Re Lee Siu Fung Siegfried

HCB 345/2001

[2025] HKCFI 462

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 345 OF 2001

________________________

________________________

BETWEEN

________________________

________________________

DECISION

________________________

Introduction

1.This is an application made by the Trustees in Bankruptcy of the Discharged Bankrupt (the “Applicants”)  by way of summons dated 27 February 2024 (the “Summons”)  for discovery of documents from the respondent (“R”)  and for R to be examined, pursuant to section 29 of the Bankruptcy Ordinance, Cap 6 (the “Ordinance”).

2.The Applicants have previously obtained two separate orders against the Discharged Bankrupt, his brother, his son and his two sisters from Godfrey Lam J (as he then was)  in 2016 and 2017 in the present bankruptcy proceedings for them to attend examination and to produce documents[1].

3.Eight years later, the Applicants now seek a similar order against R, the Discharged Bankrupt’s daughter.

Background

4.The background of the case was set out in the reasons handed down on 12 October 2016 by Godrey Lam J[2] (the “2016 Decision”)  in §§2 – 13 and 36, which I gratefully adopt herein:

“2.  The [Discharged Bankrupt] was the founder, Chairman, CEO and the largest single shareholder of Siu Fung Ceramics Holdings Limited (“SFCH”), a company whose shares were listed in Hong Kong in the 1990s.  I shall refer to SFCH and its subsidiaries and associated companies together as “the Group”. The 2^nd respondent is the younger brother and the 3^rd respondent is the son of the [Discharged Bankrupt].

3.  Petitions to wind up SFCH and several other companies in the Group were presented by HSBC in March 1999.  On 9 May 2000, winding up orders were made.  Claims of creditors admitted for the Group total approximately HK$8,436 million.  To date no dividend has been paid to the creditors of SFCH.  Aggregate dividends paid to the creditors of some of the companies in the Group are less than 1% of their admitted claims.

4.  On 18 January 2001, a bankruptcy petition was presented by HSBC against the [Discharged Bankrupt] for a debt of HK$322 million based on a guarantee.  He was adjudged bankrupt on 8 May 2001.  Proofs of debt filed in the bankruptcy to date (pending adjudication)  amount to some HK$458 million.

5.  Soon after the adjudication the [Discharged Bankrupt] submitted a statement of affairs stating assets of HK$265 only.  Between 2001 and 2004 he submitted 3 annual statements reporting zero income and zero expenditure.  Nothing has been contributed by the [Discharged Bankrupt] to the bankruptcy estate.  Not a single cent of dividend has been paid to the creditors.  The [Discharged Bankrupt] had stayed mostly in the Mainland in the years immediately following the adjudication of bankruptcy.

6.  In 2004, the Insider Dealing Tribunal, chaired by Lugar-Mawson J, found that the [Discharged Bankrupt] had used the securities accounts of 3 persons to sell 16.94 million shares in SFCH in June 1996 and also counselled or procured his wife to sell 80 million shares in SFCH in July 1996 when he had price-sensitive information adverse to the Group, thereby avoiding losses of HK$69.87 million.  The proceeds of sale were deposited by his wife into his bank account.  The Tribunal imposed an order for disqualification of the [Discharged Bankrupt] from management of any company for the maximum period of 5 years (from 25 October 2004), ordered him to pay HK$69.87 million being the amount of loss avoided, HK$139.74 million in penalty, and HK$9.19 million in costs.  In making these orders, the Tribunal stated:

‘In this regard, we are aware that Siegfried Lee is now bankrupt in Hong Kong. He has not responded to the publication of the first part of this report. He is believed to reside in Beijing, but neither the Tribunal nor the SFC knows his present address. There are however reasons to believe that Siegfried Lee is not totally without assets. In Chapter 11, at page 146, we referred to Daniel Chan admitting squirreling away $25 million offshore for Siegfried Lee’s benefit. We propose to proceed on the basis that Siegfried Lee remains a wealthy man and that eventually his assets will be tracked down. To do otherwise would be to reward mendacity.

