THE JOINT AND SEVERAL TRUSTEES IN BANKRUPTCY OF NANIK DAYARAM (ALSO KNOWN AS NANIK DAYARAM HATHIRAMANI), A BANKRUPT v. LEE PEI YIN

HCB 7651/2011

[2018] HKCFI 2497

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 7651 OF 2011

_________________________

_________________________

___________________

D E C I S I O N

___________________

THE APPLICATION AND BACKGROUND

1.  This is an application (by summons dated 17 May 2017) for suspension of automatic discharge from bankruptcy for a period up to 4 years by the Joint and Several Trustees in bankruptcy (“Trustees”) of Nanik Dayaram (“Dayaram”), pursuant to section 30A of the Bankruptcy Ordinance, Cap 6 (“the Ordinance”).

2.  Dayaram was adjudged bankrupt on 13 June 2013 as a result of a petition dated 7 December 2011 presented by a creditor, namely the Hongkong and Shanghai Banking Corporation Limited (“HSBC”). But for this application and the interim suspension orders, Dayaram would have been discharged from bankruptcy on 13 June 2017. Mr Osman Mohammed Arab and Mr Wong Kwok Keung of RSM Nelson Wheeler Corporate Advisory Limited were appointed the Trustees on 23 July 2013by a resolution passed at the first meeting of creditors.

3.  Dayaram submitted his Statement of Affairs to the Official Receiver’s Office on 15 July 2013 and his Preliminary Examination of Bankrupt to the Trustees on 8 November 2013. He said that he did not own any stocks, shares, bonds, unit trust and other financial securities in his Preliminary Examination of Bankrupt. He, however, disclosed the following assets in his Statement of Affairs:-

(a) HK$71,907.72 (cash in banks);

(b) Investment in stocks and shares in Days International Limited (incorporated in Hong Kong) (in compulsory liquidation) (“Days International HK”); and

(c) Membership of Hilltop Country Club.

4.  Following the appointment of the Trustees, they started the usual investigation and raised many round of enquiries with Dayaram by sending him written requests for information and documents.

5.  As at the date of the present application (17 May 2017), according to the Trustees, the total value of the proofs of debt submitted were over HK$ 221 million and USD$ 39 million.

6.  On 11 August 2015, Dayaram was convicted by a jury of nine counts of conspiracy to defraud and sentenced to 10 years’ imprisonment, which consisted of making and submitting false invoices and false bills of lading to banks, including HSBC, in order to obtain loans which have remained overdue and outstanding: HKSAR v. Nanik Dayaram HCCC 2/2014 (unreported) 11 August 2015.

7.  Because of the criminal trial, Dayaram had been remanded in custody on 6 August 2015. Although he was later granted bail pending appeal against conviction and sentence on 24 August 2016, he returned to prison on 19 January 2017 to serve the remainder of his sentence.

8.  The Trustees make the present application to object the automatic discharge and they rely on the following 2 grounds as provided for in sections 30A(4)(c) and 30A(4)(d) of the Ordinance respectively, that:-

(a) Dayaram has failed to co-operate in the administration of his estate; and

(b) the conduct of Dayaram in respect of the period before and after the commencement of the bankruptcy has been unsatisfactory.

LEGAL PRINCIPLES

9.  Parties are represented by counsel at the hearing and they do not have great dispute as to the legal principles applicable in the present case. I therefore take the liberty to repeat some of their submissions below for reference.

10.  The applicable legal principles for suspension of time to discharge from bankruptcy under section 30A(3) of the Ordinance are helpfully summarised in following authorities.

11.  In Re Hui Hing Kwok [1999] 3 HKC 683, Le Pichon J (as she then was), having considered the purpose of sections 30A(1) and 30A(2) of the Ordinance as set out in the Law Reform Commission’s Report on Bankruptcy that led to their enactment, observed that:-

“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.”

12.  In Re Lee Raymond Cho Min & Re Lee Priscilla Hwang CACV 112 & 113 of 2014 (unreported) 30 July 2014, Yuen JA held that:-

“It is well-established that an application for suspension of discharge from bankruptcy should be considered in two stages:

(1) the court should first determine whether one or more of the grounds mentioned in s.30A(4) has been established; and if established,

(2) the court would then move on to consider whether or not, in the exercise of its discretion, a suspension of discharge should be ordered,

- having regard to all the circumstances of the case, including the nature of the acts complained of and the post-bankruptcy order conduct of the bankrupt, and

- bearing in mind the two main objectives of this part of the [the Ordinance]:

(a) the rehabilitation of the bankrupt by allowing him to resume a normal commercial life, as well as

(b) the public interest in ensuring that the return of the bankrupt to the commercial world would not carry with it an unacceptable risk to persons who may be engaged in commercial relations with him, and in preserving commercial morality.”

13.  I am also told that it is useful to look at Yuen JA’s comments in Re Leung Yat Tung (the Bankrupt) (No 2) [2007] 4 HKC 192 in relation to the failure in co-operation ground that:-

“As the courts have said, a bankrupt is not permitted to adopt a ‘catch me if you can’ approach. He cannot wait and see if the trustee in bankruptcy manages to piece together the jigsaw of his financial affairs, and then when he is required to answer the trustee’s questions, try to get away with revealing as little as he can according to the strict letter of the questions. Instead he should pro-actively reveal the complete picture of his financial affairs to the trustee, and where pieces do not appear to fit, in that his conduct or transactions appear to be inconsistent, it is for him to explain the inconsistencies and convince the trustee of the true state of affairs.”;

14.  Mr McLeish, counsel for Dayaram, specifically drew my attention to the reasons given by Yuen JA in Re Lee Raymond Cho Min & Re Lee Priscilla Hwang (supra), in relation to bankrupt’s unsatisfactory conduct, that:-

“7. …… It is now clear that suspension may be ordered only if the pre-bankruptcy order conduct was grave but it need not be “exceptionally grave”: Tang Kai Mo v Fred Lee [2009] 1 HKLRD 87 , paras. 30-32.”

“8. As to what is meant by “unsatisfactory” pre-bankruptcy conduct, it was held in Lau Chi Kam [Fred Lee v Lau Chi Kam [2008] 3 HKLRD 627 ] (para 10) that the test for determining whether pre-bankruptcy order conduct was unsatisfactory was whether society would be prepared to condone such conduct without any expression of disapproval. ……”

15.  Mr McLeish also submitted that for appropriate period of suspension of time to discharge from bankruptcy, Yuen JA held in Re Leung Yat Tung (supra) when overturning an order for suspension of the maximum period of four years:-

“In my view, that maximum period should be reserved for the most egregious cases. Whilst the bankrupt was not cooperative in substance, he at least remained in communication with the OR …”

16.  He also relied on a passage from Totterdell v Nelson (1990) 97 ALR 341 (cited by Le Pichon J (as she then was) in Re Li Tat Kong [2000] 3 HKC 360), in which Burchett J observed that:-

“There may be cases where it would be unfair to a bankrupt to delay his discharge by reason of an incomplete investigation, lethargically pursued, to the torpor of which he has not contributed.”

DISCUSSION

17.  Mr Lok, counsel for the Trustees, in support of the application, asked me to look at 4 particular incidents, namely:-

(a) Non-disclosure of claim against Days International HK;

(b) Non-disclosure of shareholding in Days Impex Limited (incorporated in Liberia) (“Days Impex Liberia”) and Days Impex Limited (incorporated in Hong Kong) (“Days Impex HK”) (both in compulsory liquidation); and

(c) Dissipation of shareholdings in some related companies to associated parties; and

(d) Dissipation of contributions from Mandatory Provident Fund (“MPF”) Scheme.

Non-disclosure of Claim against Days International HK

18.  First of all, the Trustees relied on the non-disclosure of the Dayaram’s claim against Days International HK, a company incorporated in Hong Kong which is currently in liquidation under HCCW 299 of 2011. Mr Lok submitted that Dayaram only mentioned about the claim on 27 December 2013 when prompted by the Trustees on 23 December 2013 and the claim was not stated in the Statement of Affairs filed by Dayaram dated 15 July 2013. The claim was in the sum of HK$4,744,239.20 and was not disclosed prior to this request. Mr Lok submitted that Dayaram has remained largely unhelpful in relation to the Trustee’s investigation. The paucity of information provided is unacceptable and this is particularly so given that Dayaram was a director and shareholder of Days International HK.

19.  Dayaram explained that provisional liquidators were appointed for Days International HK by the court on 14 September 2011. The provisional liquidators seized all company assets and documents. He said that he was excluded from the company’s premises save that he was permitted to collect personal items and effects. Furthermore, at the creditors’ meeting held on 18 January 2012, Dayaram’s claim of HK$4,744,239.20 was reduced to HK$1 for voting purposes.

20.  Dayaram further explained that the reason he did not initially inform the Trustees of this claim was because the claim had already been rejected and he did not consider that there was any realistic prospect of recovery in any event.

