HCB 1276/1997
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
IN BANKRUPTCY PROCEEDINGS NO. 1276 OF 1997
____________________
Re: Choi Sze Fai Bankrupt
____________________
Coram: Before Master J. Wong in Court
Date of Hearing: 24 April 2002
Date of Handing Down: 16 May 2002
_________________
JUDGMENT
_________________
Introduction
1. This is an application by the Official Receiver and Trustee
(“the OR”) for an order that the automatic discharge from bankruptcy under
sections 30A(1) and (2)(a) of the Bankruptcy Ordinance, Cap. 6 (“the
Ordinance”) be suspended for such period as the Court may order under
section 30A(3) thereof.
2. The OR objects to the automatic discharge of the bankrupt Mr.
Choi Sze Fai (“Mr. Choi”) which should have taken place on 14 April 2002.
In the present case, interim extensions of the adjudication order were made
on 13 March 2002 and 24 April 2002 until the determination of the OR’s
- 2 -
application. If the objection is valid, the court has power and discretion to
suspend the discharge for a period not exceeding four years from 14 April
2002.
3. The Official Receiver’s objection is based on section 30A(4)(c)
and (d) which read as follows:
“ (4) The grounds on which an objection can be made to the
discharge of a bankrupt under this section are as follows-
……
(c) that the bankrupt has failed to co-operate in the
administration of his estate;
(d) that the conduct of the bankrupt, either in respect of
the period before or the period after the
commencement of the bankruptcy, has been
unsatisfactory”
Adjournment
4. During the hearing of the application, it was noted that parties
exhibited only selected documents in their evidence. Ms. Phyllis
McKenna, senior solicitor for the OR, applied for an adjournment for
production of further documents. Mr. Choi objected it on the ground that
further adjournment would prejudice his position. I agreed with Mr. Choi
and as such, the application was carried on upon the documents presented
by the parties so far, namely, the OR’s First Report dated 8 February 2002,
Affirmation of Mr. Choi dated 19 March 2002 and the OR’s Second Report
dated 4 April 2002.
Background
5. On 21 March 1994, Mr. Choi, as a solicitor, was convicted of a
number criminal offences of dishonesty towards his employers and clients,
- 3 -
forgery and attempts to prevent the course of justice. He was sentenced to
6 years in prison by the District Court of Hong Kong. He appealed to
Court of Appeal but was unsuccessful. Thereafter on 14 August 1995, the
Solicitors Disciplinary Tribunal ordered that Mr. Choi’s name be struck off
the roll of solicitors and made costs order against him. On 30 October
1997, the Law Society applied to bankrupt Mr. Choi for a sum of
HK$97,163, being taxed costs of the said disciplinary proceedings.
Receiving order was served on Mr. Choi at Stanley Prison on 15 January
1998 and on 31 March 1998, Mr. Choi submitted his Statement of Affairs
(“the Statement of Affairs”) and finally, on 14 April 1998, an order of
adjudication was made against Mr. Choi.
The OR’s Case
6. Mr. Choi has been one of the most difficult bankrupt to handle.
He not only failed to co-operate with the OR but also demonstrated
unsatisfactory conduct after the commencement of the bankruptcy. He
was unwilling and evasive in answering queries raised by the OR. His
negative attitude has impeded the investigation of his affairs by the OR.
7. Regarding a property known as Flat D, 7/F, Cheong Wang
Mansion, No. 539 Castle Peak Road, Kwai Chung, New Territories (“the
Property”), he declared in the Statement of Affairs that he had half share.
It accorded with the public record at Land Registry. The other half share
belonged to Mr. Choi’s brother, Mr. Choi Kai Man. However, he later
said that he was holding the half share in trust for his brother only.
Nonetheless, no explanation was offered and no step was taken to exclude
it from his estate pursuant to S.43D of the Ordinance. The Property is still
registered in both the names of Mr. Choi and his brother. Further,
- 4 -
although Mr. Choi’s brother redeemed the Mortgage on 8 June 1998, both
he and Mr. Choi took no step to discharge the other encumbrances
registered by the Department of Justice for costs of criminal prosecution as
well as the said receiving order and adjudication order against Mr. Choi.