…

Siegfried Lee has made no representations to us in mitigation of penalty.  We can find none.  He was motivated by greed throughout all his dealings.  He displayed a cavalier attitude towards his duties as the chairman of a listed company.  He was prepared to use his family members, as well as his subordinates and their family members, to execute his dishonest schemes.  There is evidence that he has feathered a nest offshore to avoid his creditors in Hong Kong and he has expressed no remorse for his wrongdoing.’ (emphasis added)

7.  An order for payment was also made against Daniel Chan, an employee of SFCH whom the Tribunal found to be the “trusted lieutenant” of the [Discharged Bankrupt]. When Daniel Chan failed to pay, an order was made for his oral examination as a judgment debtor.  The explanation he gave there was accepted by the Master in a subsequent (unsuccessful)  application by the Government as judgment creditor for an order of imprisonment under Order 49B rule 1B (unreported, HCMP 2851/2004, 23 October 2006), at §39:

‘I accept the explanation of [Daniel Chan] that he was instructed by Lee Siu Fung to transfer the money of HK$25 million through his own HKBC account to the Singapore BNP account on the same day when he received cheques from Lee Siu Fung. The Singapore account did not belong to him and … apparently belonged to Lee Siu Fung. After the money was transferred to such account, [Daniel Chan] did not know what had happened to the money.’

8.  Shortly before the expiry of 4 years from the adjudication of bankruptcy, on 5 May 2005, the trustees made an application, first, under s 30A(10)  of the Ordinance, for a declaration that time had not run during the period in which the [Discharged Bankrupt] was absent from Hong Kong (the trustees alleging that the [Discharged Bankrupt] had gone to Beijing the day after he was adjudged bankrupt), and secondly, to object to automatic discharge on various grounds under s 30A(3)  & (4)  such as the [Discharged Bankrupt]’s alleged failure to cooperate with the trustees.  In the light of the Court of Final Appeal’s decision in Re Chan Wing Hing (2006)  9 HKCFAR 545 (handed down on 20 July 2006)  which declared s 30A(10)(b)(i)  unconstitutional, the first part of the trustees’ application was withdrawn with leave in August 2006.

9.  The trustees, however, failed to proceed with the second part of their application.  On 2 February 2008, the [Discharged Bankrupt], represented by the solicitors’ firm of Messrs Anthony Siu & Co, took out an application to strike out the trustees’ summons of 5 May 2005.  In the end, on 27 August 2008, Barma J (as he then was)  struck out the trustees’ summons on the ground that it was an abuse of process for the trustees to have taken out the application (and thereby obtained an interim suspension of discharge)  and failed to proceed with it.  The [Discharged Bankrupt] was as a consequence regarded as having been discharged from bankruptcy in May 2005.  It should be noted that Barma J did not deal with the merits of the trustees’ objection based on s 30A(3)  & (4).  In fact, the [Discharged Bankrupt] had not yet by then filed evidence to respond to the allegations made against him because it had been agreed that the point on s 30A(10)  would be dealt with first.  Barma J took into account that an objection to automatic discharge should be made at a reasonably early stage and proceeded with expeditiously since delay would mean the bankrupt may be unfairly denied his discharge until some time after he should have obtained it.  An interim order should not be left in place for longer than necessary to enable the objection to automatic discharge to be determined.  The learned judge also noted that in this case while the maximum postponement of automatic discharge was for 4 years, by the time an application could be heard after the filing of evidence relating to the grounds in s 30A(3)  & (4), there would have had been a de facto suspension of discharge for over 3.5 years.

10.  As I shall explain further below, the [Discharged Bankrupt]’s discharge from bankruptcy did not in law end his duties to assist the trustees in their functions which continue notwithstanding the discharge.  On 6 January 2012, the trustees wrote to the [Discharged Bankrupt]’s then solicitors, Messrs Anthony Siu & Co, asking the [Discharged Bankrupt] to attend on the trustees to answer various questions and provide information as set out in a letter issued by the trustees to the [Discharged Bankrupt] on 1 February 2005 (attaching previous letters)  which had not been answered by him.  On 10 and 23 February 2012, the trustees wrote to the same solicitors asking the [Discharged Bankrupt] to attend on the trustees to provide information.  The [Discharged Bankrupt] refused to do so.