21.  Mr McLeish argued that there might be some substance to the Trustee’s allegation if there was any basis for suggesting that Dayaram could possibly have believed that the claim could result in a payment to him given what had occurred. But he submitted that there was none. Dayaram was misguided in initially omitting to mention the claim, but realistically he had nothing to gain from this so as to permit bad faith to be imputed to him. In his submissions, Dayaram’s omission did not cause prejudice to the Trustees’ administration.

it is not sufficient for a bankrupt to take a purely passive role. In discharge of his duty, Dayaram needed to take all reasonable steps to enable the Trustees to obtain all relevant information and understand his affairs promptly, but obviously he was in breach of this positive duty. It is not a matter for Dayaram to decide what should be investigated by the Trustees. I also notice that Dayaram was the director and shareholder of a number of companies.  He is a sophisticated businessman with ample experience in the commercial world and therefore he knows far better than anyone else the importance of the disclosure at an early stage. All in all, I agree with the Trustees that this amounts to failure to co-operate in administration of the estate.

Non-disclosure of shareholding in Days Impex Liberia and Days Impex HK

23.  Now, I turn to another incident relied on by the Trustees, namely the non-disclosure of shareholding in Days Impex Liberia who, in turn, was the controlling shareholder of Days Impex HK.

24.  Dayaram explained that he ceased to be the sole shareholder of Days Impex Liberia, and hence ceased to have any interest in Days Impex HK several months before the bankruptcy order. He said that “the ownership of Liberian companies is by way of bearer shares” and explained how he somehow came to lose his shareholding because of debts owed to a “friend” (who lent him US$250,000) as a result of “high stakes baccarat” in Las Vegas in Christmas 2010. As a result, he later “ceased to own any shares in Days Impex Liberia several months before [he] was declared bankrupt”, namely “about the end of 2012”.

25.  Mr McLeish submitted that as at the time Dayaram completed the Statement of Affairs, Mr Dayaram had no shareholding in Days Impex Liberia or interest in Days Impex HK. Accordingly, there was no omission as alleged by the Trustees and the complaint of failure to co-operate under this heading is not made out.

26.  I agree that the mere failure to mention the shareholding in Days Impex Liberia in the Statement of Affairs is not sufficient to establish that Dayaram was in breach of the duty to co-operate as I accept that at the material time he was no longer the shareholder. But the Trustees’ complaint went far deeper than that. There is no dispute that, even up to the present moment, Dayaram refused to provide any information on this “friend” who was the lender and later kept the “bearer shares” of Days Impex Liberia. Dayaram said in his affirmation dated 21 July 2017 that “I am unable to disclose the identity of the person to whom I gave the shares as this would cause considerable difficulties with his family”. Furthermore, there is also no record whatsoever, contemporaneous or otherwise, to support any of his bare allegations in the entire incident. Furthermore, Dayaram actually had been a director of Days Impex Liberia for the period 5 years preceding the bankruptcy petition until 1 June 2013 but no document has ever been provided to prove the resignation.

27.  I agree with Mr Lok’s submissions that although the Trustees have not had a lot of evidence to say that there must be some questionable or highly problematic transactions yet, in my view, Dayaram had a positive duty to provide the information and evidence for investigation.  The major problem is that he refused to provide the assistance that the Trustees was entitled to have.

28.  Furthermore, because there was no mention whatsoever by Dayaram of the shareholdings of Days Impex Liberia and Days Impex HK at all until the present application, the Trustees were unable to carry out their investigation. The information requested was definitely useful to the Trustees. It would be quite wrong to say now that there might not be much use to look at the shareholdings of Days Impex Liberia and Days Impex HK as they could be worthless. If bankrupts generally were allowed to delay, or even to refuse, to provide useful information like this, administration of estate of bankrupts would become an almost impossible mission. I find that this deliberate act of withholding useful information is a very serious breach of a bankrupt’s duty of co-operation in the administration of his estate.

Dissipation of Shareholdings in the Related Companies to Associated Parties

29.  I am told that the Trustees were concerned as to the circumstances in which Dayaram transferred his shares in 3 different Hong Kong companies, namely Days Cyberport Limited (“Days Cyberport”), Malkita Limited and Days Travel Service Limited (“Days Travel Service”) (collectively the “Related Companies”) shortly after the filing of the bankruptcy petition on 7 December 2011.

30.  According to the Trustees, Dayaram executed a number of share transfers of his shares in the Related Companies on 21 February 2012, as a result of which each of the transferees became the sole member of the Related Companies. The transferee of the shares in Days Travel Service and Malkita Limited was Dayaram’s wife, Sheila Dayaram, who further transferred the shares in November 2012 to their son, Mahesh Dayaram. The transferee of the share in Days Cyberport was Days International Limited, a company incorporated in British Virgin Islands (“BVI”), of which Dayaram was a director (and was once a shareholder until 2005 or 2006). Dayaram explained to the Trustees on 11 September 2013 that he was, in fact, holding shares on trust for the respective transferees of the Related Companies but was unable, upon repeated requests, to produce any relevant information so as to substantiate the explanation being advanced until almost 2 years later.

31.  Dayaram explained that in fact, he informed the Trustees about these transfers in his first response to their questions following their appointment in his letter to the Trustees dated 11 September 2013. He said that he was holding the shares on trust for the transferees who had requested him to transfer the shares to them. I am told that there was no consideration for these transfers. He also said that he sent copies of the relevant declarations of trust and transfer requests to the Trustees by post almost 2 years later on 5 August 2015. However, the Trustees, in reply, said that “they have not received copies of the Declarations of Trust and Transfer Request as alleged.”

32.  Besides giving the explanation above, Dayaram further said that, at the time of the transfers, the companies were all dormant and none of them had any assets. It was therefore submitted on his behalf that even if Dayaram had had any beneficial interest in the shares concerned, the transfer would be of nominal value and therefore would not constitute any unsatisfactory conduct.

33.  First of all, even accepting the fact that the relevant declarations of trust and transfer requests were sent by Dayaram to the Trustees by post on 5 August 2015, I agree with the Trustees that it is highly suspicious to take almost 2 years to come up with these documents.  I do not accept his explanation for the delay.

34.  Secondly, Dayaram never took the effort to ensure the Trustees received the documents. They were only recently disclosed in the present application. In my view, this alone amount to failure to co-operate in administration. And I also agree with the Trustees that “Had the Bankrupt provided the said documents also by e-mail (as per one of his usual modes of communication with the Trustees) the Bankrupt would have at least be able to provide electronic record of the same”. There is absolutely no evidence whatsoever to support that he “sent copies of these documents to the Trustees by post on 5 August 2015, with a covering letter”.  It is not in dispute that the duty is on the bankrupt to make full and frank disclosure and to proffer all pertinent information. Obviously, Dayaram, as a bankrupt, has failed to do so.

35.  Thirdly, the complaint against Dayaram was indeed about the suspicious transfer of the shares to some associated parties, namely his wife, his son and a company incorporated in BVI with Dayaram as a director. According to him, although he was no longer the shareholder of this BVI company at the time of transfer, he never explained who then became the shareholder or who was the beneficial owner of this company since 2005 or 2006 and the reasons behind all these changes of shareholdings. Although it might be argued that if the value of transfer was nominal, it might not constitute an unsatisfactory conduct, this is definitely not an answer to his conduct in failing on his part to co-operate in providing essential information to the Trustees for investigation.

Dissipation of Contributions from MPF Scheme

36.  The Trustees also submitted that Dayaram failed to provide any satisfactory explanation for the spending of HK$1,320,478.04 maintained at HSBC Life (International) Limited (“HSBC Life”) on or about 25 March 2013, namely after his bankruptcy petition was filed and around 2 months prior to his Bankruptcy Order was made.

37.  Dayaram admitted that he had withdrawn his entire MPF contributions in March and April 2013. In the letter dated 27 September 2013, the Trustees requested for transfer of the money to the estate as the MPF contributions vested in the Trustees. Initially, on 12 October 2013, in response to the Trustees’ request, he explained that the funds withdrawn “was already spent before the end of May, 2013.  There is no money remaining in my possession to refund to you”. More than 8 months later, on 30 June 2014, Dayaram purported to explain that the funds had been exhausted as a result of “donations in the dropboxes of Temples”, “cash handouts to poor people living in Government Housing Estates with particular emphasis on elderly and handicapped” and “food handouts to homeless living under flyovers with cash handouts as well”.  As a result, he “fully exhausted HK$1.08 million in the 9 weeks of charity”. There is no information whatsoever other than his bare assertions and there is no way to confirm the truth of the matter.

38.  My special attention was drawn to the initial answer given by Dayaram that the purpose of spending the contribution was not provided. Later, Dayaram decided to explain and said that he spent the MPF contributions on charity. He then gave a detailed account on how he made the donations to different parties. As a result, he “fully exhausted HK$1.08 million in the 9 weeks of charity”“plus travelling expenses of approximately 30K” and “there are no receipts for donations”.

39.  Mr McLeish submitted that given the charitable character of the dissipation of the MPF contributions, the test for determining whether pre-bankruptcy conduct was unsatisfactory is clearly not met. He argued that society would be prepared to condone such conduct without any expression of disapproval.

40.  With the greatest respect, I do not agree. It is wholly unacceptable and irresponsible for a businessman who donated his assets for charity when he knew too well that he was insolvent. After the bankruptcy petition was filed and served, Dayaram must have been aware of the huge liability he had to meet. I am sure that any responsible businessman would not have spent funds like that in a manner similar to what Dayaram had done. In my view, no one would be prepared to condone Dayaram’s conduct without any expression of disapproval. Applying the test in Re Lee Raymond Cho Min & Re Lee Priscilla Hwang (supra), this is no doubt an unsatisfactory conduct and I therefore find that the pre-bankruptcy conduct of Dayaram has been unsatisfactory. In addition, I also find that the initial answer given by Dayaram is an obvious failure in co-operation.