8. On 16 August 1998, bearing in mind Mr. Choi then claimed
that he was not half of the owner of the Property, issued notices of
prosecution under S.24 Crimes Ordinance (Cap. 200) against the OR
without any justification, wrongfully alleging that OR had threatened to
disconnect water supply therein.
9. After commencement of the bankruptcy, Mr. Choi commenced
two High Court proceedings HCA No. A10132 of 1998 and HCA No. 7223
of 2000 without obtaining any prior consent from or informing the OR at
all. In these two actions, it was not until the defendants in these two
proceedings challenging the status of Mr. Choi as bankrupt, the OR was
then informed. The OR invited Mr. Choi to attend its office for interview
twice by 2 letters dated 10 March 1999 and 18 March 1999 respectively to
explain the position. Mr. Choi failed the OR and merely replied in writing
that he had taken out the proceedings for and on behalf of one Madam Lam
Lai Kuen. Further, Mr. Choi threatened to take action against the OR for
damages if the proceedings would be discontinued by the OR. Upon
seeking legal advice, the OR had no alternative but to allow Mr. Choi to
continue with the said two proceedings for the time being and hoped that
the status of Mr. Choi would become clear upon final determination of the
proceedings.
- 5 -
Mr. Choi’s Case
10. Mr. Choi said that he had tried his best to avoid bankruptcy but
in vain. He did co-operate with the OR including consenting it to obtain
all his information and financial record from the Inland Revenue
Department and banks.
11. He did inform the OR that the Property was not belonging to
him when he completed the Statement of Affairs. That was why the
handwriting word “registered” appeared twice on the Statement of Affairs
to note this point. Further, the OR should have known it by a letter dated
18 March 1998 from Messrs. Henry C.K. Tung & Co. when his brother
took steps to redeem the mortgage.
12. The OR, upon knowing that he did not have any interest in the
Property, went to inform the Office of Water Authority to cut the water
supply of the Property to force his brother and other occupiers to lend him
money to discharge the bankruptcy. It was only after he made a strong
complaint that the water supply of the Property was not disconnected.
13. Regarding the said two High Court proceedings, Mr. Choi said
that he commenced them as trustee for Madam Lam only. In short, he
owed Madam Lam some money and as such, beneficiary interest in a
property at Bangkok was passed to her. Hence, he saw no reason why the
OR should be informed of the trust property. Further, upon questioned by
the OR, he did explain clearly everything. Last, but not least, the OR
never asked him to discontinue the proceedings. He also did not fail to
attend meetings as requested by the OR. For the first appointment, he
received the letter after the appointed time. On the second occasion, he
- 6 -
explained clearly his position in writing.
Ruling
14. When exercising my discretion over the matter, I bear in mind
the underlying principle of the introduction of automatic discharge
provision as described in para. 17.16 of the Law Reform Commissions
Report on Bankruptcy (1995) which says:
“The introduction of the automatic discharge, with the objection
system, have a two fold effect. Firstly, bankrupts would have a
greater incentive than at present to co-operate with the trustee, as
failure to co-operate could result in the trustee objecting to a
bankrupt’s discharge. Secondly, the rehabilitation of a bankrupt
from bankruptcy would be assured, subject to rehabilitation being
delayed as a consequence of a bankrupts own failings.”
Certainly, as also commented by the Mrs. Justice Le Pichon in Re Hui Hing
Kwok [1999] 3 HKC 683,
“Rehabilitation is the sense of enabling the bankrupt to resume a
normal life in society is a key, if not the key consideration. It
should only be delayed by bankrupt’s own failings ……”
15. Having considered the evidence placed before me and the
submissions made by both parties, I come to the conclusion that the
automatic discharge should be suspended for 3 years from 14 April 2002.