11.  On 28 August 2012, the trustees wrote to Anthony Siu & Co again, pointing out that despite previous letters (including earlier letters of 4 October 2005, 12 January 2006 and 3 March 2008)  to the [Discharged Bankrupt], no information had been received from the [Discharged Bankrupt], and asking the solicitors to remind the [Discharged Bankrupt] of his legal obligations and statutory duties.  On 3 October 2012, the solicitors replied that their client, the [Discharged Bankrupt], was ‘not obliged to entertain’ the trustees’ requests because they had not provided particulars or documentary evidence to support their allegations.

12.  From December 2015 onwards, the trustees have sent written questionnaires to the [Discharged Bankrupt] and various persons connected with him including the 2^nd and 3^rd respondents seeking answers and explanation…

13.  There is evidence that, after the trustees took these steps, on 8 April 2016, the [Discharged Bankrupt] and another man attended the trustees’ offices in Causeway Bay without prior notice.  He complained that the trustees had disturbed him and his family members, and threatened that he could send 6 men to the trustees’ offices every day for a month.  The trustees’ solicitors’ letter of the same date recording the incident was sent to the [Discharged Bankrupt] by post and by hand … A further solicitors’ letter dated 14 April 2016 was sent by post and by hand to the [Discharged Bankrupt] … complaining about the incident and also reminding him to respond to the questionnaire.  The 1^st respondent did not respond.

…

36.  Apart from certain Hong Kong bank accounts the trustees have found the [Discharged Bankrupt] to have held, which had not been reported by him, the trustees suspect that not only had the [Discharged Bankrupt] concealed or not disclosed his assets held in nominee accounts or through offshore companies, but he had since around 1996 taken steps to put his assets beyond the reach of creditors.  The evidence was that in 1996 the Group experienced financial difficulties.  As found by the Insider Dealing Tribunal, the [Discharged Bankrupt], with private information, caused shares in SFCH to be sold before the share price dropped.  An overall loss of HK$252 million was announced by the Group on 27 September 1996.  Cash flow problems were announced in November 1996.  Restructuring attempts began in 1997 for the Group but were unsuccessful.  Meanwhile the evidence shows certain dispositions of assets which have aroused the trustees’ suspicion.  In the 7^th affirmation of Alan Tang the trustees have identified five specific areas and one general area that they particularly wish to probe into.”

5.The 6 areas of inquiry mentioned in the last sentence in the quotation above are[3]:

(1)  Gratuitous or undervalue transfer of the Discharged Bankrupt’s 75% holding in Siu Fung Pharmaceutical Holdings Limited (“SFPH”);

(2)  The interest in Siu Fung Ceramics (Beijing)  Sanitary Ware Company Limited (“BSW”)  in 2001;

(3)  Nominee accounts;

(4)  Unreported patents on designs of sanitary ware registered in the Discharged Bankrupt’s name during his bankruptcy;

(5)  Undisclosed cash receipts for disposals of joint venture interests; and

(6)  undisclosed assets generally.

6.Godfrey Lam J (as his Lordship then was)  has held that the provision of information for the aforesaid areas is reasonably required for the Applicants to carry out their functions, when considering whether a section 29 Order should be granted against the Discharged Bankrupt, his brother, his son and his two sisters.

7.R has filed a 2-page affirmation in opposition, contending that:

(1)  She had only been involved in the business of the Discharged Bankrupt since 2016, due to a family decision as her brother believed she was more capable and responsible person.

(2)  She has always been living her own way of life in self-founded business unrelated to that of the Discharged Bankrupt.

(3)  She was a minor when the Discharged Bankrupt was bankrupted.  Some questions date back to May 1996 when she was merely 9 years old.

(4)  Since 2016, she has become a mother to 4 children.  She relied on her family to assist her with the day-to-day operations of the companies.

8.R appeared at the hearing and was not legally represented.  She reiterated that since the transactions took place many years ago, she is not in a position to provide any useful information.

Legal Principles

9.  Section 29 of the Ordinance provides (where material)  that:

“(1)  The court may, on the application of the Official Receiver or trustee, at any time after a bankruptcy order has been made against a bankrupt summon before it the bankrupt or his spouse, or any person known or suspected to have in his possession any of the estate or effects belonging to the bankrupt or supposed to be indebted to the bankrupt, or any person whom the court may deem capable of giving information respecting the bankrupt, his dealings or property, and the court may require any such person to produce any documents in his custody or power relating to the bankrupt, his dealings or property.