Sections 30A(4)(c) and 30A(4)(d) of the Ordinance

41.  All in all, I agree with Mr Lok that Dayaram’s conduct has been unsatisfactory and he has clearly failed to co-operate with the Trustees.  It appears to me that none of the conduct was relating to poor judgment or misfortune. The 2 grounds as provided for in sections 30A(4)(c) and 30A(4)(d) of the Ordinance respectively have been established.

The Exercise of Discretion

42.  In exercise of my discretion, I bear in mind the 2 main objectives for the Ordinance set out in Re Lee Raymond Cho Min & Re Lee Priscilla Hwang (supra) for suspension of automatic discharge from bankruptcy. Again, I do not intend to repeat the facts as they are usefully summarised in the counsel’s submissions. I shall just give my reasons and decision on this matter.

43.  First of all, I was invited to take into account the way that Dayaram arranged his affairs prior to his bankruptcy, which had a direct bearing on the way that his bankruptcy could be administered. For instance, Dayaram would acquire properties, in his own name, and then arrange for another corporate entity to take up the actual purchase. Complicated corporate structures were created for carrying on business or for holding investment including stock and shares or real property for Dayaram and his family. In my view, this made the work of the Trustees particularly difficult, unless Dayaram was upmost co-operative but unfortunately he was not.

44.  Secondly, I agree with the submissions of the Trustees that there are strong indications to suggest that the arrangements of Dayaram’s affairs, including the imposition of complicated trust arrangements and corporate structures, could have effectively concealed his relationship with a group of companies (holding a number of properties in Hong Kong) which on the face of it belonging to his family. I agree that Dayaram has clearly failed from being full and frank in his disclosure. For this, the Trustees will have to continue with the investigation because the administration has not been completed. In my view, the attitude adopted by Dayaram is far from satisfactory and co-operative. Trustees would need more time to investigate to complete a meaningful administration.

45.  Thirdly, I also take into account the serious commercial fraud that Dayaram was involved.

46.  Fourthly, it is quite apparent that Dayaram largely chose to be passive and reactive.  He adopted the “catch me if you can” approach and only provided information when he was caught and cornered by the Trustees.  And very often, he was unable to provide documentary evidence to support his explanation.

47.  Fifthly, I agree with Mr Lok that there was no undue delay in administration on the part of the Trustees.

48.  However, when exercise my discretion, I do notice one thing which is in favour of Dayaram. I agree with Mr McLeish that, so far, the results and the evidence coming out from the investigation of the 4 incidents, relied upon by the Trustees for making this application, did not seem to show Dayaram did actually conceal any assets, although his unco-operative attitude gave a very strong impression that he did. I also agree that the maximum period should be reserved for the most egregious cases and I am afraid that this is, although a very serious one, not one of the most egregious. I therefore do not intend to impose the maximum period of suspension of 4 years.

49.  Given all the circumstances of the present case, I order that the relevant period shall cease to run for a period of 3 years.

50.  I was specifically asked to reserve the decision on costs and so I order.

DISPOSITION

51.  I will make the following orders:-

(a) The discharge of the bankruptcy under section 30A of the Bankruptcy Ordinance (Cap. 6) shall cease to run for a period of 3 years from 12 June 2017; and

(b) Costs be reserved.

52.  Finally, I thank both counsel for their very helpful assistance.

HCB 7651/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7651 OF 2011

____________

____________

____________

__________________________

JUDGMENT
__________________________

A. Introduction

1.  This is an application by the Trustees in Bankruptcy of Nanik Dayaram (“Bankrupt”) by amended summons dated 2 September 2015 against the Respondent for (i) production of 13 categories of documents and (ii) provision of information on oath as set out in the Schedule to the amended summons, as well as (iii) oral examination of the Respondent, pursuant to section 29(1) of Bankruptcy Ordinance, Cap. 6 (“BO”).

2.  The Respondent is an authorised signatory of Sovereign Managers Limited (“SML”), a company incorporated in Turks and Caicos Islands (“TCI”). SML and Sovereign Trust (Hong Kong) Limited (“SHK”) are part of the Sovereign Group of companies (“Sovereign Group”) which have offices around the world and provide inter alia corporate services to their clients. In addition to being the authorized signatory of SML, the Respondent is also the office manager and company administrator of SHK. The office of SML and SHK was and probably still is on 16/F,   Kinwick Centre, 32 Hollywood Road, Central, Hong Kong. The Respondent has been under the employment of SHK since at least March 2001.

3.  In or around March 2001, SML was appointed a corporate director of Days Properties Limited (“DPL”), a company incorporated in TCI.  According to the Respondent, DPL was and is one of the many clients’ companies which SML manages in the course of its business.

4.  DPL is the registered owner of inter alia two luxurious residential properties in Hong Kong[1] ie Flat 2 on the 6^th Floor in Block A and Car Parking Space No.72, Villa Monte Rosa, No.41A Stubbs Road, Hong Kong (“Property A2-6”) and Flat 2 on the 7^th Floor in Block A and Car Parking Space No.289, Villa Monte Rosa, No.41A Stubbs Road, Hong Kong (“PropertyA2-7”) (“collectively “Properties”). DPL has been the registered owner of the Properties since 1997.

5.  After considerable fine-tuning by Mr Wong SC in the morning of 7 October 2015, the Trustees’ application is now confined to the provision of information on oath by, and oral examination of, the Respondent. The revisions made by Mr Wong SC have now been incorporated in a re-amended summons dated 27 October 2015 the relevant parts of paragraphs 1 and 2 read:

“1. The Respondent does within 14 days from the date of the Order to be made herein state on oath, the information relating to the Bankrupt, [DPL]…[Property A2-6] and… [Property A2-7] as stated in the Schedule hereto:

…

2. The Respondent shall attend an oral examination before a Master with 3 hours reserved on a date to be fixed for the purpose of giving evidence in relation to the information and/or documents stated in the Schedule hereto.”

6.  The Schedule to the re-amended summons reads:

“(c) Documents and/or information in relation to the directorship of [SML];

(d) Information as to the “single corporate shareholder” that beneficially owns [DPL] and also as to the trust related thereto and supporting documents thereof;

(e) Documents and/or information relating to the appointment of SML as corporate director of [DPL];

(f) The resolution(s) of the board of directors as referred to in the execution clauses of the documents below:

(i) Mortgage in respect of [Property A2-6] dated 8 May 2014 registered at the Land Registry by Memorial No.14060402440093 (“1^st Mortgage”);

(ii) Rental Assignment in respect of [Property A2-6] dated 8 May 2014 registered at the Land Registry by Memorial No.14060402440102 (“1^st Rental Assignment”);

(iii) Mortgage in respect of [Property A2-7] dated 8 May 2014 registered at the Land Registry by Memorial No.14060402440111 (“2^nd Mortgage”); and

(iv) Rental Assignment in respect of [Property A2-7] dated 8 May 2014 registered at the Land Registry by Memorial No.14060402440126 (“2^nd Rental Assignment”);

(g) Documents and/or information in relation to any trust arrangements directly or indirectly involving [DPL] either in respect of [Property A2-6] and/or [Property A2-7], other properties or generally;

(h) Any other documents (either internal or external) in relation to the 1^st and 2^nd Mortgages and the 1^st and 2^nd Rental Assignments in respect of [Property A2-6] and/or [Property A2-7] (such as shareholders’ resolution of [DPL], certificate of good standing, certificate of no encumbrance, power of attorney, notice(s) to mortgagor and facility letter(s) issued by Bank of China International Limited, etc.);

(i) Documents evidencing and/or details of the registration of the 1^st and 2^nd Mortgages and the 1^st and 2^nd Rental Assignments in Turks and Caicos Islands or elsewhere;

(j) The lease(s)/tenancy agreement(s) and/or details of the tenancy in respect of [Property A2-6] and/or [Property A2‑7] from December 2006 onwards;

(k) All correspondence entered into between SML and any entities (either individual or corporate) and/or details of the communication between SML and any entities (either individual or corporate) in relation to the execution of the 1^st and 2^nd Mortgages and the 1^st and 2^nd Rental Assignments and/or the transaction(s) contemplated thereunder, including but without limitation to, all letters, emails, call reports and telephone notes, etc.;

(l) Fee note(s) and/or invoice(s) issued by SML in respect of its service(s) provided to [DPL], either in connection with the execution of the 1^st and 2^nd Mortgages and the 1^st and 2^nd Rental Assignments, the transaction(s) contemplated thereunder or otherwise; and

(m) Documents in relation to or specifying details of, and/or details of the “service(s) provided” (as referred to in (l) above) (whether or not such services were provided directly or indirectly in relation to the Bankrupt), e.g. nature and subject matter of the services, when and to whom were the services rendered.”

7.  In so far as the Trustees seek information from the Respondent on “documents”, the information sought is essentially confined to whether the documents in question were once in the Respondent’s possession, power or custody, if so, the identities of the persons/ entities to whom the documents were given and the present whereabouts of them.

8.  The Trustees say, upon investigation, they believe the Properties and DPL are or have been beneficially held or controlled by the Bankrupt via offshore trust arrangements. They submit the information sought is reasonably required for them to carry out further investigation into the beneficial ownership of DPL and the Properties and pursue discovery of documents and/or further relevant information from other persons/ entities who may be in possession of them.  The Trustees submit the Respondent is likely to able to provide the information sought.