Mr. Choi’s Own Failings
16. First, I am satisfied that Mr. Choi failed to complete his
Statement of Affairs properly. Mr. Choi’s explanation is simply
unbelievable. He was a solicitor. He attempted to use the word
- 7 -
“registered” to explain that he was trustee in the Property only. However,
to prevent himself from going into bankrupt, he suggested to offer the
whole of the Property as security, though not successful. He or his
brother have made no attempt to discharge the Charging Order Nisi and
Absolute registered against the Property as early as 19 August 1994 and 17
February 1995 respectively. They have also allowed the receiving order
and order of adjudication appearing on the land search of the Property since
18 February 1998 and 26 May 1998 respectively. All these actions or
non-actions points to the fact that Mr. Choi do have interest in the Property.
17. Further bearing in mind the concept of trust property, Mr. Choi
elected to skip completely in the Statement of Affairs his dealings with
Madam Lam and the interest of the property in Bangkok. Why didn’t Mr.
Choi also simply omit the Property in the Statement of Affairs?
18. Second, I find it difficult, if not impossible, to accept that the
OR would employ improper means to force Mr. Choi to pay to discharge
the bankruptcy, and a fortiori, the complaint and remarks made by Mr.
Choi towards the OR must be wrongful.
19. Third, the OR certainly has the duty and right to ask Mr. Choi
to attend meeting in examination of his affairs. Even I will be accepting
Mr. Choi’s explanation that he only came to notice of the 1st meeting late,
by electing to write a letter and not attending the 2nd meeting proposed by
the OR, or failing to suggest another convenient time, is simply not
co-operating with the OR.
20. Forth, I find, without prior consent from or notice to the OR,
the conduct of Mr. Choi commencing the two High Court proceedings is
- 8 -
unsatisfactory. It put the OR into a very embarrassing position when they
were queried by a third party as to the knowledge of the said proceedings.
Although I note that Mr. Choi tried to explain his position to OR upon
questioning, the Amended Statement of Claim produced at exhibit OR-6 in
one of the proceedings simply indicated that Mr. Choi commenced the
proceedings in his own name without mentioning that he was a trustee or at
all.
21. Fifth, I agree with Ms. McKenna’s submission that the general
attitude of Mr. Choi have been threatening and discourteous to the OR.
When making such comment, I remind myself that Mr. Choi, having been a
solicitor, can defend his rightful interest without fear. However, he has
been exceeding the limit. It suffices for me to extract the following
paragraphs to demonstrate Mr. Choi’s attitude:
“I have heard a ‘rumour’ that your department was used to
employ some inappropriate methods to force/threaten some
innocent people to settle the bankrupt’s debt ……” (letter of Mr.
Choi dated 30 November 2001)
“Apart from deliberately giving me a late notice of the hearing,
the Official Receiver also cheated me into believing that the said
hearing of 13th March 2002 is a substantive hearing.” (paragraph
8 of Affirmation of Mr. Choi)
Remarks on the OR
22. Sixth, on the other hand, with due respect, noting the
inconsistency of allegations by Mr. Choi over his ownership in the Property
as early in 18 March 1998, the OR did not do anything but “waited” over
3.5 years and then, issued a letter to Mr. Choi’s brother on 13 November
2001 inviting him to buy off the interest of Mr. Choi in the Property.
While agreeing with Ms. McKenna’s saying that Mr. Choi had failed to
- 9 -
co-operate with the OR and demonstrated unsatisfactory conduct, as well as
there was no fund for the OR, I am sure there must be something that OR
could have done to resolve the problem. But for these remarks over the
OR, I would have suspended the automatic discharge for 4 years. As the
OR is asking me to exercise discretion, I believe that Mr. Choi should be
given a “discount” here. One year or a quarter deduction is appropriate in
the circumstances.
Costs
23. I do not have an opportunity to hear representation from the
parties to the question of costs. Nonetheless, I believe that I should not
make any costs order in the circumstances. Hence, there will be an order
nisi for no order as to costs, which will be made absolute after the
expiration of 14 days from today.
(Jack Wong)
Master
Ms. Phyllis McKenna, Senior Solicitor, for Official Receiver.
Mr. Choi acting in person.