(1A)  The court may require a person referred to in subsection (1), other than the bankrupt, to submit an affidavit to the court containing an account of his dealings with the bankrupt or to produce any documents in his possession or under his control relating to the bankrupt or the bankrupt’s dealings, affairs or property.

……

(3)  The court may, by itself or by a commissioner appointed for the purpose, examine on oath, either by word of mouth or by written interrogatories, any person so brought before it concerning the bankrupt, his dealings or property and any other matter the court considers relevant.”

10.The principles governing the exercise of power under section 29 are well settled.  In Hau Po Man Stanley (in bankruptcy)  & Ors v Joint and Several Trustees[4], the Court of Appeal stated at §21:

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

11.Godfrey Lam J has set out in the 2016 Decision that :

“31. It was said in Hau Po Man Stanley at §32 that a mere ‘fishing’ expedition by the applicant is not permissible under s 29. At first sight there might appear to be a conflict with what was said by Lord Millett NPJ in Kong Wah Holdings Ltd at §33, namely, that the liquidator is ‘necessarily engaged in just such an expedition and the purpose of s 221 is to enable him to carry it out effectively’. But on closer analysis it seems to me there is no real conflict.

32. The feature highlighted by Lord Millett’s remark is that in the context of private examination, which is inquisitorial in nature, the officer in question, whether a liquidator or trustee, does not advance a case or specific pleaded allegations. He may not in fact have the material to do so; yet the procedure ‘may be used to discover facts and documents relating to potential claims by the liquidator against third parties’: Kong Wah Holdings Ltd at §26. The object is to gather for the office-holder information about the affairs of the company or the bankrupt to enable him to carry out his functions effectively.

33. In Re Ho Yuk Wah David (bankrupt) [2015] 2 HKLRD 603 at §16, To J said:

‘As in the case of company insolvency, the jurisdiction conferred on the court by the section 29 of the Bankruptcy Ordinance is inquisitorial in nature. It must of necessity be general, wide and unlimited. The trustee has a wider agenda than a party seeking discovery under Order 24. His general mandate is to investigate the affairs and property of the bankrupt. His functions are to put the bankrupt’s affairs in order and administer his affairs to which he is a total stranger. He needs far wider discovery to enable him to discharge his functions than what is permissible in an ordinary inter-party or third party discovery under Order 24. He may not know what he had to unravel from the bankrupt’s affairs. He cannot be confined to pleaded issues. He is not required to prove any pleaded issues on a balance of probability. It is therefore inappropriate to compare the discovery sought under section 29 of the Bankruptcy Ordinance with that under Order 24. Public policy requires that the trustee in bankruptcy be given a “fishing licence” for the benefit of the creditors. As in the case of company insolvency, the essential requirement is whether the information or documents sought are reasonably required to enable the trustee to carry out his functions in gathering information about the assets, affairs and dealings of the bankrupt as effectively as possible, and with as little expense as possible.’

34. On the other hand, it would appear that in Hau Po Man Stanley at §32 the Court of Appeal was concerned about expeditions that ignore costs and proportionality: see Re Lee Priscilla Hwang (bankrupt) [2012] 4 HKLRD 581 at §23 per Recorder A Chow SC (as Chow J then was). What could also be regarded as impermissible fishing is to seek to extract information from persons in respect of a matter when there is no well-founded ground upon which to consider him prima facie capable of giving information: cf In re Maundy Gregory, ex parte Norton [1935] Ch 65, 74. It would also be impermissible fishing to begin an examination without any clear suspicions and to conduct it to determine if matters or facts might emerge which may be of interest or assistance, though this does not mean a liquidator is not permitted to probe the circumstances relating to those on which the examination is centred, in the hope of determining whether there is another line of enquiry which should be pursued to ascertain the truth: Re Weihong Petroleum Co Ltd (No 2) [2003] 2 HKLRD 747 at §§40-41, 43.

35.  Finally, so far as the general approach is concerned, it seems to me that the case for making an order for examination of the bankrupt, including a discharged bankrupt, will in general be stronger than in respect of a stranger who is not under an express continuing statutory duty to assist the trustee that I have described above: cf Kong Wah Holdings Ltd, supra, at §30(2); Re China Metal Recycling (Holdings)  Ltd [2015] 2 HKLRD 747 at §70.”

