Re: Hui Hing Kwok Bankrupt and Ex Parte : The Official Receiver
Read the full judgment text of HCB 871/1994 on BabelCite. This HCB judgment was delivered on 28 May 1999 before Le Pichon J.
Bankruptcy – automatic discharge – section 30A Bankruptcy Ordinance – objection by Official Receiver – grounds (d) and (g) of section 30A(4) – unsatisfactory conduct of bankrupt – offence under section 131(a) – obtaining credit to the extent of $100 or upwards without first informing creditor that he is an undischarged bankrupt – use of passport instead of Hong Kong identity card when opening bank accounts – whether such use constitutes unsatisfactory conduct additional to conduct forming basis of criminal conviction – exercise of court's discretion to suspend discharge – rehabilitation of bankrupt as key consideration – suspended sentence as further deterrent – Law Reform Commission of Hong Kong Report on Bankruptcy (May 1995) – Bankrupt adjudicated on 16 June 1995 – opened HSBC savings account on 22 May 1996 and Powervantage account later using passport – Powervantage account debit balance of $66,167.38 – obtained $22,000 personal loan from JCG Finance Company Limited on 6 January 1997 using identity card, refinanced at $60,000 on 20 September 1997 – did not disclose undischarged bankrupt status to creditors – pleaded guilty to two counts under section 131(a) and sentenced to six months' imprisonment suspended for two years on each count – ground (d) not established as Official Receiver failed to discharge burden of showing intent to cheat bank – Bankrupt's explanation for use of passport (short-notice opening before overseas training) accepted – discretion under ground (g) not exercised as Bankrupt adequately punished and at 40 years of age young enough to start a new life – suspended sentence to act as deterrent until March 2000 – application to suspend automatic discharge refused.
Legal issues: Whether use of passport instead of identity card constitutes unsatisfactory conduct under section 30A(4)(d) of the Bankruptcy Ordinance · Whether to exercise discretion to suspend automatic discharge under section 30A(4)(g) of the Bankruptcy Ordinance
Outcome: Official Receiver's application to suspend the automatic discharge of the Bankrupt under section 30A(3) of the Bankruptcy Ordinance refused; ground (d) not made out and discretion under ground (g) not exercised in favour of suspension.
Cited by 4 cases
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HCB000871/1994 HCB871/94 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDING NO.871 OF 1994 ------------
------------- Coram : The Hon Mrs Justice Le Pichon in Court Date of Hearing : 24 May 1999 Date of Judgment : 28 May 1999 ------------------------ J U D G M E N T ------------------------ 1. This is an application by the Official Receiver and trustee for an order that the automatic discharge from bankruptcy under sections 30A(1) and (2)(a) of the Bankruptcy Ordinance be suspended for such period as the court may order under section 30A(3) of the Ordinance. 2. The adjudication order was made on 16 June 1995. Under the provisions of section 30(A) of the Ordinance, "first time" bankrupts are automatically discharged from bankruptcy four years after the date of the making of the bankruptcy order unless an objection by a trustee of the estate or a creditor is upheld by the court under section 30A(3). The Official Receiver objects to the automatic discharge which, subject to any order (if any) that may be made by the court, would take place on 16 June 1999. In the present case, if the objection is valid, the court has power to suspend the discharge for a period not exceeding four years from 16 June 1999. 3. The Official Receiver's objection is based on section 30A(4)(d) and (g) which read as follows :
Background facts 4. On 22 May 1996, approximately a year after he was adjudicated bankrupt, the Bankrupt opened a savings account with the Hongkong and Shanghai Bank ("HSBC") by using his passport instead of his Hong Kong identity card as identification. 5. Almost a year later, the Bankrupt opened a Powervantage Account with HSBC. As at 29 November 1997, this account had a debit balance of $66,167.38. Again, in opening this account, the Bankrupt used his passport instead of his Hong Kong identity card. He did not inform HSBC that he was an undischarged bankrupt. 6. On 6 January 1997, the Bankrupt obtained a personal loan of $22,000 from JCG Finance Company Limited. Although the Bankrupt used his Hong Kong identity card for identification when he applied for these loans, he did not disclose that he was an undischarged bankrupt. The original loan was refinanced on 20 September 1997 when the Bankrupt obtained $60,000 from JCG. 7. The Bankrupt was charged with two counts, namely obtaining credit from (1) HSBC in the sum of $66,167.38 and (2) from JCG in the sum of $60,000 without first informing HSBC and JCG that he was an undischarged bankrupt, contrary to section 131(a) of the Ordinance. The Bankrupt pleaded guilty and was convicted. He was sentenced to six months' imprisonment suspended for two years in respect of each count. Grounds of objection 8. As noted above, the Official Receiver relies on both grounds (d) and (g) of section 30A(4). So far as ground (g) is concerned, it is a fact that the Bankrupt has been convicted of offences under section 131(a) which provides as follows :
9. So far as ground (d) is concerned, if it is additional to ground (g), it must be conduct other than that which is prohibited by section 131(a) on the facts of the present case, namely the obtaining of credit in excess of $100 "without first informing that person that he is an undischarged bankrupt". The 'misconduct' relied on by the Official Receiver appears to be the fact that the Bankrupt used his passport rather than his Hong Kong identity card when opening the Powervantage account "to cover up his undischarged bankrupt status". In considering misconduct in the present case in the context of ground (d), the complaint is related solely to the opening of the Powervantage account. The use by the Bankrupt of his passport for the purposes of opening the savings account with HSBC is unobjectionable since the obtaining of credit did not arise. Moreover, as the Bankrupt explained, he needed to open that account so that autopay arrangements in respect of his salary could be made by his new employer. Nor is the obtaining of the JCG loan relevant since what was used by the Bankrupt was his identity card and not his passport. 10. The Official Receiver submitted that the use of the passport by the Bankrupt was intentional and the purpose was to cover up his bankrupt status. The underlying assumption appears to be that had the identity card been used, his bankrupt status would have come to light. Of course, that does not necessarily follow as is evident from the JCG transaction where the identity card was in fact used. Further, as for the opening of the Powervantage account, the Bankrupt explained that it had to be arranged at short notice because he had to go overseas for training for a period of three months and he was advised by the bank's staff that the quickest way of processing his application was to use the documentation that had been submitted for the opening of the savings account as he already had an existing account with HSBC. In these circumstances, I am not satisfied that the Official Receiver has discharged the burden of showing that the Bankrupt was intending to cheat the Bank. In my judgment, the Official Receiver has failed to make out ground (d). 11. That leaves ground (g). Whilst a conviction under the relevant sections is a ground upon which an objection can be made, the court nevertheless has a discretion whether or not to suspend the discharge. For those offences, the Bankrupt has been convicted and has suspended sentences hanging over him. In respect of conduct which culminated in his conviction, he has been punished and in my view adequately so. The Bankrupt is 40 years of age, certainly young enough to start a new life. The purpose of the automatic discharge provisions is described in the following terms in the Law Reform Commission's Report on Bankruptcy issued in May 1995 (at para 17.16) :
Rehabilitation in 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 a bankrupt's own failings. As the Bankrupt has been adequately punished for his failings, and the suspended sentence will act as a further deterrent against misbehaviour until March 2000, on balance, I do not consider that I should exercise my discretion to suspend the discharge and so delay the Bankrupt's rehabilitation. 12. Accordingly, the Official Receiver's application is refused.
Representation: Miss Kitty Tsui, for the Official Receiver Bankrupt Hui Hing Kwok, in person, present |
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