Re Wong Moon Tai

HCB000080/1983

BANKRUPTCY

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Coram: The Honourable Mr. Justice Jones in Court

Date: 21st November 1983

Mr. Comerford (Director of Legal Aid) for Petitioners

Mr. Bharwaney instructed by (Michael Cheuk & Co.) for Debtor

Mr. O'Connell for Official Receiver

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JUDGMENT

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1. The petitioners apply for a receiving order on the grounds that the debtor within three months before the presentation of the petition committed an act of bankruptcy by absenting himself from his home since the 24th March 1983 with intent to defeat or delay his creditors.

2. In 1972 the debtor obtained a licence to deal in gold on the Chinese Cold and Silver Exchange Society in the name of Tai Shun Company. He commenced trading in 1977 and continued to do so until the end of December 1982. In February 1983 his licence was revoked by the exchange. The debtor opened an account with the Wing Hang Bank in the name of Tai Shun on the 27th August 1980 which was closed on the 31st May 1982 and another in the name of Tai Shun Ho on the 1st September 1979 which was closed on the 14th June 1983. He was described as the sole proprietor of both firms. The debtor was the only signatory for Tai Shun Ho, but his son Wong Kai Wing was a joint signatory for Tai Shun. Wong Moon Tai is described as the sole proprietor of Tai Shun in the application form for business registration.

3. The three petitioner testified that they were employed by Wong Kai Wing in August 1980 on behalf of his father. the debtor. All the petitioners signed a written contract, but none of the contracts was produced in evidence. Their duties were to canvass orders for the sale and purchase of gold. The petitioners are claiming arrears of wages, severance pay, wages in lieu of notice, and double pay.

4. Tai Shun originally carried on business at Des Voeux Road West, but later moved to Wing Hang Building and finally to Connaught Building.

5. Another firm Tai Shun Company was registered in the name of Wong Kai Wing and commenced business on the 1st May 1982. Bankruptcy proceedings were instituted against Wong Kai Wing in January 1983 and a receiving order was made on the 28th February 1983. However, his estate had no assets. Mr. Yip, the 2nd petitioner, submitted a proof of debt in those proceedings. The present whereabouts of Wong Kai Wing are unknown.

6. The debtor denied. that he employed the three petitioners. He claims that he operated his business separately from that of Wong Kai Wing, but dealt with orders on the exchange on behalf of his son who did not have a licence to trade. He said that the two changes of address recorded in the business registration certificates were made by Wong Kai Wong without his authority whilst the bank account in the name of Tai Shun was opened merely to facilitate business dealings on the exchange.

7. Wong Kai Wing studied in Canada from 1974 until the middle of 1978 when he returned to Hong Kong. He was employed for some time, but eventually joined Ki Tai Loong, a firm that deals in gold. Accordingly to the debtor Wong Kai Wing set up his own business in the middle of 1980.The debtor claims that he was in no way involved in this business and paid no capital to Wong Kai Wing. However, he concedes that Wong Kai Wing was his main customer on the Gold and Silver Exchange.

8. I agree with Mr. Bharwaney, who appeared for the debtor, that there is no evidence that the debtor and his son were partners. Accordingly it falls to be decided whether the debtor was the sole proprietor with his son acting in a managerial capacity or whether the son was carrying on business on his own account.

9. Mr. Bharwaney referred to the revocation of the de debtor's licence on the Gold and Silver Exchange on the grounds that he had been acting for third parties in breach of the Society's regulations. The specific reasons for the revocation of the licence were not given by the representative of the Society, but the debtor said that it was due to a demonstration made by his son's clients at the Exchange. I do not consider that this evidence indicates that the debtor could not have. been the employer. It was inconclusive. Mr. Bharwaney also submitted that some of the employees worked at the branch offices which were only registered under the name of Wong Kai Wing's firm, Tai Shun Co. However, this firm only commenced business in May 1982 whereas the petitioners were employed in August 1980.

10. The onus is upon the petitioners to establish on a balance of probabilities that they were employed by the debtor. There is no doubt that the petitioners looked to Wong Kai Wing for payment of their salaries, and they approached him when they fell into arrear. Mr. Yip's proof of debt in the bankruptcy proceedings against Wong Kai Wing describes Wong Kai Wing to be trading as Tai Shun Co. Quite clearly the picture is confusing when the debtor has traded under the name of Tai Shun and Wong Kai Wing under the name of Tai Shun Co., whilst the debtor operated two bank accounts in the name of Tai Shun and Tai Shun Ho. This does not in my opinion prejudice Mr. Yip.

11. The debtor was a most unconvincing witness. Quite clearly he was not telling the truth when he professed to shift the responsibility for the changes of address on the business registration certificate to his son. Such changes could not have been made without his full knowledge and agreement. The debtor explained that he opened the second bank account because he was advised to do so by the Cold and Silver Exchange Society,and that it was done to facilitate business transactions.I reject this evidence which I find to be untrue. Again his testimony concerning the actual business relationship with his son was not capable of belief. I accept the evidence of the petitioners that they were engaged by Wong Kai Wing on behalf of the debtor.

12. In my judgment the evidence conclusively shows that the debtor was the person in ultimate control of the business. Mr. Bharwaney submitted that pursuant to s. 9(3) of the Bankruptcy Ordinance, the 15% rule should be invoked. However, I agree with the submission made by Mr. O'Connell who appeared for the Official Receiver that this section does not apply to preferential creditors.

13. Accordingly there will be a Receiving Order against the debtor with costs to be paid out of the estate. There will also be the usual taxation in accordance with the Legal Aid (Scale of Fees) Regulations.