9.  The application, as fine-tuned, is opposed by the Respondent.

B. Further Background

10.  By an order dated 13 June 2013, a bankruptcy order was granted against the Bankrupt. In his Statement of Affairs dated 15 July 2013, the Bankrupt reported that his only asset was cash in banks in the sum of HK$71,907.72. As the Bankrupt has substantial outstanding liabilities amounting to over HK$221 million and US$39 million, the realization from his bank accounts can only be regarded as minimal. 

11.  The Trustees say they discovered that Bankrupt and his family had close connection with a group of companies whose names begin with the word “Days” including DPL.

12.  The Trustees suspect DPL was under the control of the Bankrupt as far back as 1997. This is said to be evident by a number of documents, including, for instance, a nomination in respect of Property  A2‑6 dated 14 March 1997 by which Days Impex Limited nominated DPL to take up the assignment of Property A2-6 from the vendors pursuant to a sale and purchase agreement dated 3 February 1997. The nomination was signed by the Bankrupt as director on behalf of DPL. Similarly, the assignment and mortgage of Property A2‑6, both dated 17 March 1997, were also signed by the Bankrupt as director on behalf of DPL. Regarding Property A2-7, it was found that the Bankrupt had also signed a nomination, assignment and mortgage as director on behalf of DPL in November 1997.

13.  In a Citibank account opening form dated 21 December 2000 signed by the Bankrupt, he gave Property A2-6 as his address. 13 years later, in his Statement of Affairs dated 15 July 2013, the Bankrupt still gave Property A2-6 as his address. In his letter to RSM Nelson Wheeler dated 10 January 2014, the Bankrupt admitted he was residing in Property A2-6 but claimed he had no connection with DPL. [2]

14.  In the “Know your Client” Report (“Citibank Report”) prepared by Citibank sometime in April 2011, it was stated that the Bankrupt had a total net worth of over $76 million, of which more than $40 million was “onshore”. The report further recorded that the Dayaram family owned 3 units at Villa Monte Rosa. Most important of all, the report stated the Bankrupt was both the “Owner” and “Provider of Funds” of DPL and Goldfinch Investments Limited (“Goldfinch”).

15.  Goldfinch is a company incorporated in Cayman Islands. It  has been the sole registered member of DPL since at least 2006, as evident from a special resolution dated 28 June 2006. The resolution was signed by Donat Investments SA, Madeleine Investments SA and Hitchcock Investments SA. All 3 companies are said to be shell companies controlled by Citibank and/or Cititrust (Cayman) to function as the board of directors of private investment companies assigned to Citibank’s clients for the purpose of setting up trust arrangements.

16.  Further investigation by the Trustees reveals that DPL entered into 2 loan arrangements with Bank of China International Limited in 2014, whereby Property A2-6, Property A2-7 and the rental income generated therefrom were charged to the bank as securities, as evident from 2 mortgages and 2 rental assignments dated 8 May 2014. These are the 1^st and 2^nd Mortgages and 1^st and 2^nd Rental Assignments referred to in the Schedule. All these instruments were executed by SML, as a corporate director of DPL. In turn, the Respondent signed them on behalf of SML.

18.  As I said earlier, in his letter dated 10 January 2014, the Bankrupt denied any connection with DPL. By letter dated 16 July 2014 to the Respondent, the Trustees attempted to seek clarification from her instead.  In the letter, the Trustees requested substantially the same information as those set out in the amended summons.  The Respondent did not reply to the letter. Instead, by a letter dated 28 July 2014 signed by the Respondent on behalf of SML, SML replied to the Trustees which gave very little away. The reason why this court takes such a dim view of SML’s reply will become apparent later in this judgment.

19.  Upon further request from the Trustees by letter dated 28 August 2014, SML issued to Trustees a “cease and desist” letter dated 8 September 2014, describing Trustees’ requests as “oppressive” and “harassment” and threatening to seek a wasted costs order against them in court proceedings.

20.  On 24 December 2014, the Trustees issued the present summons.

C. Discussion

21.  Section 29(1) of BO provides:

“(1) The court may, on the application of the Official Receiver or trustee, at any time after a bankruptcy order has been made against a bankrupt summon before it the bankrupt or his spouse, or any person known or suspected to have in his possession any of the estate or effects belonging to the bankrupt or supposed to be indebted to the bankrupt, or any person whom the court may deem capable of giving information respecting the bankrupt, his dealings or property, and the court may require any such person to produce any documents in his custody or power relating to the bankrupt, his dealings or property.” (emphasis added)

22.  Section 29 of BO, like its counterpart in section 221 of the Companies (Winding-Up and Miscellaneous Provisions) Ordinance (“CO”), Cap. 32, is designed to help a trustee to discover the truth and circumstances connected with and to gather information about the bankrupt’s property, affairs and dealings, in order that the trustee might be able, as effectively and with as little expenses as possible, to complete his functions, one of which is to collect the assets of the bankrupt, settle his liabilities and distribute surplus funds to his creditors. The powers it confers is necessarily wide: Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd. (2006) 9 HKCFAR 766; Re Lai Kwok Ying (A Bankrupt) unrep., HCA8750 of 2007, 7 August 2009.

23.  The 3-stage test which governs applications under section 29 was set out by Kwan J (as she then was) in Re Lai Kwok Ying (A Bankrupt) supra at paragraph 5:

(1) First, the provision of information or documents must be reasonably required for the trustee to carry out his functions (“1^st Requirement”).

(2) Second, there is a primafacie case that the respondent is able to provide such information or documents (“2^nd Requirement”).

(3) Third, if the above criteria are met, the court must strike a balance between the applicant’s reasonable requirements and the need to avoid making an order which is wholly unreasonable, unnecessary or oppressive (“3^rd Requirement”).

24.  There is no dispute between the parties that the principles relating to the court’s exercise of similar powers in the insolvency context under section 221 are relevant to an application under section 29 of BO. In  Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd. supra, the leading case on section 221, Lord Millet said this at [33]:

“33. …The power of a court or arbitral tribunal to order discovery is very narrow, and narrower than the powers of the court under s.221 in at least two respects…  Secondly, a party seeking discovery is not entitled to the production of documents which may help him discover whether he has other claims not covered by the pleadings; he must not be engaged in a “fishing” or speculative expedition.  The liquidator, by contrast, is necessarily engaged in just such an expedition and the purpose of s.221 is to enable him to carry it out effectively.”

25.  At the hearing, this court was informed by the parties that the Respondent no longer took issue on the 1^st Requirement. She, however, maintained her opposition on the basis that the Trustees had failed to satisfy the 2^nd or 3^rd Requirement.

C.1. 2^nd Requirement - Respondent’s ability to provide information

Preliminary

26.  Mr Gray submitted to this court that the Trustees failed to satisfy the 2^nd Requirement. The reason essentially was that the Respondent had stated on oath that she could think of no other relevant matters over and above what she had already said in her affirmation and the court had no reason not to accept her statement in this regard.

27.  As to be expected, Mr Wong SC disagreed. He submitted that the Respondent’s evidence on this issue was evasive and the court should not take her denial of knowledge at its face value. Specifically, Mr Wong SC invited this court to compare the Respondent’s reply to the Trustees’ request for production of documents and her reply to the Trustees’ request for information.

28.  With regard to the former, the Respondent said at paragraph 35 of her 1^st affirmation:

“None of the documents specified in paragraph 1(a) – (m) are in my possession, control or power. Nor do I know of their existence save for the following…

c. – m. None of the documents are in my possession, control or power.”

29.  However, with regard to the provision of information, which is what the present application, after fine-tuning, is about, the Respondent resorted to a general denial of her ability to provide further information. At paragraph 26 of her 1^st affirmation, the Respondent said:

“A[s] I have already explained I am not capable of providing the information or evidence the [Trustees] requested.”

30.  This court agrees with Mr Wong SC.

31.  It is apparent from the decision of Kwan J (as she then was) in Re  New China (Hong Kong) Group Ltd unrep., HCMP 2180 of 2005, 14 February 2006, at paragraphs 16 – 20 that the trustees, and, a fortiori, the court are not bound to accept a respondent’s statement that he has no recollection or, by analogy, no information to give, at its face value. In my view, the proper approach is for the court to assess the weight to be given to such a statement against all the background facts and the manner in which the statement is made. This approach is sound in principle and accords with ample common sense.

32.  If a general denial on oath is sufficient to tip the balance in favour of a respondent with regard to the 2^nd Requirement, then every respondent to an application of the present nature can easily thwart a trustee’s investigation and request for information by asserting he has nothing or nothing more to offer. Adopting a purposive approach to the interpretation of section 29, and drawing from the wisdom of cases like Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd. supra; Re New China (Hong Kong) Group Ltd supra, Re Lai Kwok Ying (A Bankrupt)supra and Re Lee Priscilla Hwang (bankrupt) [2012] 4 HKLRD 581, this court does not find anything in that section which allows a respondent to take such a convenient “escape route”. Nor does section 29 compels this court to allow a respondent to do so.

33.  Further, despite the general denial, the examples cited by Mr Wong SC in oral submissions reasonably establish that the Respondent has much more information to provide than what has been disclosed in her 1^st (or 2^nd) affirmation filed in these proceedings. For reasons which will become apparent, the identity of SML’s directors is, in my view, a clear case in point. Another case in point is the services provided by SML to DPL.

