Order for production of documents – principles applicable to s. 29 application – respondent deemed capable of producing document which it had enforceable right to obtain – Bankruptcy Ordinance (Cap.6) s.29
T was the trustee in bankruptcy of B. T believed that B operated a complex scheme using offshore companies and nominees to conceal his assets, one of which was C. R1 were the joint and several liquidators of C. R1 were minority partners of an accounting firm, R2, which had subsequently split up and was represented by its majority partners. T successfully obtained disclosure orders pursuant to s.29 of the Bankruptcy Ordinance (Cap. 6) (“BO”) against R1–2 (R1’s Order & R2’s Order respectively) by consent, requiring them to produce certain documents or to make an affirmation if those were no longer in their possession, custody and power. Rs failed to comply fully with the disclosure orders. T applied, inter alia, to enforce R1’s Order pursuant to O. 45 of the Rules of the High Court (Cap. 4A, Sub. Leg.) (the “RHC”) and to impose R2’s Order on R1 by way of a fresh order (“R2’s Fresh Order”) pursuant to s. 29 of the BO. While R2 had previously had possession of the documents sought, the majority partners claimed that they were in the possession of R1’s, who had conduct of the relevant matters on its behalf; whereas R1 claimed that the documents remained with the majority partners.
Held, allowing the application, that:
Principles applicable to application under s. 29 of the BO
- A trustee in relation to the bankrupt was in the same position as a liquidator in an insolvent company. The principles governing the court’s exercise of the discretion under s. 29 of the BO and the equivalent in s. 221 of the Companies (Winding-up and Miscellaneous Provisions) Ordinance (Cap. 32) were essentially the same. A trustee needed far wider discovery to enable him to discharge his functions than what was permissible in an ordinary inter-party or third party discovery under O. 24.
- The following principles were applicable to a s. 29(1) application:
- the power conferred by the section was general, wide, unlimited and discretionary in nature;
- to invoke the court’s exercise of the discretion, the trustee bore the burden of proving: (i) that the provision of information or documents was reasonably required for him to carry out his functions, in respect of which great weight should be given to his views, and (ii) a prima facie case that the respondent was able to provide the same; and
- as the exercise of the power might be oppressive to a third party or the bankrupt, the court must carefully strike a balance between the trustee’s reasonable requirements and the need to avoid making an order which was wholly unreasonable, unnecessary or oppressive to the person concerned, and the burden was on the trustee to satisfy the court it was a proper case for such an order to be made.