Secretary for Justice v. Sanrita Wong Kwok Mei

HCMP 3114/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3114 OF 2000

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BETWEEN

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Before:  Deputy High Court Judge Lok in Chambers

Date of Hearing: 30 July 2014

Date of Decision: 5 August 2014

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DECISION

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1.This appeal against master’s decision is about one question: after the making of a bankruptcy order against the judgment debtor, should the court allow the judgment creditor (who is also the petitioner in the bankruptcy petition) to apply for a prohibition order against the judgment debtor (who is now an undischarged bankrupt) under s 21B of the High Court Ordinance (Cap 4), with the effect of securing the attendance of the judgment debtor at the office of the Official Receiver (“OR”) who is the trustee in bankruptcy?

Background

2.On 26 June 2000, the Insider Dealing Tribunal made an order (“the IDT Order”) ordering, inter alia, Madam Wong Kwok Mei Sanrita (“Madam Wong”) to pay the Government: (i) a sum of $10,000,000 being the approximate total losses avoided as a result of her insider dealing; (ii) a penalty of $12,000,000; and (iii) a sum of $2,400,000 being approximately 20% of the expenses of and incidental to the inquiry.

3.The IDT Order was subsequently registered and sealed in the High Court on 26 June 2000.  Under s 29(1) of the then Securities (Insider Dealing) Ordinance (Cap 395)[1], the IDT Order became for all purposes an order of the Court of First Instance, and the Secretary of Justice became the judgment creditor in respect of the debt due under the IDT Order.

4.As Madam Wong had not made any payment to the Government under the IDT Order, the Secretary of Justice commenced bankruptcy proceedings against Madam Wong.  Consequentially, a bankruptcy order was made against Madam Wong on 26 February 2003 (“the Bankruptcy Order”).

5.According to the information provided by the Immigration Department, Madam Wong left Hong Kong for Canada on 27 May 2000. She had not returned to Hong Kong until mid-2014.  I am given to understand that the papers of the bankruptcy proceedings were served on Madam Wong by way of substituted service.

6.OR is the trustee in bankruptcy, but Madam Wong has not contacted the office of OR throughout the years.  Neither has Madam Wong informed the OR’s office of her return to Hong Kong.  Under s 30A(10)(a) of the Bankruptcy Ordinance (Cap 6), Madam Wong remains an undischarged bankrupt at this stage.

7.Upon knowing that Madam Wong had returned to Hong Kong in mid-2014, the Secretary of Justice made an ex parte application before Master Lai on 25 June 2014 for a prohibition order against Madam Wong.  Master Lai adjourned the application.  The Secretary of Justice restored the application before Master Hui on 10 July 2014.  Master Hui refused the application.  The Secretary of Justice then lodged an appeal against the learned Master’s decision.  On 11 July 2014, Au J considered the appeal and took the view that the appeal should be heard by the bankruptcy judge.  The Secretary of Justice therefore withdrew the appeal and lodged a fresh appeal against Master Hui’s decision before the bankruptcy judge.

Merits of the prohibition order application

8.S 21B(1) of the High Court Ordinance reads as follows:

“(1) The Court shall have jurisdiction to make an order prohibiting a person from leaving Hong Kong (a prohibition order) to facilitate the enforcement, securing or pursuance of –

(a) a judgement against that person for the payment of a specified sum of money;

(b) a judgment or order against that person –

(i) for the payment of an amount to be assessed; or

(ii) requiring him to deliver any property or perform any other act; or

(c) a civil claim (other than a judgment) –

(i) for the payment of money or damages; or

(ii) for the delivery of any property or the performance of any other act.”

9.Mr Suen, Senior Government Counsel, confirms that the Secretary of Justice is relying on ss 21B(1)(a) and (1)(b)(ii) in making the prohibition order application against Madam Wong.

10.In my judgment, Master Hui was right in refusing the application.  From the wording of s 21B, it is clear that the court would only make a prohibition order in favour of a judgment creditor to facilitate the enforcement, securing or pursuance of a judgement or a civil claim.  This would include the prohibition of a judgment debtor from leaving Hong Kong for the purpose of facilitating the service of the papers of the bankruptcy proceedings on the judgment debtor.  However, once the court has made a bankruptcy order against the judgment debtor, the judgment creditor’s right to enforce the judgment ceases, as s 12(1) of the Bankruptcy Ordinance provides:

“On the making of a bankruptcy order, the Official Receiver shall thereby become the provisional trustee of the property of the bankrupt, and thereafter, except as directed by this Ordinance, no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the bankrupt in respect of the debt, nor shall proceed with or commence any action or other proceedings, unless with the leave of the court and on such terms as the court may impose.”