34.  With these preliminary observations in mind, I now turn to the specific requests in the Schedule.

Para. (c) of Schedule

35.  This is open and shut.

36.  The Respondent, at paragraphs 7 and 24 of her 1^st affirmation, said:

“7. As an authorised signatory of SML I take orders from the directors of SML, signing documents on behalf of SML when requested to do so…

24. With regard to paragraph 32 [of the Trustees’ first affirmation], I discussed the contents of the letters from the Trustees in Bankruptcy with the directors of SML.  Although it was the directors’ view that the Bankrupt had no known interest in [DPL], the directors wished to be as co‑operative as possible with the [Trustees] without disclosing maters private to SML, the Sovereign Group, or [DPL] which the directors were of the view had no known present connection to the Bankrupt.”

37.  It should be perfectly obvious from the two paragraphs that the Respondent has maintained contact with some, if not all, directors of SML, both in the course of her day to day duties as an authorized signatory of SML and specifically in considering the Trustees’ request for information in correspondence. It is more than likely that she would be able to provide information on the directors of SML.

38.  For the present purpose, the threshold is a relatively low one of showing a prima facie case. This court is satisfied that threshold has been met.

Paras. (d) and (g) of Schedule

39.  These two paragraphs relate to (i) the beneficial ownership of DPL and (ii) trust arrangements directly or indirectly involving DPL, including the Properties.

40.  In the letter dated 28 July 2014 signed by the Respondent for and on behalf of SML, it is said “The beneficial owner of [DPL] is a single corporate shareholder which we believe has shares and control issued to a trust…To our knowledge, the Bankrupt is not a beneficiary or shareholder of either component of the structure.”

41.  Mr Wong SC submitted, and this court agrees, that the Respondent would likely know something about the “single corporate shareholder” said to be the beneficial owner of DPL. If the Respondent, on behalf of SML, can assert positively that the Bankrupt is not (i) the beneficial owner of DPL, or (ii) a shareholder of the beneficial owner of DPL, it implies she has some knowledge of who that beneficial owner or shareholder might be. The same can be said in relation to the trust arrangements involving DPL. After all, setting up a trust in relation to the shares of DPL’s single corporate shareholder is one way of acquiring, directly or indirectly, beneficial ownership of DPL.

42.  As for trust arrangements in respect of the Properties registered in DPL’s name, since the Respondent is an authorized signatory of SML who in turn, as director of DPL, will be required to sign documents giving effect to such trust arrangements, it stands to reason that the Respondent would likely have some information concerning the existence or non-existence of such arrangements, and if exist, what those arrangements might be.

43.  This court is satisfied that threshold of showing a prima facie case has been met.

Para. (e) of Schedule

44.  Since the Respondent was already working in the Sovereign Group in March 2001 when SML was first appointed a director of DPL, it stands to reason that she would likely have some information relating to SML’s appointment. This court is satisfied that the threshold of showing a prima facie case has been met.

Paras. (f); (h) - (i) and (k) of Schedule

45.  These four paragraphs relate to the 1^st and 2^nd Mortgages, as well as the 1^st and 2^nd Rental Assignments, and can conveniently be dealt with together.

46.  As office manager and company administrator, one of the Respondent’s duties was and is to keep company files up to date, file  documents with the Companies Registry and ensure the other administrators perform their duties. As SML’s authorized signatory, her duty was of course to sign documents for and on behalf SML when requested to do so. In view of the foregoing, and since the Respondent was the person who signed the 1^st and 2^nd Mortgages, as well as the 1^st  and 2^nd Rental Assignments, on behalf of SML as director of DPL, it is rather futile for her to deny she is able to provide information concerning the execution of these documents (and other related documents) and their subsequent registration whether in Hong Kong or TCI.

47.  As far as other related documents are concerned, at the very least, there should be some correspondence, internal memo etc. leading up to Bank of China offering banking facilities to DPL. There should also be board resolutions approving the facilities and authorizing the execution of the 1^st and 2^nd Mortgages, as well as the 1^st and 2^nd Rental Assignments, to which the Respondent would likely be able to testify. The Respondent should also be able to inform the Trustees of the existence or otherwise of any other documents seen, signed or filed by her in relation to the mortgages and rental assignments.

48.  This court is satisfied that the threshold of showing a prima facie case has been met.

Para. (j) of Schedule

49.  This paragraph relates to the tenancies of the Properties. During oral submission, Mr Wong SC told this court he only sought information on such tenancies from December 2006 to the present.

50.  As I said earlier, DPL is the registered owner of Property A2‑6 and Property A2-7. Apart from the 1^st and 2^nd Rental Assignments dated 8 May 2014 in favour of Bank of China, this court has also been provided with an earlier Rental Assignment dated 19 March 2001 executed by DPL in favour of Citibank covering both Properties. All these Rental Assignments presuppose the Properties have been leased out by DPL the income from which was charged to Citibank and subsequently Bank of China. Hence, prima facie, DPL has leased out both Properties since 2001, intermittently if not continuously. If so, it is likely that SML would have executed tenancy agreements on behalf of DPL and similarly the Respondent would have signed such tenancy agreements and may have some information to provide.

51.  Further, the Bankrupt is and has been residing in Property A2‑6 since at least 2000 and claims to be doing so under a tenancy entered into by his son’s employer with DPL. If so, it stands to reason that SML, as director of DPL, would likely have signed board resolutions authorizing the grant of the tenancy and the execution of the tenancy agreements in question. It also stands to reason that the Respondent may have signed such documents for and on behalf of SML and therefore would have some information to provide.

Para. (l) and (m) of Schedule

52.  These two paragraphs relate to the services provided by SML to DPL and fee notes/invoices issued by SML for such services.

53.  According to the Respondent, DPL was and is one of the many clients’ companies which SML manages in the course of its business. Obviously, SML does not provide such corporate services to DPL for free. If so, there would likely be fee notes/ invoices issued by SML, which in turn would set out in general, if not in detail, the services for which DPL is charged. As an authorized signatory of SML, the Respondent may have personally provided such services to DPL ( at least in relation to the 1^st and 2^nd Mortgages and 1^st and 2^nd Rental Assignments), recorded such services internally to enable fee notes/ invoices to be prepared, signed off such fee notes/ invoices  and/or filed them.

54.  This court is satisfied that the threshold of showing a prima facie case has been met.

Conclusion

55.  To conclude, on the totality of the evidence, and for the reasons set out above, this court is satisfied that the Trustees have shown a prima facie case that the Respondent is able to provide the further information sought. That deals with the 2^nd Requirement.

C.2.   3^rd Requirement - Balancing Exercise

56.  In Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd. supra at [29] and [30], Lord Millet NPJ said this with regard to a liquidator’s application under section 221 for production of documents:

“29. In exercising its discretion, the court must endeavour to strike a balance between the liquidator’s reasonable requirements and the need to avoid making an order that is unreasonable, unnecessary or oppressive to the party from whom the documents or information are sought…

30. Over the years the courts have laid down general principles governing the balancing exercise which the court is called upon to undertake…They can be summarised as follows:

(1) The liquidator must show that the documents are reasonably required to enable him to carry out his functions, not that they are necessary to enable him to do so;

(2) the case for making an order under the section in respect of a former officer is usually stronger than in respect of a stranger who owes no fiduciary duties to the company and who is not under a statutory duty to assist the liquidator;

(3) there is an element of oppression in requiring a party to provide information which exposes him to potential liability;

(4) an order for oral examination is likely to be more oppressive than an order to produce documents;

(5) it is oppressive to require a person suspected of wrongdoing to prove the case against himself on oath prior to proceedings being brought;

(6) an order is not necessarily oppressive because it is inconvenient for the party subject to it or causes him a lot of work or may make him vulnerable to future claims;

(7) in the light of the summary nature of the procedure and the need for expedition, the court cannot be expected to indulge in fine judgments as to the precise width of the order which should be made; and

(8) the court must take care not to cut down the width of the order sought by the liquidator in a way which would risk making it ineffective.” (emphasis added)

57.  In my view, the same principles apply mutatis mutandis to trustees’ request for information in a bankruptcy context and this court shall be guided by them in carrying out the balancing exercise in the present case.

58.  With regard to the 3^rd Requirement, Mr Gray raised a number of points in support of his submission that the Trustees’ request was unreasonable, unnecessary and/or oppressive.

59.  Firstly, Mr Gray submitted that there is an element of oppression in requiring a party to provide information which exposes him to potential liability: Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd. supra at [30(3)].   In this regard, Mr Gray said an Order requiring the Respondent to disclose the information sought by the Trustees would render her (i) in breach of the confidentiality clauses of her employment contract with SHK; and (ii) potentially liable under TCI laws.

60.  As far as her employment contract is concerned, clause 14.1, for instance, provides that, unless authorized by SHK’s directors, the Respondent may not disclose any confidential information concerning the business or finances of SHK, its Subsidiaries and Associated Companies or any of their dealings, transactions or affairs or any such information concerning the affairs of any clients or customers of SHK, its Subsidiaries or Associated Companies.

61.  Mr Wong SC submitted, and I agree, that the point about breach of the confidentiality clauses of the Respondent’s employment contract is untenable and should be rejected.

