First Bangkok City Finance Limited (in Liquidation) and Another v. Coro Tejapaibul and Others
Read the full judgment text of HCA 6686/1988 on BabelCite. This High Court CFI judgment.
1. The plaintiffs are two deposit taking companies now in liquidation. The amended points of claim runs to over 100 pages - 13 large investigation reports form part of that points of claim.
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HCA006686/1988 --------------------- HEADNOTE --------------------- Practice - Procedure Winding-up by Official Receiver - Ord. 5 rule 6(2) institution of proceedings - whether Official Receiver a "Legal Officer" - Registrar-General (Establishment) Ordinance - Legal Officers Ordinance. 1988, No. 6686 IN THE SUPREME COURT OF HONG KONG HIGH COURT ___________ BETWEEN
Coram: The Hon. Mr. Justice Sears in Court Date of Hearing: 27/10/88, 28/10/88 and 31/10/88 Date of Delivery of Judgment: 31/10/88 ___________ JUDGMENT ___________ 1. The plaintiffs are two deposit taking companies now in liquidation. The amended points of claim runs to over 100 pages - 13 large investigation reports form part of that points of claim. 2. There are 19 defendants. These companies were wound up on the petition of the Financial Secretary, Mr. Piers Jacobs. Essentially the claim is that the 1st to 7th defendants, who are Thai nationals, controlled these two companies. The 2nd defendant is the daughter and the 3rd defendant the son of the 1st defendant. The 7th defendant, with whom I am concerned today, was the Chief Executive of the 2nd plaintiffs. It is alleged that these seven defendants fraudulently ran these companies for their own benefit and they diverted the plaintiffs' funds into companies wholly or partly owned by them, or to accounts held in the name of their families or confederates. The deficiencies amount to over $400 million and the investigation reports were carried out to discover where the $400 million had gone. 3. I have dealt with a number of interlocutory matters and I have already entered judgment for the plaintiffs against the 8th defendant, which is a company controlled by the defendants, or some of them, in respect of what is called 'loan churning', involving many millions of dollars being shuffled round in a series of fraudulent operations. The matter today arises as a result of me granting leave to serve these proceedings out of the jurisdiction on the 7th defendant. 4. Mr. Michael Bunting who appears for the 7th defendant takes a preliminary point that the proceedings have been begun by the Official Receiver on behalf of the companies and he is not a solicitor. 5. By virtue of Order 5 Rule 6(2):
(This exception only applies to Hong Kong.) 6. Mr. Smith says he is acting on behalf of the Official Receiver and he concedes that in order to succeed on this point he must show that the person who is instructing him is a "legal officer", within the meaning of the Legal Officers Ordinance and therefore Order 5 Rule 6(2)(c) is satisfied. What is really being suggested is that the method of instituting these proceedings, involving as I have said many hundred million dollars, is not lawful, because the Official Receiver is not authorised to act as though he were a solicitor. This has raised a point of considerable public importance (I have dealt myself with many cases where the Official Receiver was so acting) and Mr. Whaley, for the Attorney General, has sought leave to intervene and be a party for the purposes of this preliminary issue. 7. I queried whether this was necessary as I would obviously listen to any submissions the Attorney-General wishes to make, but for the avoidance of doubt I do give leave for the Attorney General to be a party solely for the purposes of this preliminary issue. The writ in this action says it is issued by the Official Receiver liquidator whose registered office and address for services is 10/F., Queensway Government Offices. 8. Mr. Smith, who has appeared in front of me in a number of interlocutory matters, has always told me that he was instructed by the Official Receiver and indeed in this case he also accepted that the person who appears to be instructing him was the Official Receiver. Considerable discussion has taken place as to whether in Hong Kong there is an Official Receiver. 9. The first matter, therefore, to be decided is has issued these proceedings on behalf of these companies. The Official Receiver was established in Section 75 of the Bankruptcy Ordinance. 10. By virtue of Section 188 of the Companies Ordinance:
11. The Bankruptcy Ordinance provided that the Official Receiver was to be appointed by the Governor. As a result of research which the Attorney General's Department and the Registrar General's Department have carried out, it appears that the Governor always appointed the Official Receiver. 12. In 1949, however, there was set up an office in Hong Kong called the Office of the Registrar General, and the Registrar General by virtue of this Ordinance was authorised 'ex officio' to exercise all the powers and the duties of a variety of people found set out in the schedule: Land Officer, Registrar of Companies, Registrar of Trade Marks and Design, Registrar of Patents, Registrar of Marriages, the Official Receiver in Bankruptcy and the Official Trustee. As he was the Official Receiver in Bankruptcy, he was also the Official Receiver for winding up. So from 1949, it appears that the Registrar General has discharges the functions of the person who used to be the Official Receiver. The Registrar General himself has to be appointed by the Governor, and this I am told has always occurred. 13. In 1969, this ordinance was repealed by the Registrar General (Establishment) Ordinance. Section 3 enacts
One of the offices is Official Receiver and one the Official Solicitor.
