Mineral & Gems Enterprises (HK) Co Ltd v. Yi Pak Lun

HCA002118/1979

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Coram: Li, J.

Date of Judgment: 11th January, 1980

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JUDGMENT

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Background of Application under Order 49B

1. This is an application under Order 49B rule 6 for discharge from the Debtors Prison. The applicant issued the cheque to the plaintiff respondent for a sum of $241,760 dated the 15th February 1979. The cheque was dishonoured. This was made the subject matter of an action by the respondent against the applicant in this Court action. Judgment was obtained by the respondent on the 13th June 1979 for the sum of $191,760. The applicant failed to satisfy the judgment debt. On the 6th December 1979 the applicant was put in the Lai Chi Kok Reception Centre for his failure to satisfy the judgment debt. He now applies for his discharge.

Burden of Proof

2. It is settled law and practice that on such an application the defendant must make a clean breast of whatever he possesses whether in the form of money, property, interest or rights. On the other hand the burden is on the respondent, if he wants to oppose such an application, to satisfy me that the judgment debtor's, (i.e. the applicant) inability to satisfy the judgment debt is attributable to unjustifiable extravagance in living or that the judgment debtor for the purpose of avoiding the payment of the debt has wilfully concealed property or his right or interest therein or fraudulently transferred or removed property or committed any other act of bad faith.

Facts

3. The application is dated the 31st December, 1979 supported by an affirmation by the applicant. In this, the applicant has listed seven items of his assets three of which he did not give the whereabout of them. On objection by solicitors for the respondent I give the applicant a chance to give evidence viva voce before me. He is asked as to the whereabout of three of these items namely a wrist watch, a gold chain and his electrical appliances valued at $4,000. I also explain fully to the applicant that if he has any assets other than those listed he must disclose them in evidence whether they are contingent or expectant interests or debts or accounts (good or bad) receivable.

4. The applicant then gives evidence. He lists a number of interests in films or film rights in various firms. He also mentioned about a film which is in the course of making but, at the time of his arrest, was in the hand of the processing company. He never said anything about sums of money he received prior to his arrest but after the judgment against him. He never in his evidence in chief mentioned that he had a 30% interest in a jewellery business or the gems in stock of a firm by the name of Brilliant Jewellery Company. These he disclosed after he was put through a series of questions in cross-examination. The applicant has not voluntarily given me a full account of all his earthly possessions. However, that is not the greatest stumbling block to his application.

Act of Bad Faith

5. The important question is whether the applicant had committed any act of bad faith. The applicant had issued a cheque of over $241,000 for the purchase of jewellery from the plaintiff. This cheque was dated the 25th February 1979. He knew this cheque had been dishonoured and formed the subject matter of an action in the High Court. He said that his solicitor told him in June that he lost this action. He knew and he must have known that the judgment debt was payable by him. He said that his partner Mr. Ma who was a partner in the jewellery business promised to pay and that Mr. Ma was to take the jewellery to Singapore for sale and apply the proceeds of sale for payment of the judgment debt. Since June, he had seen Ma at least once. He never asked Ma to pay the judgment debt or pay him his share of the proceeds Ma tried to stall him. By that time he should have known that Ma was a swindler. He had no business to be generous at other people's expense. He should take action against Ma at once. He admits frankly that right from the beginning of the jewellery business lent to this Mr. Ma something to the total of $700,000. Yet he did not see fit to press Ma either for the return of a portion of the jewellery representing his 30% interest or having some proceeds of sale in order to repay the judgment debt. That I find is difficult to accept from a reasonable human being. That is not all. In cross-examination he said that sometime in June 1979 he had a loan of $95,000 and sometime after the business of the jewellery business closed down in September 1979 he obtained yet another loan of $120,000 thus he had a total of $215,000 in his possession. What did he do with this sum? He used $50,000 odd to repay debts owing to his various friends. He used the balance of $165,000 for making a film which is part finished or one-fifth finished. At that time he knew that he was owing money to the plaintiff. He had a judgment debt to be satisfied. He deliberately preferred some of his friendly creditors to the respondent who was not being paid a cent in satisfaction. While he was in that insolvent state he saw fit to engage in another business enterprise and spent away $165,000. Apart from the aforesaid sum of $215,000 he also admits that he received $200,000 from Taiwan as advanced payment for the film which is part finished. He has not accounted for the $200,000. Presumably it has been spent for the making of the new film. His very act of paying other friends to the extent of $50,000 and squandered away the $165,000 in making a film without paying a cent to the respondent is an act of bad faith. For this reason I am satisfied that the respondent has discharged the burden that the applicant acted in bad faith. Accordingly the application must be refused.

Representation:

Applicant in person

Davies (Deacons) for Respondent/Plaintiff