62.  Clause 26 of the employment contract expressly provides that Hong Kong laws are to govern and, under Hong Kong laws, it is well‑established that confidentiality is not a valid ground for resisting disclosure of documents or information if ordered by the court: Alfred Crompton Amusement Machines Ltd v Commissioners of Customs and Excise (No.2) [1974] AC 405; 433 D v NSPCC [1978] AC 171, 218; 230; 237. This rule is most commonly invoked in relation to discovery of documents in litigation and the testimony of witnesses in court. Specifically in relation to provision of information, it was held by the House of Lords in D v NSPCC supra at 218 the fact that information has been communicated by one person to another in confidence is not of itself a sufficient ground for protecting from disclosure in a court of law the nature of the information or the identity of the informant if either of these matters would assist the court to ascertain facts which are relevant to an issue on which it is adjudicating.

63.  In the event that SHK brings a breach of confidence or breach of employment contract claim against her, the Respondent will have a defence on the ground that she is under compulsion of law to make the disclosure. This defence is of general application and applies to all relationships in which a duty of confidence is imposed. As Diplock LJ (as he then was) emphasized in Parry Jones v Law Society [1969] 1 Ch 1, 9:

“Such a duty [of confidence] exists not only between solicitor and client, but, for example, between banker and customer, doctor and patient and accountant and client. Such a duty of confidence is subject to, and overridden by, the duty of the party to that contract to comply with the law of the land. If it is the duty of such a party to a contract … to disclose in defined circumstances confidential information, then he must do so, and any express contract to the contrary would be illegal and void.” (emphasis added)

64.  As far as potential liability under TCI laws is concerned, Mr Gray prayed in aid the TCI Companies Ordinance (“TCICO”) and Confidentiality Relationships Ordinance (“CRO”) which, he alleged, prohibit the disclosure by the Respondent of confidential information pertaining to SML and DPL, both TCI incorporations.

65.  Mr Wong SC’s principal, though not the only, answer is this. He submitted that the Respondent, being the party who bears the burden of proof, has failed to establish a real likelihood that she will be prosecuted in the TCI if she is compelled to provide the information sought by the Trustees. In this regard, Mr Wong SC referred this court to a passage in Mathews & Malek Disclosure in the context of objections to disclosure:

“8.26 The court may take into account, in deciding whether to order disclosure, the fact that compliance with the order would or might entail a breach of foreign law… It will also need to be shown that the foreign law concerned contains no exception for legal proceedings, and that it is not just a text, or an empty vessel, but is regularly enforced, so that the threat to the party is real. Even so, the court has a discretion and, on the basis that English litigation is to be played according to English and not foreign rules, it will rarely be persuaded not to make a disclosure order on this ground.”

66.  Mr Wong SC further prayed in aid Morris v. Banque Arab et Internationale D’Investissement S.A. [2001] I.L. Pr 37, a decision of Neuberger J (as he then was).

67.  Morris v. Banque Arab was a case in which the claimants, liquidators of BCCI S.A. and BCCI Overseas, commenced proceedings against the defendant French bank under section 213 of the Insolvency Act 1986. Directions given in the proceedings included orders for disclosure and inspection of documents located in France. The defendant resisted inspection on the basis of a French “Blocking Statute”, according to which the production of such documents for use as evidence in foreign legal proceedings was prohibited.

68.  Neuberger J first distinguished between acts prohibited by English law and those prohibited by foreign law. While an English court could not order a person to breach English law, there was authority to suggest that less deference was due to a foreign law: the forum state had a legitimate interest in the conduct of its own judicial proceedings which should not be undermined by the encroachment of foreign law.

69.  At [46], Neuberger J said:

“For reasons given by Lord Nicholls [in the Privy Council decision in Brannigan v Davison [1997] AC 238 at 249-250], risk of prosecution in another country should not be an absolute reason for refusing to answer questions or refusing to produce documents. Thus, Lord Nicholls said this:

‘Different countries have their own interests to pursue. At times national interests conflict. In its simple, absolute, unqualified form the privilege, established in a domestic law setting, cannot be extended to include foreign law without encroaching unacceptably upon the domestic country’s legitimate interest in the conduct of its own judicial proceedings.’ ”

70.  On the facts, Neuberger J concluded that the order for inspection should stand. Among the reasons given, his Lordship stated that there was no evidence that any prosecutions had ever been attempted under the French Blocking Statute and the documents sought were clearly highly material to the case.

71.  In reliance on these authorities, Mr Wong SC submitted that the burden rests on the party objecting based on foreign law, ie the Respondent, to show that the foreign law is regularly enforced so that the threat of prosecution by the relevant authorities is real rather than theoretical. He submitted that the Respondent’s expert has produced no evidence or statistics on whether offences under section 222 of TCICO and section 4 of CRO have ever been prosecuted in the TCI. On the contrary, there is clear evidence from the Trustees that prosecution for breach of the TCICO and CRO in the TCI is unheard of.  The Respondent has provided no real answer to that evidence.

72.  I agree with Mr Wong SC.  Further, it is well‑established under Hong Kong laws that our courts will not lend its aid to the enforcement, either directly or indirectly, of foreign penal laws: Chershire and North’s Private International Law 14^th Ed. pp 121-2; 126‑7; Dicey, Morris and Collins The Conflicts of Laws 15^th Ed. Vol. 1 paras 5R‑019 and 020. Since the Respondent is a Hong Kong resident who ordinarily lives here, any suggestion that she will be arrested in Hong Kong, extradited to TCI and charged with the alleged offences is rather far‑fetched. Such a suggestion, even if made, is certainly not borne out by the expert evidence.

73.  In the circumstances, it is not necessary for this court to decide, and this court shall refrain from deciding, Mr Wong SC’s subsidiary point which is that, on the evidence, the Respondent has also failed to show that the information sought by the Trustees is confidential information protected by the terms of either the TCICO or CRO.

74.  For these reasons, I reject Mr Gray’s TCI law point.

75.  Next, Mr Gray submitted that the Trustees should pursue other avenues of obtaining the information required, for instance, from SML or DPL, and no order should be made against the Respondent. 

76.  This court disagrees.

77.  As a matter of law, the fact that the Trustees can or may be able to obtain the required information from some other persons or entities is not a bar to an application under section 29. No authority has been cited by Mr Gray in support of his submission – on the contrary, the express wording of section 29 is, in my judgment, against it.  Section 29 empowers the court to summon before it any person whom the court may deem capable of giving information respecting the bankrupt, his dealings or property. There is no requirement that the person so summoned is, and no other persons are, capable of giving such information. It follows that, if  there are a number of persons deemed capable of giving such information, the Trustees may go after only one such person but not the others, or they may go after one such person first, and, depending on the outcome of their pursuit, decide whether they need to go after the others.

78.  Section 29 certainly does not impose any requirement on the part of the Trustees to attempt to obtain the required information from some other persons/ entities, let alone exhausting such attempts, before launching an application against the target respondent. Indeed, it is difficult to see how such a requirement can work in practice. If such a requirement does exist, it would mean, when the Trustees make a section 29 application against DPL, DPL can legitimately defend the application by contending the Trustees should go after SML instead, and vice versa. If the Trustees do proceed against both DPL and SML, they would say the Trustees should proceed against some individual directors of DPL and/or SML, and vice versa. This way, the Trustees will end up going round in circles.

79.  Further, both SML and DPL are companies incorporated in TCI. DPL’s sole corporate director is SML, and SML’s directors are unknown to the Trustees. In the afternoon of 7 October 2015, this court specifically asked Mr Gray whether SML had directors in Hong Kong who would be available for oral examination. Mr Gray said he could not reveal that to the court. That is fair enough but it also means the so‑called alternative means of obtaining the required information from SML and DPL are illusory.

80.  Lastly, Mr Gray submitted that, if this court is minded to compel the Respondent to provide the information sought, it should only order her to answer written interrogatories from the Trustees, rather than to attend court for oral examination.

81.  This court disagrees. First, Mr Gray’s submission was premised on the alleged need of the Respondent to comply with TCI laws and seek permission from the TCI Court before providing the information sought. Since this court has rejected Mr Gray’s TCI law point, the underlying premise on which the submission was based also falls away. Further, speaking from experience, oral examination is clearly a more effective way of soliciting information than written interrogatories. It is also a more expeditious way. In practice, answers to written interrogatories will likely be prepared by the target respondent’s lawyers whereas answers given in oral examination will be much more spontaneous. Given this court is satisfied that the Trustees reasonably require the information from the Respondent, this court should, in principle, make an order which facilitates, rather than delay or impede, the obtaining of such information. An order for oral examination would fit the bill. An order for answers to written interrogatories would not.

82.  In these circumstances, this court rejects the submission that only written interrogatories should be ordered.

D. Disposition

83.  For all the above reasons, this court hereby grants an Order in terms of paragraphs 1, 2 and 4 of the re-amended summons. Regarding paragraph 3 of the re-amended summons, this court orders the Trustees to bear the reasonable photocopying charges, if any, to be incurred by the Respondent in compliance with the Order so made.

84.  In the absence of agreement within 14 days on the costs of the application, including all costs previously reserved, the parties are at liberty to restore the application for argument on costs before this court, ½ hour reserved. The parties are further directed to file and serve written submissions on costs 3 clear days before the restored hearing.