11.Hence, after the making of a bankruptcy order, an unsecured judgment creditor, like any other unsecured creditors, only has the right to lodge a proof of debt against the bankrupt’s estate, and it is the job of the trustee in bankruptcy to realise the assets of the bankrupt, if any, with a view to pay up the debts owed to the various creditors.  In order to help the trustee in bankruptcy to discharge such duty, there are various provisions in the Bankruptcy Ordinance (Cap 6) and its subsidiary legislations imposing duty on the bankrupt to supply information about his assets to the trustee in bankruptcy.  That is why after the making of the bankruptcy order, the trustee in bankruptcy would administer the estate of the bankrupt and the lodging and adjudication of the proof of debt are matters between the judgment creditor and the trustee in bankruptcy.  This is the basis of the operation of the whole bankruptcy regime.

12.Mr Suen does not seek to dispute the aforesaid principle.  He accepts that the right of a judgment creditor to enforce a judgment ceases once the judgment debtor is adjudicated bankrupt.  He also confirms that the Secretary of Justice is not seeking for a prohibition order to facilitate the enforcement of the IDT Order.

13.In order to overcome such hurdle, Mr Suen puts forward an alternative argument which runs as follows.  The Secretary of Justice is the petitioner in the bankruptcy proceedings, and so his position is like that of a plaintiff in any other ordinary civil claim.  The Secretary of Justice eventually obtained the Bankruptcy Order against Madam Wong.  There is a notice in the Bankruptcy Order requiring Madam Wong to attend the OR’s office.  As Madam Wong has failed to do so, the Secretary of Justice, just like any other plaintiff in a civil claim, is seeking for a prohibition order with a view to secure the attendance of Madam Wong at the OR’s office.  According to Mr Suen, s 21 B(1)(b)(ii) empowers the court to grant a prohibition order to facilitate the enforcement of an order which requires a person to perform an act.  Since the Bankruptcy Order requires Madam Wong to attend the OR’s office, which she has failed to comply, the court should grant a prohibition order under s 21B(1)(b)(ii) with the effect of compelling Madam Wong to attend the OR’s office.  Mr Suen also confirms that the prohibition order can be discharged once Madam Wong attends the OR’s office.

14.I do not accept such argument.  On the procedural issue, if the Secretary of Justice, as the petitioner in the bankruptcy proceedings, is applying for a prohibition order with a view to enforce the attendance requirement in the Bankruptcy Order, the present application should have been taken out in the bankruptcy proceedings and not in the miscellaneous proceedings in 2000 for the registration of the IDT Order.  Procedurally, the application has been taken out in the wrong proceedings.

15.More importantly, by making the Bankruptcy Order, the Bankruptcy Court had not ordered Madam Wong to attend the OR’s office.  Although r 72A(3) of the Bankruptcy Rules (Cap 6) requires a bankruptcy order to contain a notice stating that it will be the duty of the debtor to attend on the interim trustee, such attendance provision is no more than a notice.  In other words, the attendance requirement is not an order by the court.  As there has been no order by the court requiring Madam Wong to attend the OR’s office, the Secretary of Justice cannot rely on s 21B(1)(b)(ii) to justify the making of the prohibition order against Madam Wong.

16.Furthermore, to allow the Secretary of Justice to enforce “the attendance requirement” in the Bankruptcy Order would upset the operation of the whole bankruptcy regime. As I have mentioned above, the whole purpose of requiring the bankrupt to attend on the trustee in bankruptcy is to facilitate the administration of the estate of the bankrupt by the trustee in bankruptcy.  The judgment creditor, even if he is the petitioner in the bankruptcy proceedings, should not be allowed to intervene in the administration of the bankrupt’s estate, otherwise the judgment creditor would enjoy an advantage over other creditors.  As there are various powers conferred upon the trustee in bankruptcy relating to the administration of the estate, the judgment creditor can invite the trustee to exercise the appropriate powers to compel the judgment debtor to attend the OR’s office, for example, by applying for a warrant of arrest against the judgment debtor under s 27 of the Bankruptcy Ordinance if the relevant conditions are satisfied.  If the judgment creditor disagrees with the decision of the trustee, he can always apply to the court to compel the trustee to act in a particular manner.

17.For the above reasons, it is not appropriate for the court to make a prohibition order against Madam Wong under s 21B of the High Court Ordinance.  I therefore dismiss the appeal against Master Hui’s order.

18.I am not sure whether OR intends to seek his costs against the Secretary of Justice.  At this stage, I just make a costs order nisi that there be no order as to costs of the appeal, which shall be made absolute 14 days after the date of the handing down of this Decision.

Mr Suen Sze Yick, Senior Government Counsel, for the plaintiff (judgment creditor)

Ms Anita Tong, Government Counsel, for the Official Receiver