The Official Receiver v. Mak Pui Yuk and Others
Read the full judgment text of HCB 941/1990 on BabelCite. This HCB judgment was delivered on 29 June 1994 before Rogers J.
Bankruptcy law – interim application by Official Receiver – Mareva Injunction – Prohibition Orders under Order 44A – cross-examination on affirmations – specific discovery – undertakings – bankruptcy of Chung Wong Kit. The Official Receiver, as trustee in bankruptcy of Chung Wong Kit, applied for several interim orders including leave to cross-examine the Respondents on their affirmations, specific discovery of bank accounts, extension of the Mareva Injunction as against the 2nd and 5th Respondents to cover additional properties, and extension of the Prohibition Orders. The court found the Official Receiver had made out a prima facie case that the bankrupt had come by a great deal of money which appeared to have been channelled through the 6th to 9th Respondent companies and more directly to the 1st to 5th Respondents (family members). First issue: whether to grant leave to cross-examine the Respondents on their affirmations — held: application adjourned sine die with liberty to restore; cross-examination to a limited extent may be allowed if the Respondents fail to comply with the 13th May disclosure order after adequate time, given the danger of unfair advantage in cross-examining before the main hearing. Second issue: whether to order specific discovery of bank accounts — held: no extension required, as the discovery sought was already within the scope of the 13th May order, and expanding orders carries the danger that parties will overlook their original obligations. Third issue: whether to extend the Mareva Injunction to cover property outside the jurisdiction (2nd Respondent) and property within Hong Kong (5th Respondent) — held: no extension needed; undertakings from the 2nd and 5th Respondents to keep 50% of sale proceeds in a special account and to notify the Official Receiver of any sale would provide sufficient protection, and extending the injunction outside the jurisdiction carries its own complications. Fourth issue: whether to extend the Prohibition Orders, particularly against the 5th Respondent alleged to be about to emigrate — held: no extension; the 5th Respondent's intended departure was a technicality amounting to an annual vacation with her husband who was a director of a publicly listed company in Hong Kong, and the amount at stake against her was comparatively small; no basis was shown for making Prohibition Orders against the other Respondents apart from one who would be travelling on business. Outcome: interim application adjourned, no extension of cross-examination, specific discovery, Mareva Injunction, or Prohibition Orders, with undertakings given in respect of the properties to provide equivalent protection to the Official Receiver.
Legal issues: Whether to grant leave to cross-examine respondents on their affirmations · Whether to order specific discovery of bank accounts · Whether to extend the Mareva Injunction to include further properties · Whether to extend the Prohibition Orders against the Respondents
Outcome: Interim application adjourned; cross-examination application adjourned sine die with liberty to restore; no extension of specific discovery order or Mareva Injunction; undertakings given in lieu for the properties; Prohibition Orders not extended.
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HCB000941/1990 IN THE HIGH COURT OF HONG KONG IN BANKRUPTCY NO. 941 OF 1990
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_______________ Coram: The Hon. Mr. Justice Rogers in Court Date of hearing: 29 June 1994 Date of decision: 29 June 1994 _______________ D E C I S I O N _______________ 1. This is more in the nature of an interim decision because the application which has been made today, is not going to be concluded today and in fact is probably not going to be concluded for some months. 2. The Official Receiver has applied for a number of orders including leave to cross-examine the Respondents on the affirmations which they have made. He has asked for specific discovery of bank accounts held by the respective Respondents, the inclusion into the Mareva Injunction order as against the 2nd Respondent of property which is outside the jurisdiction and the inclusion as against the 5th Respondent of property which is within Hong Kong or her share in that property and finally the extension of the Prohibition Orders which I made on a temporary basis last Saturday morning and were extended yesterday until today. 3. After a very full and careful exposition of the facts of the case and a discussion of the various issues with the Court, Mr. Fitzpatrick has suggested that the application for leave to cross-examine be adjourned. With that suggestion I concur. Without going in to the facts in any great depth, the Official Receiver has made out a case, it seems to me, that the bankrupt came by a great deal of money. That money seems to have been passed in various directions through various companies including the 6th to 9th Respondents and in some respects directly, or more directly, to the 1st to 5th Respondents. 4. There is a great deal of further information which is clearly needed to comply with the orders which I made on the 13th May. On the authorities, if the Respondents neither set the Mareva Injunction order aside nor comply with it, they do leave themselves open to cross-examination. I am reluctant to be over hasty in ordering cross-examination because the main proceedings are still to be heard. It inevitably raises a danger that one side will get an unfair advantage by being able to cross-examine the other. However, just as contempt proceedings are a threat which is held over against persons who do not comply with orders, if after the Respondents have been given an adequate time to comply with the order they do not do so, it seems that cross-examination at least to a limited extent is something which may be allowed. I, therefore, propose to adjourn Mr. Fitzpatrick's application sine die with liberty to restore. The intention being that if the Official Receiver can at the end of the day show that the disclosure required under the Order of the 13th May has not been complied with, there may well be an order for cross-examination. 5. Turning then to the request for inclusion of specific discovery of bank accounts; in my view, what is sought is in fact included within the order of the 13th May. That appears to be Mr. Fitzpatrick's view and in those circumstances I do not propose to extend the order because I do not think it is necessarily right to expand orders because the danger then is that people will look at the expanded order and not look at their requirements under the original order. Having said that I think that what Mr. Fitzpatrick is asking for is what is included I will leave it at that and one would expect it to be complied with in due course. 6. As regards to the inclusion of the properties, Miss Au-yeung has indicated that the Respondents, namely, the 2nd and 5th Respondents with whom this aspect of the matter is concerned, are prepared to give undertakings that if the properties were sold, 50% of the proceed to sale will be kept in a special account. She coupled that with a further suggestion or an earlier suggestion that notice should be given to the Official Receiver if the properties were to be sold. In my view, I think both undertakings should be given and if those undertakings are given, then that would be a sufficient protection for the Official Receiver of those assets. Since all the Official Receiver is asking for is 50% of the proceeds of those assets there is no need to extend the Mareva Injunction outside the jurisdiction which naturally has its own complications. 7. I turn finally to the question of the extension of the Prohibition Orders. These are matters which I have to say that I tested Mr. Fitzpatrick to the full in respect of, since I have a great reluctance in making any prohibition Order under the terms of the new Order 44A. It is further said that these orders were applied for on the basis of the solicitor's letter which indicated that the 5th Respondent was about to emigrate. It seems now from the affidavit which has been filed that first of all, although the 5th Respondent will technically be landing in the chosen country of immigration, it is more in the nature of a technicality and she has every intention of returning after what is no more than her annual vacation with her husband. The 5th Respondent, indeed, seems to have a great deal to bring her back to Hong Kong where her husband is a director of a publicly listed company. The amount at stake directly as against the 5th Respondent is in terms of this case comparatively small and if I were to compare that with what might be at stake for her husband in respect of his position, I would say it was very small. So I consider that again in those circumstances that really the 5th Respondent is not on what I have seen likely to leave Hong Kong other than for a short holiday. Therefore I think it is inappropriate to make an order against her. In respect of the other Respondents, apart from one who would be travelling on business, nothing has been shown that they are about to leave, and therefore, I do not propose to make any order in respect of them.
Representation: Ms. Queeny Au-yeung inst'd by Messrs. Ko & Co. for 1st-9th Respondents. Mr. Fitzpatrick inst'd by Official Receiver. |