Justice Ribeiro PJ
I agree with the joint judgment of Mr Justice Fok PJ and Mr Justice Stock NPJ.
Justice Tang PJ
I agree with the joint judgment of Mr Justice Fok PJ and Mr Justice Stock NPJ.
Justice Fok PJ & Justice Stock NPJ
The Bankruptcy Ordinance provides that after a person is adjudged bankrupt he is entitled to be discharged from bankruptcy upon the expiration of periods prescribed by the Ordinance. However, by reason of section 30A(10)(a), the relevant period shall, in the case of a person who has left Hong Kong before the commencement of the bankruptcy, not start to run until he returns to Hong Kong and notifies the trustee in bankruptcy of his return. The question in this case is whether that subsection contravenes the constitutional freedom to travel and to enter and leave Hong Kong.
The respondent is a national of South Korea. He came to Hong Kong in 1993 to work and in March 2000 acquired the status of permanent resident. In July 2003, while he was still residing in Hong Kong, proceedings against him were commenced claiming damages for fraud and misrepresentation in connection with securities transactions; and default judgment was entered on 8 November 2004.
In August 2003, he left Hong Kong to live in the USA. In January 2005 a statutory demand was issued; on 3 July 2006 a petition in bankruptcy was presented; in November that year an order was secured for substituted service of the petition; and the bankruptcy order was made on 20 December 2006.
On 3 April 2007, trustees of the respondent’s property were appointed (“the Trustees”). Two creditors lodged proofs of debt in a total sum of HK$255,190,535.95.
In July 2011, leave was granted to the Trustees pursuant to section 29 of the Ordinance to examine the respondent but the respondent failed to attend that examination and on 3 May 2012 there was issued a prohibition order and a warrant for his arrest.
Upon his arrival in Hong Kong on 10 May 2012, the respondent was arrested and brought the following day before the Master. The examination of the respondent was adjourned upon his intimation that he wished to challenge the constitutionality of section 30A(10)(a) since, but for that provision, the automatic discharge from bankruptcy conferred by section 30A(1) and (2) took effect on 21 December 2010, so that, on that basis, he could no longer lawfully be examined under section 29. By summons dated 26 July 2012, he sought declarations to that effect. This appeal has its origin in that summons.
In April 2006, prior to the date of the bankruptcy order, the respondent left the United States and from early December 2006 to 11 April 2008 he lived in South Korea. He visited Hong Kong on a number of occasions in 2006, and on numerous occasions in 2008, 2009, 2010 and 2011. It is common ground that he was not in Hong Kong on the date of the bankruptcy order and that upon his subsequent visits to Hong Kong he did not notify the trustees of his return.
The proceedings leading to this appeal
The respondent’s summons was for declarations as against the Trustees and the Official Receiver to the effect that:
by virtue of section 30A(1) and (2) of the Ordinance, he had been discharged from bankruptcy on and after 21 December 2010;
in so far as it was contended that section 30A(10)(a) of the Ordinance had suspended the operation of the relevant period for which subsections (1) and (2) provided, section 30A(10)(a) was unconstitutional and therefore of no effect; and
if it were adjudged that the respondent had been discharged from bankruptcy on and after 21 December 2010, section 29 of the Ordinance (which empowers the court to issue a summons for his examination) could not lawfully be invoked as against him.
By a judgment dated 2 May 2013, the application for these declarations was dismissed at first instance.
The Court of Appealreversed the judge’s decision as to the constitutionality of the impugned provision and, accordingly, granted a declaration that the provision was unconstitutional and that the bankruptcy had been discharged on 21 December 2010.
On 16 April 2015, the Court of Appeal granted leave to the Official Receiver to appeal on the ground that the appeal involved a question of great general and public importance, namely, whether section 30A(10)(a) of the Ordinance is constitutional. The Trustees have taken no part in this appeal.
The scheme under the Ordinance
Section 30A(10)(a) forms part of a scheme regulating discharge from bankruptcy introduced into the Ordinance by amendments in 1996. Whereas, under the previous statutory scheme, discharge from bankruptcy was “virtually impossible”, the present scheme contained in sections 30, 30A and 30B of the Ordinance now provides for an automatic discharge from bankruptcy after the passage of a particular period of time: four years for a person not previously adjudged bankrupt and five years for a person previously so adjudged (“the relevant period of bankruptcy”). Thus, under section 30 of the Ordinance, the relevant period of bankruptcy of a person commences with the day on which the order is made and continues until he is discharged either automatically (under section 30A) or, in limited circumstances, by early discharge on the application of the bankrupt (under section 30B).