Connections of R with the areas of inquiry

12.Mr Patrick Siu, counsel for the Applicants submitted that the following corporate manoeuvres contributed to the transfer of the Discharged Bankrupt’s assets out of the creditors’ reach, and R would have knowledge of such manoeuvres by reason of her directorship / shareholding in various companies:

Funding for Acquisition of BSW

(1)  From the examination of the Discharged Bankrupt, his brother, his son and his two sisters, it transpired that a majority of the consideration for the brother’s acquisition of the 36% equity interest in BSW was from Goldsmith International Limited (“GIL”).  There is no explanation why GIL would pay for such an acquisition.

(2)  R has been a director of GIL since 2016.

Injection of assets belonging from SFPH into ROY Asset Holding SE (“ROY”)

(1)  This area of inquiry concerned a share transfer in SFPH in February 1996.  Before the transfer the Discharged Bankrupt was the sole shareholder and director of SFPH.  After the transfer, the Discharged Bankrupt held 75% of the shares whilst his brother held 25 % of the shares.

(2)  In May 1997, 3,200,000 shares were allotted to a company owned by the sisters of the Discharged Bankrupt, such that the Discharged Bankrupt’s shareholding was diluted by half.

(3)  In December 1997 and March 1998, the Discharged Bankrupt disposed of the entirety of his shareholding in SFPH to his brother and a company owned by his ex-wife at the consideration of  HK$1 respectively.

(4)  In December 2001, the shares of SFPH were held as follows:

(a)  Huby Technology Limited (of the sisters): 15,200,000 shares.

(b)  Dynamic Achieve Investments Limited (of the sisters): 800,000 shares.

(c)  High Knowledge Investments Limited (owned by the wife of the Bankrupt’s brother): 1,600,000 shares.

(d)  Techfarm Investment Limited: 800,000

(5)  In February 2002, the above four companies entered into a share exchange agreement under which the four companies transferred all their shares in SFPH in return for shares in Lee’s Pharmaceutical Holdings Limited (“LPHL”). 

(6)  LPHL’s shares were listed in July 2002.  Each of Huby Technology Limtied, Dynamic Achieve Investments Limited, High Knowledge Investments Limited and Techfarm Investment Limited became shareholders of LPHL instead of SFPH.

(7)  These series of transactions led to the end result that SFPH, which was originally held as to 75% by the Discharged Bankrupt as at 1996 became the business of LPHL in which the Discharged Bankrupt had ostensibly no interest, and all that the Discharged Bankrupt had obtained in return was HK$2.  On the other hand, LPHL is now listed on the main board in Hong Kong.

(8)  Of the 8 million shares Dynamic Achieve Investments Limited had, it disposed of 4 million shares at nil consideration, which the Applicants believe to form a partial consideration for Lion Legend Holdings Limited (“LLH”)  to acquire Hillmond International Holdings Limited, which held 22% equity interest in BSW.

(9)  In preparation for the listing of ROY, and in exchange for the injection of BSW and LPHL’s shares into ROY, shares in ROY were issued to LLH’s shareholders.

(10)  Following subsequent exchange agreements among LLH, BSW Trading Limited (“BSW Trading”), GIL, Hi Scene Industrial Limited (“HSI”)  and Shine Eagle Holdings Limited (“SEH”), Shine Eagle Trust reg (“SETR”)  took up 65% of the equity ROY.  Upon the listing of ROY, BSW was described as a major asset of ROY.

(11)  As at 2015, SETR was owned by the Discharged Bankrupt’s son (45.6%), the Discharged Bankrupt’s ex-wife (35.3%)  and R (19.1%). SETR was dissolved by the R in 2016, and substantial shareholdings in ROY were transferred to HSI, which is wholly owned by the R.  R currently holds 75.47% of the equity in ROY.

(12)  The Discharged Bankrupt was also immediately appointed as the CEO and Chairman of ROY.  He has remained as CEO and Chairman of ROY to date.  He also gave a high profile interview with Ming Pao announcing his personal comeback with the “Siu Fung” empire in 2015.  It was therefore contended that here are reasonable grounds to believe that R is holding ROY for and on behalf of the Discharged Bankrupt as there was no explanation as to how the R became such a substantial shareholder of ROY.