HCB 1276/1997
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
IN BANKRUPTCY PROCEEDINGS NO. 1276 OF 1997
____________________
Re: Choi Sze Fai Bankrupt
____________________
Coram: Before Master J. Wong in Court
Date of Hearing: 24 April 2002
Date of Handing Down: 16 May 2002
_________________
JUDGMENT
_________________
Introduction
1. This is an application by the Official Receiver and Trustee
(“the OR”) for an order that the automatic discharge from bankruptcy under
sections 30A(1) and (2)(a) of the Bankruptcy Ordinance, Cap. 6 (“the
Ordinance”) be suspended for such period as the Court may order under
section 30A(3) thereof.
2. The OR objects to the automatic discharge of the bankrupt Mr.
Choi Sze Fai (“Mr. Choi”) which should have taken place on 14 April 2002.
In the present case, interim extensions of the adjudication order were made
on 13 March 2002 and 24 April 2002 until the determination of the OR’s
- 2 -
application. If the objection is valid, the court has power and discretion to
suspend the discharge for a period not exceeding four years from 14 April
2002.
3. The Official Receiver’s objection is based on section 30A(4)(c)
and (d) which read as follows:
“ (4) The grounds on which an objection can be made to the
discharge of a bankrupt under this section are as follows-
……
(c) that the bankrupt has failed to co-operate in the
administration of his estate;
(d) that the conduct of the bankrupt, either in respect of
the period before or the period after the
commencement of the bankruptcy, has been
unsatisfactory”
Adjournment
4. During the hearing of the application, it was noted that parties
exhibited only selected documents in their evidence. Ms. Phyllis
McKenna, senior solicitor for the OR, applied for an adjournment for
production of further documents. Mr. Choi objected it on the ground that
further adjournment would prejudice his position. I agreed with Mr. Choi
and as such, the application was carried on upon the documents presented
by the parties so far, namely, the OR’s First Report dated 8 February 2002,
Affirmation of Mr. Choi dated 19 March 2002 and the OR’s Second Report
dated 4 April 2002.
Background
5. On 21 March 1994, Mr. Choi, as a solicitor, was convicted of a
number criminal offences of dishonesty towards his employers and clients,
- 3 -
forgery and attempts to prevent the course of justice. He was sentenced to
6 years in prison by the District Court of Hong Kong. He appealed to
Court of Appeal but was unsuccessful. Thereafter on 14 August 1995, the
Solicitors Disciplinary Tribunal ordered that Mr. Choi’s name be struck off
the roll of solicitors and made costs order against him. On 30 October
1997, the Law Society applied to bankrupt Mr. Choi for a sum of
HK$97,163, being taxed costs of the said disciplinary proceedings.
Receiving order was served on Mr. Choi at Stanley Prison on 15 January
1998 and on 31 March 1998, Mr. Choi submitted his Statement of Affairs
(“the Statement of Affairs”) and finally, on 14 April 1998, an order of
adjudication was made against Mr. Choi.
The OR’s Case
6. Mr. Choi has been one of the most difficult bankrupt to handle.
He not only failed to co-operate with the OR but also demonstrated
unsatisfactory conduct after the commencement of the bankruptcy. He
was unwilling and evasive in answering queries raised by the OR. His
negative attitude has impeded the investigation of his affairs by the OR.
7. Regarding a property known as Flat D, 7/F, Cheong Wang
Mansion, No. 539 Castle Peak Road, Kwai Chung, New Territories (“the
Property”), he declared in the Statement of Affairs that he had half share.
It accorded with the public record at Land Registry. The other half share
belonged to Mr. Choi’s brother, Mr. Choi Kai Man. However, he later
said that he was holding the half share in trust for his brother only.
Nonetheless, no explanation was offered and no step was taken to exclude
it from his estate pursuant to S.43D of the Ordinance. The Property is still
registered in both the names of Mr. Choi and his brother. Further,
- 4 -
although Mr. Choi’s brother redeemed the Mortgage on 8 June 1998, both
he and Mr. Choi took no step to discharge the other encumbrances
registered by the Department of Justice for costs of criminal prosecution as
well as the said receiving order and adjudication order against Mr. Choi.
