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Re Asher & Company (Hong Kong) Ltd

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date30 June 2003
Year2003
Citation[2004] 2 HKLRD 37
Judgement NumberHCCW150/1998
Subject MatterCompanies Winding-up Proceedings
CourtHigh Court (Hong Kong)
HCCW000150A/1998 RE ASHER & COMPANY (HONG KONG) LTD

HCCW000150A/1998

HCCW 150/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 150 OF 1998

____________

IN THE MATTER of ASHER & COMPANY (HONG KONG) LIMITED

AND

IN THE MATTER of Companies Ordinance, Chapter 32

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Coram: Deputy High Court Judge To in Chambers

Date of Hearing: 6 June 2003

Date of Decision: 30 June 2003

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D E C I S I O N

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Introduction

1. This is an appeal against the decision of Master Woolley made on 6 March 2003 during the course of the Appellant's examination under section 221 of the Companies Ordinance regarding the dealings, affairs or property of Asher & Co. (Hong Kong) Limited ("the Company"). The Appellant was a director of the Company. He refused to answer a certain question put to him by Miss Ismail, counsel for the Official Receiver, on the ground that his answer might incriminate himself. After having been referred to the decision in Re Weihong Petroleum Co. Ltd, [2002] 1 HKLRD 541, in which Madam Justice Kwan held that the privilege against self-incrimination had been impliedly abrogated by section 221 of the Companies Ordinance, Master Woolley ordered the Appellant to answer the question. At the request of the Appellant's counsel, Mr Swaine, and on his undertaking to file the necessary Notice of Appeal, Master Woolley adjourned the examination pending appeal.

2. At the appeal, Mr Swaine submitted that until the decision in Re Weihong, it was generally accepted that the privilege against self-incrimination existed and that it was impossible to read into the words in section 221 of the Companies Ordinance the implied abrogation of such a fundamental right as the common law privilege against self-incrimination. He submitted that Madam Justice Kwan wrongly assumed that the privilege against self-incrimination had been abrogated and transplanted English decisions decided under a different company law and insolvency law regime created by the Companies Act 1985 and Insolvency Act 1986 into Hong Kong. In essence, his submission is that Re Weihong was decided per incuriam and should not be followed. In my view, Re Weihong was a well reasoned decision and I can see no reason to depart from it. However, I shall address the various points raised by Mr Swaine.

Article 11(2)(g) of the Hong Kong Bill of Rights

3. Mr Swaine argued that although Article 11(2) of the Hong Kong Bill of Rights is expressly concerned with determination of a criminal charge, the guarantees under sub-paragraph (g) is meaningless unless it is equally available to a person being asked questions in civil proceedings the answers to which might have the effect of incriminating himself. With respect, I do not agree. The words of Article 11(2) are unambiguous. The guarantees provided under that article are available only to a defendant in the determination of any criminal charge against him. In Re Tse Chu Fai Ronald [1993] 2 HKLR 453, Jones J held that Article 11 of the Bill of Rights has no relevance to the inspector's investigation under section 145 of the Companies Ordinance. Likewise, I hold that the guarantee under Article 11(2)(g) is not available to a person being examined under section 221 of the Companies Ordinance.

Whether the common law privilege against self-incrimination may be invoked

4. The privilege against self-incrimination is such a well known protection to the individual's freedom and liberty that it has become part of our legal heritage. But this privilege may only be invoked by a person exposed to jeopardy of criminal prosecution and is only available where there is a real danger of prosecution and conviction: see Pyneboard Proprietary Limited v. Trade Practices Commission (1983) 45 ALR 609 at 621-622, per Murphy J. The privilege cannot be invoked by showing merely that it was probable that a criminal offence was committed in connection with the affairs of the company and that it was possible, if not probable, that the examinee was a party to the offence. It has to be shown with certainty that the examinee has committed the offence before the privilege can be invoked. In In re Repetition Engineering Service Ltd (1945) 173 LT 75, Cohen J in ordering the examination said at p.76:

"It is true that it also seems probable that a criminal offence was committed in connection with such diversion [of money which ought to have gone into the coffers of the company] and possible, if not probable, that X was a party to the offence. But this is not certain, for X may have been ignorant of the elements which constituted the crime and may be able to answer questions, which will assist the liquidator in his investigation without incriminating himself."

5. In the present case, the Appellant was asked questions relating to a cheque drawn by the Company, in which the Appellant was a director, in favour of the Appellant's solicitors firm purportedly for payment under an annual retainer agreement. So far as could be ascertained from the transcript, the Appellant said he did not recognise the signature on the cheque and when he was shown a bill issued by his firm and asked if the cheque was issued in respect of that bill, the privilege was raised. In my view, whatever would have been his answer to that question or answers to further questions along that line, the Appellant was not at risk of prosecution, let alone conviction. He may be able to answer the question or questions to assist the Official Receiver in his investigation, without incriminating himself. The burden of showing a real danger of prosecution and conviction rests on the party seeking to raise the privilege and the Appellant has utterly failed to discharge that burden. This conclusion alone would be sufficient for me to dismiss the appeal. I shall now turn to the question whether the privilege has been impliedly abrogated by section 221, should the issue arise in the course of further examination.

The proper approach to construction of section 221

6. Like any common law right or privilege, the privilege against self-incrimination may be taken away by the legislature. It is common ground that section 221 does not expressly abolish this privilege. Thus the question raised by this appeal is whether on a true construction of section 221 of the Companies Ordinance, the privilege has been impliedly abrogated. The answer to this question is to be found in the language, the character of the provision and the purpose which the provision was intended to achieve. The privilege is impliedly abrogated if the obligation to provide information or produce documents is expressed in general terms and it appears from the character and purpose of the provision that the obligation was not intended to be subject to any qualification and that unless the privilege is abrogated the purpose of the provision could not be achieved. If the liquidator's investigation into the affairs of the company is in the public interest and the information or documents sought is peculiarly within the knowledge or possession of the person being examined and who cannot reasonably be expected would provide the information or documents otherwise than under a statutory obligation, then it can be inferred that the obligation was not intended to be subject to any qualification. Thus whether the examinee is under a statutory obligation or owes a duty to furnish information sought and whether there is any public interest in the liquidator's investigation are the keys to the true construction of section 221. The above approach deduced from the basic rules of statutory interpretation indeed explains the test in In re Levitt Ltd [1992] Ch 457 adopted by Madam Justice Kwan in Re Weihong. In my view, this approach is applicable in construing any statutory provision whether under the new or old regime. I think Mr Swaine's criticism of the decision in Re Weihong is without merit.

The practice prior to In re Levitt Ltd

7. Before turning to the construction of section 221, I shall first examine the position in Hong Kong prior to the decision in Re Weihong and the position in the United Kingdom before in In re Levitt Ltd. The development of company law and insolvency law in the United Kingdom has taken a different course from that in Hong Kong since 1985. Hong Kong's Companies Ordinance is based on the United Kingdom's Companies Act of 1948. Following the Report of the Review Committee on Insolvency Law and Practice (1982), Cmnd. 8558, ("the Cork Report"), there were substantial changes in company law and...

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