be fixed for directions as to its further progress to be given by the Bankruptcy Judge, and adjourned paragraph 2 of the summons sine die with liberty to restore.

4.  No doubt he took this course because he was of the view that it was desirable to determine the question raised by paragraph 1 of the summons first, since depending on its determination, it might prove to be premature to deal with the question raised by paragraph 2.  The procedure for discharge from bankruptcy is governed by sections 30, 30A and 30B of the Ordinance.  Under section 30, a bankruptcy commences on the day that the bankruptcy order is made against the bankrupt, and continues until the bankrupt is discharged under section 30A or 30B.

5.  Section 30A deals with automatic discharge from bankruptcy, which was introduced by amendments made to the Ordinance in 1996.  The effect of sections 30A(1) and (2) is that (subject to the other provisions of section 30A) a first-time bankrupt will be discharged four years after the date on which the bankruptcy order against him is made (this period is defined as “the relevant period”).  However, such discharge is not a certainty, for other provisions of section 30A provide means by which the relevant period may be extended.

6.  Under section 30A(3) it is possible for the bankrupt’s trustee or creditors to object to his discharge, on one or more of the grounds specified in section 30A(4).  If the court is satisfied that the objection is valid, it may, at its discretion, extend the period of the bankruptcy by ordering that the relevant period shall cease to run for a period, to be specified in its order, of up to a further four years in the case of a first-time bankrupt.  In effect, the period of the bankruptcy may be extended for up to a total of eight years in an appropriate case.

7.  Further, section 30A(10)(b)(i) provides that in the case of a bankrupt who after the commencement of his bankruptcy leaves Hong Kong without notifying his trustee of his itinerary and where he can be contacted, the relevant period shall (notwithstanding sections 30A(1), (2) and (3)) not continue to run during the period he is absent from Hong Kong and until he notifies the trustee of his return.  In such a case, the relevant period of four years might not in fact expire until well after four years have elapsed from the date of the bankruptcy order.

8.  Whereas under sections 30A(3) and (4), there is an extension of the relevant period at the end of the four years, the effect of section 30A(10) is that, where it applies, the four years will not be regarded as having expired, taking account of periods of the bankrupt’s absence from Hong Kong without complying with the requirements of this subsection.

9.  In this case, it was the Trustee’s contention that the Bankrupt had left Hong Kong on the day after the bankruptcy order was made against him, without notifying the Official Receiver of his itinerary or where he could be contacted, and that, on one view of the matter, the relevant period had ceased to run at that point, and had never resumed running.  In the event, as the evidence developed, it was the Trustee’s contention that a very substantial portion of the four years that had elapsed since the making of the bankruptcy order in this case did not count towards the relevant period by virtue of the operation of section 30A(10)(b)(i).

10.  Against that background, it is not surprising that Master Kwang should have thought it appropriate that the question of how much more of the relevant period remained to run should be dealt with before going on to consider whether or not that period should be extended pursuant to sections 30A(3) and (4) by reason of the grounds relied on by the Trustee in paragraph 2 of the summons.

11.  The matter then came before the court on 7 November 2005.  However, at that point, the effect and constitutional validity of section 30A(10)(b)(i) was the subject of consideration in a pending appeal before the Court of Appeal in other bankruptcy proceedings (Re Chan Wing Hing, CACV 153/2005), and it was agreed that the application should be adjourned pending the delivery of the Court of Appeal’s judgment.  In the event, that judgment was handed down on 16 January 2005, and the application restored.

12.  At the end of the hearing before me, Ms Ismail, appearing for the Trustee, informed me that the decision in Re Chan Wing Hing was the subject of a further appeal to the Court of Final Appeal, in FACV Nos. 7 and 8 of 2006, which was due to be heard within a few weeks, on 26 June 2006.  In the event, the hearing in fact took place on 6 July 2006, and judgment was handed down on 20 July 2006.  By its judgment, the Court of Final Appeal declared section 30A(10)(b)(i) of the Ordinance unconstitutional, as it amounted to a disproportionate infringement of the right to travel provided for by Article 31 of the Basic Law and Article 8(2) of the Bill of Rights.

13.  In the light of that decision, section 30A(10)(b)(i) is of no effect, and cannot therefore affect the running of the relevant period.  That being so, there is no basis on which any declaration can or should be made under paragraph 1 of the Trustee’s summons.

14.  Following the handing down of the Court of Final Appeal’s judgment, on 24 July 2006, the solicitors acting for the Trustee indicated that they wished to make submissions as to the appropriate orders to be made in the light of that judgment.  Such submissions were received on 11 August 2006.  They requested that the Trustee be given leave to withdraw his application under paragraph 1 of the summons, and that costs be reserved, on the basis that some part of the costs incurred to date would have been incurred in any event, as paragraph 2 of the summons remains to be dealt with, and some of the evidence filed by the parties went to both parts of the summons.  By letters dated 27 July and 11 August 2006, the Bankrupt objected to this course, and urged the immediate dismissal of the entirety of the summons.

15.  Given the order of Master Kwang, which was, for the reasons which I have given, entirely understandable in the circumstances, it is quite clear that the merits of the Trustee’s application under paragraph 2 of the summons have not yet been considered.  It therefore would not be appropriate to dismiss the summons altogether.

16.  In the circumstances, the appropriate course would probably be to make no order in relation to paragraph 1 of the summons.  As the Trustee now wishes to withdraw that part of the summons, I shall give him leave to do so.  The costs referable to that part of the summons will be reserved.

17.  Should the Trustee wish to pursue the relief sought by paragraph 2 of the summons, he may take steps to have it restored for hearing, so that directions for its further progress may be given.