8. On 16 August 1998, bearing in mind Mr. Choi then claimed
that he was not half of the owner of the Property, issued notices of
prosecution under S.24 Crimes Ordinance (Cap. 200) against the OR
without any justification, wrongfully alleging that OR had threatened to
disconnect water supply therein.
9. After commencement of the bankruptcy, Mr. Choi commenced
two High Court proceedings HCA No. A10132 of 1998 and HCA No. 7223
of 2000 without obtaining any prior consent from or informing the OR at
all. In these two actions, it was not until the defendants in these two
proceedings challenging the status of Mr. Choi as bankrupt, the OR was
then informed. The OR invited Mr. Choi to attend its office for interview
twice by 2 letters dated 10 March 1999 and 18 March 1999 respectively to
explain the position. Mr. Choi failed the OR and merely replied in writing
that he had taken out the proceedings for and on behalf of one Madam Lam
Lai Kuen. Further, Mr. Choi threatened to take action against the OR for
damages if the proceedings would be discontinued by the OR. Upon
seeking legal advice, the OR had no alternative but to allow Mr. Choi to
continue with the said two proceedings for the time being and hoped that
the status of Mr. Choi would become clear upon final determination of the
proceedings.
- 5 -
Mr. Choi’s Case
10. Mr. Choi said that he had tried his best to avoid bankruptcy but
in vain. He did co-operate with the OR including consenting it to obtain
all his information and financial record from the Inland Revenue
Department and banks.
11. He did inform the OR that the Property was not belonging to
him when he completed the Statement of Affairs. That was why the
handwriting word “registered” appeared twice on the Statement of Affairs
to note this point. Further, the OR should have known it by a letter dated
18 March 1998 from Messrs. Henry C.K. Tung & Co. when his brother
took steps to redeem the mortgage.
12. The OR, upon knowing that he did not have any interest in the
Property, went to inform the Office of Water Authority to cut the water
supply of the Property to force his brother and other occupiers to lend him
money to discharge the bankruptcy. It was only after he made a strong
complaint that the water supply of the Property was not disconnected.
13. Regarding the said two High Court proceedings, Mr. Choi said
that he commenced them as trustee for Madam Lam only. In short, he
owed Madam Lam some money and as such, beneficiary interest in a
property at Bangkok was passed to her. Hence, he saw no reason why the
OR should be informed of the trust property. Further, upon questioned by
the OR, he did explain clearly everything. Last, but not least, the OR
never asked him to discontinue the proceedings. He also did not fail to
attend meetings as requested by the OR. For the first appointment, he
received the letter after the appointed time. On the second occasion, he
- 6 -
explained clearly his position in writing.
Ruling
14. When exercising my discretion over the matter, I bear in mind
the underlying principle of the introduction of automatic discharge
provision as described in para. 17.16 of the Law Reform Commissions
Report on Bankruptcy (1995) which says:
“The introduction of the automatic discharge, with the objection
system, have a two fold effect. Firstly, bankrupts would have a
greater incentive than at present to co-operate with the trustee, as
failure to co-operate could result in the trustee objecting to a
bankrupt’s discharge. Secondly, the rehabilitation of a bankrupt
from bankruptcy would be assured, subject to rehabilitation being
delayed as a consequence of a bankrupts own failings.”
Certainly, as also commented by the Mrs. Justice Le Pichon in Re Hui Hing
Kwok [1999] 3 HKC 683,
“Rehabilitation is the sense of enabling the bankrupt to resume a
normal life in society is a key, if not the key consideration. It
should only be delayed by bankrupt’s own failings ……”
15. Having considered the evidence placed before me and the
submissions made by both parties, I come to the conclusion that the
automatic discharge should be suspended for 3 years from 14 April 2002.