14. Mr. Bunting says how can a Registrar General exercise the powers of the holder of the office of the Official Receiver, when the Governor has not appointed an Official Receiver. That submission does not have regard to the words of Section 4, which permits the Registrar General really to be the Official Receiver, Official Solicitor and other officers. What has happened is that it was found necessary to establish one central government body, which is now called the Registrar General's Department, where a variety of different functions are carried on. 15. In Section 2(3), the Registrar General shall be deemed to be a legal officer for the purposes of the Legal Officers Ordinance. So, the position is therefore clear that first of all the Registrar General is a legal officer; secondly, it is no longer necessary for the Governor to appoint an Official Receiver or an Official Solicitor, but he must appoint a Registrar General and thirdly, all the functions of those offices can be lawfully carried out by the Registrar General. The confusion which is being caused in this case, in my judgment, is a failure by the Registrar General's Department to realise that it is the Registrar General who brings proceedings and instructs counsel and not the Official Receiver. As far as this case is concerned, therefore, I direct that any further application which comes before me be brought in the name of the Registrar General. 16. Mr. Smith is in fact and in law being instructed by the Registrar General. Furthermore, as the Official Receiver is an officer of the court, it would be helpful, in the Registrar General's Department, for someone to be nominated to hold that position, otherwise, the court may have to question the Registrar General himself if it was necessary for the Court to summon him as an officer of the Court. This is essentially a matter for internal rearrangement within the department, but I trust that my views will be taken into account. As far as writs are concerned, they should issue out of the Supreme Court in the name of the Registrar General. 17. Mr. Bunting, now accepts that the Official Receiver, or really the Registrar General, is a legal officer. The important question still remains, however, whether such a legal officer can institute or continue proceedings where although he is acting in an official capacity, the subject matter of the action may involve "private litigation". The relevant statutory provisions are found in the Legal Officers Ordinance, Ch. 87; Section 3 says
Section 4 deals with a variety of matters. Persons therefore appear in the High Court and address argument as though they were a solicitor or barrister, because they are a "legal officer". It is important, therefore, to know whether such a legal officer can or cannot act in a particular matter. 18. Mr. Whaley has been instructed on behalf of the Attorney General and he has drawn to my attention a number of matters which demonstrate that the point now being considered has other implications; for example, the Official Solicitor may appear through a legal officer, and one of his functions is to protect persons under disability within Order 18. The Crown solicitor acts as a next friend under the matrimonial rules. The subject matters of that type of action do not relate to any official litigation, but rather private litigation. 19. Mr. Bunting's main submission is that winding up proceedings do not relate to the Official Receiver's official act, as in Section 4(1)(d), but to the issues in the action; he says therefore that when the Official Receiver institutes winding up proceedings he is not a "legal officer" and he must go to outside solicitors and instruct them. It has been pointed out to me in an affidavit that the practice has been for the Official Receiver to use Hong Kong solicitors, but in view of the legal cost involved the practice was discontinued. I have to say whether or not the Official Receiver or Registrar General can now act or whether he has to go and instruct outside solicitors. 20. Section 4(1) deals with a variety of public matters and Section 4(1)(d), says
21. In my judgment, as a matter of construction, the words "any matter which relates to..." should be construed liberally and they are meant to cover all those occasions when the particular official is dealing with matters within his official jurisdiction. What is the position therefore here? The official Receiver in the winding up of this action was appointed by the Court to be the liquidator. By virtue of that appointment he has a variety of duties under the Companies Ordinance. 22. I do not repeat all of the various duties he has, but by Section 179A the Official Receiver may appear and cross-examine any witnesses. So, when the winding up petition is heard, this legal officer is entitled to appear in the Court and carry out those duties; Mr. Bunting is forced to concede that on that occasion, he is perfectly entitiled to appear as though he were a solicitor or counsel. 23. In Section 190 when the Court has made a winding up order then a statement of affairs must be submitted to the Official Receiver, who prepares a report. Other duties are casted upon him. By virtue of Section 199(2) the Official Receiver as a liquidator has power to do all such things as may be necessary for winding up the affairs of the company and distributing assets. 24. The taking up, therefore, of the position of liquidator by the Official Receiver involves duties which he owes to the public; he is indeed a public servant. The institution of proceedings is a step in the furtherance of these duties. He is admittedly acting in the name of the company and he is bringing the actions to protect the shareholders in the company. He, therefore, has no personal interests in so far as to where the money is ultimately distributed, in the same way as the Official Solicitor has no personal interest in persons under disability, or the Crown Solicitor no personal interest when he acts as next friend in a matrimonial matter. They act on behalf of the public to protect specified classes of persons. 25. In my judgment, the institution of this type of action initiated through the Financial Secretary's petition, is a matter which relates to the Official Receiver's official acts and falls within Section 4(1)(d). 26. Section 4(2), reads as follows :
27. By reason of the challenge made by Mr. Bunting, all the relevant matters have been placed before Mr. Mathews, the Attorney General for Hong Kong and on the 1st October he signed a certificate that the institution by the Official Receiver and the carrying on of these actions on behalf of these two companies in liquidation, is a matter which relates to the official acts or omissions of the Official Receiver. 28. I have had regard to that certificate. If there was any doubt, then in my judgment, this certificate is conclusive of that doubt. 29. Furthermore, even if the words in Section 4 did not have a plain meaning, and I had to choose between two doubtful meanings, I would choose the wider meaning as submitted by Mr. Smith and Mr. Whaley, as it is contextually more apposite and more reasonable (see the speech of Lord Wilberforce in Walker v. Leeds City Council (1978) AC 403 at p. 419(g). 30. I, therefore, hold that these proceedings have been lawfully instituted, but as I have said before they should now continue with the Registrar General on the record as solicitor and not the Official Receiver.
Representation: Mr. C. Smith inst'd by the Official Receiver for Plaintiffs Mr. M. Bunting inst'd by M/S Denton, Hall, Burgin, & Warrens for the 7th Defendant Mr. A. Wong inst'd by M/S Lau, Wong & Chan for 10th, 11th and 13th Defendants Mr. Bernard Whaley for the Attorney general |