HCB 7651/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7651 OF 2011

____________

Re:              NANIK DAYARAM

Ex Parte:     THE HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED

____________

_______________

J U D G M E N T

_______________

1.  This was a bankruptcy petition dated 7 December 2011 presented by the petitioner, The Hongkong & Shanghai Banking Corporation (“the bank”) against Nanik Dayaram (“the debtor”). At the conclusion of the hearing judgment was reserved which I now give.

BACKGROUND FACTS

2.  The petition has been adjourned on a number of occasions.  Its protracted history is not relevant to the central issues in this case and it is not necessary to go into the question of which party was responsible for the adjournments.

3.  The debtor was a director of Days Impex Limited (“Days Impex”) and Days International Limited (“Days International”) (collectively “the companies”).

4.  On 23 November 1988 and 18 June 2004, the debtor provided unlimited guarantees in respect of all monies due and owing to the bank by Days Impex and Days International respectively.

5.  In the course of trading, the companies took out various loans and facilities from the bank and were unable to repay the same.

6.  The debtor failed to comply with a statutory demand served by the bank on his former solicitors Tanner de Witt on 1 November 2011 based on a debt comprising the sums of HK$39,217,885.47 and US$23,557,733.80.  Following non-payment, the bank issued this petition against the debtor.  Service was by way of substituted service on 7 December 2011.

7.  On 12 December 2011, winding up petitions presented by the bank against the companies were heard.  The debtor was represented at the hearing and representations to resist the winding up of the companies were made on his behalf.  However he was unsuccessful and winding up orders were made.

THE ISSUES

8.  The debtor who appeared in person opposed the bankruptcy petition on the ground that he had a bona fide defence on substantial grounds, namely, that the bank had acted in breach of mandate in making various loans; and further, that he had a cross claim.

9.  The liability of the companies to the bank mainly arises from the drawdown of 59 import loans and the financing of 12 export bills.  In summary, according to the bank, as at the date of the winding up orders, Days Impex’s indebtedness amounted to HK$5,219,274.97 and US$19,886,891.27 and Days International’s indebtedness amounted to HK$34,735,047.38 and US$3,966,457.43. 

(1) Whether loans made were in breach of mandate

10.  This depends solely on whetherthe loans and facilities were granted in breach of mandate.  I propose to deal with Days International and Days Impex in turn. 

Days International

11.  The signature card for Days International unequivocally states:

“ANY ONE TO SIGN SINGLY WITH COMPANY CHOP”

This was followed by 5 names and in-specimen signatures of the 5 individual signatories as well as a sample of the company chop.

12.  During the mid-morning adjournment just prior to hearing the debtor’s submissions, the court was handed a copy of the debtor’s skeleton that belatedly recognised and acknowledged that the debtor was not in a position to challenge the amounts owing under the guarantee he had provided in respect of the debts of Days International as having been made in breach of mandate.

13.  As regards Days International, only the cross-claim against the bank is left.  That will be considered at §§39-44 below.

Days Impex

14.  The documentary evidence and material events relating to the signatory mandate is set out below in chronological order.

The facts

15.  On 1 June 1994, Days Impex submitted a “Mandate for Accounts of a Limited Company” (“the 1994 mandate”) to the bank.  Clause 1 provided that

“a current account and savings accounts/savings account/call/time deposit account be opened or continued (as the case may be) with [the bank] … and any other account or accounts as may be subsequently directed by [the debtor,] MR MAHESH DAYARAM – ANY ONE SINGLY OR MS SHEILA DAYARAM, MS PITTY K W KWOK, MR GNANADORAI D SATHIARAJ, MR LAL V VASWANI – ANY TWO JOINTLY”.

16.  Days Impex operated a series of export/import accounts including account 567-776703-095 for export bills and account 567-776703-120 for import loans.  Numerous sets of application forms and drawdown documentation in respect of these two accounts form exhibit “ND-2” to the debtor’s 3^rd affirmation. The signature card of Days Impex for the Imports/Export Department is dated 1 June 1994.  7 sets of suffix numbers: #095, 120, 129, 130, 132, 140, 144 were written in manuscript in the box bearing the description “IMP/EXP Account Number (For Bank Use Only)”.

17.  Days Impex advised the bank by letter dated 21 June 1994 of an amendment board resolution of 1 June 1994 “changing signing instructions for ‘all’ Bank accounts” as opposed to just current accounts.  The board minutes attached, in pertinent part, read:

“BANKING ACCOUNT:

RESOLVED: that all the Company bank accounts will be operated on the individual signature of the following signatories:

            [The debtor]

Mr Mahesh Dayaram

FURTHER RESOLVED: that any two jointly of the following signatories are authorized to sign on all the Company bank accounts viz:

Ms. Sheila Dayaram

Ms. Pitty Kwok Kwai Wah

Mr Lal Vaswani; and

Mr. Gnanadorai D Sathiaraj

FURTHER RESOLVED: that all signatories can sign individual on Export/Import accounts.”

18.  Resolutions in similar terms were passed on 11 November 1994 except that Mr Sathiaraj was removed as a signatory.

19.  A copy of the signature card for the import/export account dated 1 June 1994 is attached as an annex to this judgment.  It will be seen that under “Imports Account” and “Exports Account”, the number “1” has been typed into most of the boxes.  That would reflect the position obtaining after the resolutions passed on 1 June 1994 and notified to the bank under cover of the company’s letter dated 21 June 1994, namely, that a single signatory could operate those accounts.

20.  Mr Tam Kai Ming, a senior loan management manager of the Asia-Pacific Risk Department of the bank has filed various affirmations on behalf of the bank.  In his 2^nd affirmation dated 10 July 2012, Mr Tam exhibited (as exhibit TKM-4) a complete set of signing instructions with board resolutions, company mandate and in-specimen signatures for the company.  His explanation at § 19 (1) is reproduced below:

“(a) … those instructions related to various banking accounts (i.e. current accounts, saving accounts, etc.), as well as the specific trade accounts (i.e. import/export accounts, letter of credit accounts, etc).

(b) The arrangement reflected in the above instructions was that any one of Group A signatory or any two of Group B signatories were required to operate the Days Impex Current Account (i.e. one of the normal banking accounts) (“Days Impex Banking Accounts Mandate”).

(c) However, there is a board resolution dated 1st June 1994, which expressly indicates that “all signatories can sign individual[ly] on Export/Import Accounts”(“Days Impex Trade Accounts Mandate”).

(d) There is a letter dated 21st of June 1994 from Days Impex enclosing an amendment Board Resolution in which it was resolved that the Days Impex Banking Accounts Mandate would apply to all bank accounts, but not to the trade accounts.

(e) On 1st December 1994, there is a letter enclosing a Board Resolution removing Gnanandorai D Sathiaraj as a signatory.

(f) On 30th March 1999, there was a new mandate submitted for the banking accounts, but not the trade accounts.

(g) On 26th April 1999, the Imports/Exports Department of the [bank] received an “Additional Signature Card” which included in-specimen signatures of two new signatories.”

21.  The new mandate mentioned in subparagraph (f) (“the 1999 mandate”) provided as follows.  In clause 1, in the “Types of Account” box were the typewritten words:

“HKD Current A/c, USD Current A/c, TDD Call Deposit A/c, USD Statement Savings, HKD Statement Savings”.

Clause 1 (in standard printed form) provided that those accounts:

“be opened or continued (as the case may be) with [the bank] and any other account or accounts as may be subsequently directed … by any one (A) or any two (B)’s.”

22.  There is a manuscript annotation on the top right hand corner of the 1999 mandate: “567-776703-001, 201, TMD” corresponding to the current account, the USD account and time deposit.

23.  Clauses 2 and 4 then provided:

“2. That [the bank] be instructed to honour and comply with all cheques, promissory notes and other orders drawn, and all bills accepted on behalf of the Company, whether the current account be in credit or overdrawn, to comply with all directions given for or in respect of any account or accounts of any kind whatsoever on behalf of the Company, and to accept and act upon all receipts for monies deposited with or owing by [the bank] on any account or accounts in the name of the Company, provided that such cheques, promissory notes, orders, bills, directions or receipts are signed by … any one (A) or any two (B)’s

…

4.  That any one (A) or any two (B)’s be authorised to arrange with the [bank] for advances to the Company by way of discount, loan, overdraft or otherwise, and for the granting of foreign exchange facilities, credits and the issue of guarantees by the [bank] from time to time as required, and to sign on behalf of the Company any form of deposit or withdrawal …”

24.  The Business Account Signature Card attached to the 1999 mandate required “Any one (A) or any two (B)’s” but that only applied to the operation of the company’s current account and time deposit account.  Trade accounts were not mentioned.

The rival contentions

25.  Before and after the 1999 mandate, the import/export accounts were operated as they had been after the bank was notified of the resolutions of 1 June 1994.  Throughout the period, the debtor was involved in the business and operations of both companies.  Until recently in these proceedings, there has never been any complaint that the bank has made unauthorised loans or that the bank was acting in breach of mandate in making any of the loans.  Even during the winding up proceedings in 2011, the debtor never disputed liability.

26.  The bank’s position is that the 1999 mandate did not affect the arrangements put in place by the resolutions of 1 June 1994 (and re-confirmed on 11 November 1994) because the 1999 mandate did not apply to the Trade Accounts Mandate.  Rather, it only applied to the Banking Accounts Mandate, specifically, to the accounts named in clause 1 of the 1999 mandate. 