Mr. Choi’s Own Failings
16. First, I am satisfied that Mr. Choi failed to complete his
Statement of Affairs properly. Mr. Choi’s explanation is simply
unbelievable. He was a solicitor. He attempted to use the word
- 7 -
“registered” to explain that he was trustee in the Property only. However,
to prevent himself from going into bankrupt, he suggested to offer the
whole of the Property as security, though not successful. He or his
brother have made no attempt to discharge the Charging Order Nisi and
Absolute registered against the Property as early as 19 August 1994 and 17
February 1995 respectively. They have also allowed the receiving order
and order of adjudication appearing on the land search of the Property since
18 February 1998 and 26 May 1998 respectively. All these actions or
non-actions points to the fact that Mr. Choi do have interest in the Property.
17. Further bearing in mind the concept of trust property, Mr. Choi
elected to skip completely in the Statement of Affairs his dealings with
Madam Lam and the interest of the property in Bangkok. Why didn’t Mr.
Choi also simply omit the Property in the Statement of Affairs?
18. Second, I find it difficult, if not impossible, to accept that the
OR would employ improper means to force Mr. Choi to pay to discharge
the bankruptcy, and a fortiori, the complaint and remarks made by Mr.
Choi towards the OR must be wrongful.
19. Third, the OR certainly has the duty and right to ask Mr. Choi
to attend meeting in examination of his affairs. Even I will be accepting
Mr. Choi’s explanation that he only came to notice of the 1st meeting late,
by electing to write a letter and not attending the 2nd meeting proposed by
the OR, or failing to suggest another convenient time, is simply not
co-operating with the OR.
20. Forth, I find, without prior consent from or notice to the OR,
the conduct of Mr. Choi commencing the two High Court proceedings is
- 8 -
unsatisfactory. It put the OR into a very embarrassing position when they
were queried by a third party as to the knowledge of the said proceedings.
Although I note that Mr. Choi tried to explain his position to OR upon
questioning, the Amended Statement of Claim produced at exhibit OR-6 in
one of the proceedings simply indicated that Mr. Choi commenced the
proceedings in his own name without mentioning that he was a trustee or at
all.
21. Fifth, I agree with Ms. McKenna’s submission that the general
attitude of Mr. Choi have been threatening and discourteous to the OR.
When making such comment, I remind myself that Mr. Choi, having been a
solicitor, can defend his rightful interest without fear. However, he has
been exceeding the limit. It suffices for me to extract the following
paragraphs to demonstrate Mr. Choi’s attitude:
“I have heard a ‘rumour’ that your department was used to
employ some inappropriate methods to force/threaten some
innocent people to settle the bankrupt’s debt ……” (letter of Mr.
Choi dated 30 November 2001)
“Apart from deliberately giving me a late notice of the hearing,
the Official Receiver also cheated me into believing that the said
hearing of 13th March 2002 is a substantive hearing.” (paragraph
8 of Affirmation of Mr. Choi)
Remarks on the OR
22. Sixth, on the other hand, with due respect, noting the
inconsistency of allegations by Mr. Choi over his ownership in the Property
as early in 18 March 1998, the OR did not do anything but “waited” over
3.5 years and then, issued a letter to Mr. Choi’s brother on 13 November
2001 inviting him to buy off the interest of Mr. Choi in the Property.
While agreeing with Ms. McKenna’s saying that Mr. Choi had failed to
- 9 -
co-operate with the OR and demonstrated unsatisfactory conduct, as well as
there was no fund for the OR, I am sure there must be something that OR
could have done to resolve the problem. But for these remarks over the
OR, I would have suspended the automatic discharge for 4 years. As the
OR is asking me to exercise discretion, I believe that Mr. Choi should be
given a “discount” here. One year or a quarter deduction is appropriate in
the circumstances.
Costs
23. I do not have an opportunity to hear representation from the
parties to the question of costs. Nonetheless, I believe that I should not
make any costs order in the circumstances. Hence, there will be an order
nisi for no order as to costs, which will be made absolute after the
expiration of 14 days from today.
(Jack Wong)
Master
Ms. Phyllis McKenna, Senior Solicitor, for Official Receiver.
Mr. Choi acting in person.