Sale of BSW

(1)  In November 2015, ROY announced that it had disposed of BSW to a White Horse Holdings Limited, and the consideration of HK$80 million was fully paid in 2018.  The son of the Discharged Bankrupt gave evidence during the private examination that the transaction was approved by the board of ROY but no other information had been forthcoming. As R is a shareholder and a director since 2017, Mr Siu submitted that she would be in a position to give information on the transaction.

House in the USA

(1)  HSI is the owner of a house situate at 1372 Edgehill Road, Pasadena, California, USA.  It was transferred to Hi Scene Industrial Inc. in August 2022 for nil consideration. 

(2)  There is also no explanation on why the Discharged Bankrupt could continue to reside in the house.

(3)  R is the sole shareholder and a director / CEO of Hi Scene Industrial Inc. since 2023 and should be privy to such arrangement and the reason behind it. 

Payments by ROY to HSI

(1)  Since January 2013, HSI has been providing consultancy services to ROY for a monthly consideration of HK$150,000.  Since March 2017, HSI has been receiving a monthly rent of US$7,000 from ROY.

(2)  There is no ostensible reason for such payments and it is suspected that they are incomes paid to the Discharged Bankrupt which he has failed to report.

13.Based on the above, the Applicants submitted that despite the Discharged Bankrupt’s report of nil assets and zero income, he has still been in control and ownership of massive assets on his own and / or through his family members.

14.R has associations with the following companies:

(1)  BSW Trading: R was the sole shareholder from 2010 to 2013 and from 2015 to present, and a director since 2016.

(2)  GIL: R was a director since 2016.

(3)  HSI: R was a shareholder since 2016 and sole shareholder since 2018, and a director since 2016.

(4)  LLH: R was a shareholder and secretary since 2017.

(5)  ROY: R was a shareholder and a director since 2017.

(6)  SEH: R was a director since 2016.

(7)  SETR: SETR used to be owned by R as to 19.1%, and it was dissolved by R in 2016.

Discussion

15.Looking at the transactions set out in paragraph 12 hereinabove, I agree with Mr Siu’s submission that the transactions are suspicious.  There seemed to have been an intricate scheme to transfer the interests of the Discharged Bankrupt to other parties when there were no discernible benefits to do so.  I agree the provision of information or documents is reasonably required for the Applicants to carry out their functions.

16.R, having the associations that she has with the companies involved in such transactions as set out in paragraph 14 hereinabove, would prima facie to be able to provide the information sought.

17.I am therefore of the view that the first 2 tests in Hau Po Man Stanley have been satisfied.

18.As to the need to strike a balance between the Applicants’ reasonable requirements and the need to avoid making an order which is wholly unreasonable, unnecessary or oppressive to R, I have taken into account the following:

(1)  The bankruptcy of the Discharged Bankrupt had ended in May 2005, 6 months shy of 20 years ago.  The Applicants, in their last round of applications for a section 29 order 8 years ago, did not include R to be a respondent.

(2)  This might be explained by the fact that R’s involvement in the relevant companies only began some time in 2016, coinciding approximately with the time when applications against the Discharged Bankrupt, his brother, his son and his two sisters were taken by the Applicants under section 29 of the Ordinance. 

(3)  Requests to R to provide information and documents were first issued in 2019, and were repeated in 2020 and 2022.  There is no explanation on why the Applicants did not take out an application earlier when it became apparent that R was not going to comply with the request.

(4)  There is no doubt that such delay might affect R’s ability to provide the necessary information or document.

(5)  R, in her affirmation however, did not contend that there was any prejudice caused by the delay.  Instead, she merely suggested that she would not be able to provide any meaningful information on matters as she was a mere minor during some of the periods and that she is a mother to 4 young children.  There is no mention to the periods since 2016 after she began being involved in the various companies in the various transactions.

(6)  Although R is not the bankrupted person, and the case for examination is weaker than that against the Discharged Bankrupt himself, R seems to have been involved in the relevant transactions since her appointment as director to the various companies.  In light of the fact that examinations against the other related parties had been unfruitful, R would become a crucial source of information.