27.  It is common ground that Pitty Kwok was a (B) signatory.  Her signature together with the company chop appeared on all the import loans and export financing of Days Impex that are now challenged.  All of this indebtedness was incurred in 2011.

28.  The debtor relied on the 1999 mandate contending that the wording of the mandate (in particular clauses 2 and 4) was sufficiently wide to encompass all accounts.  The debtor also placed reliance on manuscript annotations appearing on the 1 June 1994 signature card. 

29.  The debtor submitted that the bank knew that the 1999 mandate changed the mandate arrangement.  His submission was based on the following matters.

30.  First, it was said that the manuscript annotation “Any one (A) and any two (B)” against the number of signatures required appearing on the lower half of the card and the designation of either (A) or (B) added in manuscript against the names of the signatories could only have been made by the bank after the date of the 1999 mandate which created the A and B classification.  Previously, before the bank was notified of the 1 June 1994 resolutions, there had been a requirement for a single signature or two signature(s) depending on the identity of the signatory, but never an A and B classification.  Second, against Mr Vaswani’s in-specimen signature which appears on the reverse side of the card, there is a manuscript annotation: “(not on the revised signing list)”.  It was said that the manuscript amendments must have been made post the 1999 mandate when Mr Vaswani ceased to be a signatory under the 1999 mandate.  Third, the original signature card had been a single card with the authorised signatures appearing at the back of the card.  After the 1999 mandate, it was numbered in manuscript as “1/2” and an additional signature card numbered “2/2” in manuscript and bearing a date stamp of 26 April 1999 came into existence and contains on its reverse side, the in-specimen signatures of the 2 new (B) signatories.  Implicit in the second and third matters mentioned is the suggestion that all manuscript amendments were made post the 1999 mandate and on the same occasion.

31.  The updating of a signature card for internal use to reflect changes made from time to time is hardly uncommon.  I do not consider the second and third factors to be of any moment.  In my view, the only manuscript entry that perhaps might give rise to a query is the first factor described in the preceding paragraph. 

32.  While I take the point that A and B classification was not used in the 1994 mandate and was first used by Days Impex in the 1999 mandate, in substance, it captures and reflects the single/2 signature requirement used in the 1994 mandate.  It does not follow from the fact that such a classification was not used by Days Impex in 1994 that it could not have been used by the bank internally to reflect the single/2 signature requirement in 1994 before it was notified of the 1 June resolutions on 21 June 1994 because, as already noted, the effect is the same.  There is no evidence to support the inference that the manuscript entry in question could only have been made post the 1999 mandate.  Further, the debtor’s submission is premised on all the manuscript entries on the signature card as having been made on a single occasion and/or by the same person.  There is no evidential basis for making such an inference.  Contrast the manuscript entry “sign singly” next to the “Name of Authorised Signatures” on the reverse side of the signature card.

33.  I accept the evidence of Mr Tam that the company resolutions of 1 June and 11 November 1994 sent to the bank differentiated between the banking accounts mandate and the trade accounts mandate such that, until expressly altered, it would continue to have effect.  In any event, the undoubted existence of the import/export accounts in operation for many years, and the fact that the 1994 mandate was restricted to the accounts specifically named (ie the current account, the US dollar account and the time deposit account) which did not include import/export accounts further weakens the debtor’s submissions.

The bank’s additional responses

34.  The bank has put forward 3 additional responses if there were to be any doubt on the question whether there had been a breach of mandate.  The first and third responses can conveniently be considered together.

 (i) Apparent authority and estoppel

35.  Ms Lam, counsel for the bank, relied on Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.  It is a fact (and I so find) that since June 1994, Pitty Kwok has been operating the import/export accounts as a single signatory without any issue having been raised.  At the very least, Days Impex has held her out as having authority to do so.  In those circumstances, I agree that the Freeman & Lockyer principle applies and Days Impex remains bound in respect of indebtedness incurred on the import/export accounts attributable to Ms Kwok’s transactions with the bank.

36.  This principle is little different from saying that the company is estopped from denying the apparent authority of Pitty Kwok. On either analysis, the company is bound and the debtor remains liable under his guarantee.

 (ii) Ultra vires transactions

37.  It is well established that a director’s guarantee of a contract ultra vires the company is enforceable by the creditor. So, even if the principal obligations were void vis-à-vis Days Impex, the debtor as guarantor remains liable.  See Yorkshire Railway Wagon Company v Maclure (1881) 19 Ch D 478 and Andrews & Millet, Law of Guarantees, 6^th edition, at § 6-021.  I see no reason why this principle should not apply in the present case to render the debtor liable.

 Conclusion on breach of mandate

38.  For the foregoing reasons, I conclude that the defence that the bank had acted in breach of mandate has no merit.

(2) The Cross Claim

39.  At the outset of the hearing the bank applied for the admission of Mr Tam’s 3^rd affirmation dated 25 September 2012 into evidence.  The purpose of the affirmation is to update the court on new developments, namely the realization of security held by the bank in respect of Days International’s debt to the bank and the set off of credit balance from Days International’s account in respect of Days Impex’s debt.

40.  The debtor was prepared not to oppose the application if the court were to grant him an opportunity to respond to Mr Tam’s affirmation.  The debtor submitted that he wished to adduce evidence to show that the bank’s appointment of provisional liquidators in respect of Days International was malicious because it knew that the value of the security it held far exceeded the amount of indebtedness of both companies.

41.  The court refused the debtor’s application and allowed Mr Tam’s affirmation into evidence.  First, the matters deposed to were purely factual, being realizations that have occurred since this matter last came before the court, reducing the debt owed by the companies.  Second, the debtor has had ample time to prepare a draft of any affirmation in response, even allowing for the fact that he applied for legal aid on 28 September 2012 and the certificate refusing legal aid is dated 10 January 2013.  I have difficulty in accepting that the debtor knew nothing about the certificate until 17 April 2013.  Even if there were any truth in the matter, it did not follow that nothing could have been done pending legal aid’s decision.  If he had a valid point to make that would assist his case, those defending him would have had an interest in the matter.  Preparing a draft was necessary whichever way the decision went.  Third, the debtor’s allegation that he had a cross-claim was first made back in June 2012.  That was well before Mr Tam’s 3^rd affirmation and the present application to admit that affirmation into evidence is not a reason to grant the debtor any adjournment. 

42.  As I understand it, the complaint is that the appointment of provisional liquidators had the effect of wiping out HK$200 million worth of assets in Brazil.  There is nothing presently before court except unsubstantiated allegations.  Further, it would appear that any loss suffered would be that of Days International and therefore it is Days International rather than the debtor who should be pursuing the cause of action.  18 months have elapsed since the winding up order and the liquidators have not seen fit to pursue any such cause of action. 

43.  The court was then referred to the House of Lords decision in OBG Ltd and another v Allan and others [2007] UKHL 21 and to a passage in the speech of Lord Hoffmann at [47] which dealt with the essence of the tort of causing loss by unlawful means.  As far as I can comprehend it, the debtor is now contending that the bank’s action in appointing provisional liquidators constituted an unlawful interference with the business of Days International in which the debtor had an economic interest, thereby causing loss to the debtor.

44.  Not only is the “unlawful means” relied on unclear, the evidential basis required to establish the requisite intention to cause loss to the debtor is also unclear.  The allegation that the appointment of provisional liquidators constitutes “unlawful interference” with the business of the company would need to be underpinned by cogent evidence.  In the present case, no evidence (much less cogent evidence) has been put forward. In those circumstances, I do not consider that the alleged cross claim meets the threshold of being genuine or as one of substance.

WHETHER A BANKRUPTCY ORDER SHOULD BE MADE

45.  As Mr Tam’s 3^rd affirmation shows, the net receipts from the realization of security of Days International from August 2011 to September 2012 total $66,584,200.24 which was more than sufficient to repay Days International’s indebtedness and interest accrued since the winding up order.  The surplus was $2,336,077.06.  As Days International had given a corporate guarantee to Days Impex, the surplus has been applied to reduce the debts of Days Impex.  The net balance still owing by Days Impex is HK$3,396,272.79 and US$21,201,337.67. 

46.  In view of the conclusions I have reached on the defence put forward by the debtor, he remains liable under his guarantee for those amounts which he is unable to repay.

47.  Further, even if (contrary to my view) there were any substance in the breach of mandate defence as regards Days Impex, the debtor has admitted that the sum of HK$20,425,419.41 as being due to the bank. Applying the set off of $2.3 million odd to that amount, a net sum of $18,089,342.35 remains due and owing.

48.  While in his 3^rd affirmation dated 4 June 2012, the debtor made an offer to repay the $20 million sum, that amount had to be raised from 20 relations, friends and business associates and payment would only be made 60 days following acceptance of his offer for repayment.  In other words, the debtor was not in any position to make immediate payment.  But implicit in that offer was an admission that the net amount of $18 million odd (after setting off the surplus) remained owing.  Ms Lam submitted (and I agree) that that admission is sufficient to warrant a bankruptcy order in any event.

49.  Accordingly, I have no hesitation in making the bankruptcy order sought against the debtor.  The debtor is adjudged bankrupt. I also make an order nisi of costs in favour of the bank.

Ms Rachel Lam, instructed by Allen & Overy, for the petitioner

Debtor: Nanik Dayaram appeared in person

Attendance of the Official Receiver was excused

Annex