(7)  The oppressiveness of the delay is also partly mitigated by the fact that it is not the case that the Applicants had done nothing since the discharge of the bankruptcy order against the Discharged Bankrupt, they had all along been insisting that there were suspicions surrounding various transactions and that investigations had continued, although at a slow pace.  R should have been made aware of the challenge made by the Applicants to her other family members as early as in 2016, when she became involved in the various transactions.

(8)  I also take note of the observations by Godfrey Lam J in his decision dated 21 September 2017[5]:

“Overall, at the end of the day, one must not lose sight of the fact that this is a massive bankruptcy with a very large deficiency of assets. The bankrupt, hitherto the chairman of a listed group, had effectively produced no asset or income for the estate at all while continuing to run a business. The Insider Dealing Tribunal, after a lengthy inquiry, considered that the bankrupt remained a wealthy man who had feathered a nest offshore to avoid his creditors and whose assets remained to be tracked down, and that he was a man who was prepared to use his family members and others to execute his dishonest schemes. The administration of the bankruptcy started with no books and records. The Brother and the Son have featured prominently in the relevant transactions mentioned above. The trustees have, in my view, identified suspicious circumstances and the need for further investigation, with which the Brother and the Son have steadfastly refused to assist voluntarily. Within each sphere of investigation there may be certain matters on which the trustees already have some information and it may be said that in relation to such matters, private examination is not absolutely indispensable. But the jurisdiction is engaged once the trustees show a reasonable requirement; they do not have to establish an absolute need. In any event, considerable areas remain in which the trustees have no or little information and it does not appear, nor is it suggested by the respondents, that the information may be obtained elsewhere.”

19.I am satisfied that the tests for the granting of a section 29 Order have been satisfied and that there should be an order for R to provide answers, information and documents and be examined before a master of the High Court.

Scope of the questions

20.Mr Siu accepted that “an order for examination does not give carte blanche to the questions which may be asked of the witness at the examination; the examination takes place before a judge or a master who has the power, and indeed the duty, to prevent vexatious or oppressive questions[6].  As such, there is no dispute that despite the fact that I deem it appropriate for an order for discovery of documents an order for examination, it does not bind a judge or a master in future to the list of questions as set out in the Schedule to the Summons.

21.Nonetheless, I have made some preliminary amendments to the Schedule annexed to the Summons such that questions 4, 5, 6.4, 6.5, 6.6 and 6.7 should have the timing amended to “since R’s appointment to the relevant companies”.  I have also deleted questions 11, 13 and 24 since they are either too wide or took place well before R’s involvement in the various companies and as such, there is insufficient basis to suggest that there is a prima facie case for R to provide those information.

Order

22.For the reasons given, the Trustees have satisfied the tests for a section 29 Order. I therefore make an order as follows:

(1)  The Respondent do produce answers, or documents and information to the questions as set out in the Schedule to the Summons within 45 days of the day on which the Order is served on the Respondent.

(2)  If the Respondent cannot provide such documents/information  requested, she shall file and serve an affidavit within 45 days hereof whether they have been in her possession, custody or control (including power to procure the same from third parties); and if they had been in her possession, custody or control but no longer now, when and under what circumstances they have now become unavailable for production.

(3)  The Respondent do attend court to be examined on oath at such time and place as the court shall direct and that the Applicants be at liberty to examine the Respondent under section 29 of the Bankruptcy Ordinance (Cap. 6)  concerning the Discharged Bankrupt in relation to matters and transactions set out in the Schedule to the Summons, as well as answers, documents and information provided by the Respondent under paragraphs (1)  and (2)  hereinabove.;

(4)  Costs of the Summons be paid by the Respondent to the Applicants forthwith, to be summarily assessed (on a nisi basis).  The costs order nisi will become absolute if there is no application to vary it within 14 days hereof.

(5)  The Applicants to lodge and serve a statement of costs within 7 days hereof.  The Respondent do lodge and serve her list of objections, if any, within 7 days thereafter.  The court will carry out summary assessment on paper even if no list of objections is filed after the deadline has passed.

Mr Patrick Siu, instructed by ONC Lawyers, for the Applicants

The Respondent was not represented and appeared in person