Under section 30A(3), there is power for the court to extend the relevant period of bankruptcy by ordering that the period shall cease to run for a further period of four years for a first-time bankrupt or three years for a previous bankrupt, so that the maximum period of bankruptcy in either case is eight years. There are eight grounds on which an order under this sub-section may be made, namely:
The purpose of the scheme of automatic discharge is to provide bankrupts with greater incentive to co-operate with the trustee in bankruptcy and to ensure the bankrupt’s eventual rehabilitation from bankruptcy. Discharge is now a matter of right (rather than privilege), but the right is dependent on the bankrupt’s co-operation with the trustee in bankruptcy in the administration of the estate by, amongst other things:
submitting a statement of his affairs containing particulars of his creditors, his debts and other liabilities and of his assets pursuant to section 18 of the Ordinance; and
complying with a range of duties regarding the discovery and realisation of his property set out in section 26 of the Ordinance.
Failure to provide such co-operation may be a ground for objection to the automatic discharge of the bankruptcy and so, to that extent, the discharge is conditional upon the bankrupt’s compliance with those duties.
Section 30A(10) seeks to regulate the commencement and continuation of the relevant bankruptcy period and provides:
Notwithstanding subsections (1)-(3), where a bankrupt-
In Official Receiver & Trustee in Bankruptcy of Chan Wing Hing v Chan Wing Hing & Secretary for Justice (2006) 9 HKCFAR 545 (“Chan Wing Hing”), addressed in greater detail below, the Court was concerned with the constitutionality of section 30A(10)(b)(i) of the Ordinance, which operated to stop the relevant period of bankruptcy running during a period when, after the commencement of the bankruptcy, the bankrupt left Hong Kong without having notified the trustee of his itinerary and where he could be contacted. The Court held, by a majority, that this provision was unconstitutional because it did not satisfy the proportionality test.
Section 30A(10)(a) operates to prevent the relevant period of bankruptcy from beginning to run at all where the bankrupt has left Hong Kong before the making of the bankruptcy order and provides that it shall not do so until he has returned to Hong Kong and notified the trustee of his return. Thus, section 30A(10)(a) makes the commencement of the running of the automatic period of discharge dependent on:
physical return to Hong Kong; and
notification of such return to the trustee.
As already indicated, the issue in the present appeal is whether section 30A(10)(a) is constitutional. In Chan Wing Hing, the Court expressly declined to express any views on the constitutionality of either section 30A(10)(a) or (b)(ii).
The Court’s approach to an issue of constitutionality
There is a well-established sequence of questions that must be addressed when an issue of constitutionality is raised before a court. The first question is concerned with the identification of a constitutional right and asks whether such a right is engaged. If not, the constitutional challenge fails in limine. The next question is whether the legislative provision or conduct complained of amounts to an interference with, or restriction of, that right. Again, if the answer is no, the challenge fails without further inquiry. If, on the other hand, the answer to that question is yes, then it is necessary to consider whether those rights are absolute, in which case no infringement or restriction is permitted and no question of proportionality arises, or, if not absolute, whether the relevant infringement or restriction can be justified on the proportionality analysis.
The proportionality analysis in a case like the present involves asking, first, whether the infringement or restriction pursues a legitimate societal aim; secondly, whether the infringement or restriction is rationally connected with that legitimate aim; and thirdly, whether the infringement or restriction is no more than is necessary to accomplish that legitimate aim.
The constitutional right engaged
In the present appeal, both the Official Receiver and the Bankrupt contend that the relevant constitutional rights engaged are those contained in Article 31 of the Basic Law (“BL31”) and Article 8(2) of the Hong Kong Bill of Rights (“BOR8(2)”). A generous interpretation should, of course, be given to a constitutional right, whilst any restriction on the right should be narrowly construed.
BL31 provides as follows:
Hong Kong residents shall have freedom of movement within the Hong Kong Special Administrative Region and freedom of emigration to other countries and regions. They shall have the freedom to travel and to enter and leave the Region. Unless restrained by law, holders of valid travel documents shall be free to leave the Region without special authorization.
Article 8 of the BOR (“BOR8”) incorporates into domestic Hong Kong law the provisions of Article 12 of the International Covenant on Civil and Political Rights (the provisions of which are given constitutional effect by Article 39(1) of the Basic Law) and provides:
BOR8 does not expressly refer to a right or freedom to travel but instead BOR8(2) refers to freedom to leave Hong Kong and BOR8(4) refers to a right to enter Hong Kong. As the Court has previously observed, the second sentence of BL31 guarantees “the freedom to travel and to enter and leave the Region” and “the freedom of travel” on its own in relation to a jurisdiction involves the freedom to depart from and return to that jurisdiction. In this appeal, the parties have been content to proceed on the basis that there is no material difference between the rights conferred by BL31 and those conferred by BOR8(2) and that it is appropriate to refer to the relevant right engaged in the present case as “the right to travel”. This is consistent with the view expressed in Chan Wing Hing.
Is the constitutional right infringed?
Whilst there is no doubt that the right to travel, as identified in Chan Wing Hing, is a constitutional right, it remains necessary to identify the precise scope of the right in question in order to determine if the operation of section 30A(10)(a) infringes that right.
In Chan Wing Hing, the Court was concerned with the operation of section 30A(10)(b)(i), set out in paragraph 18 above, which had the effect of causing the period of automatic discharge from bankruptcy to cease to run unless the bankrupt notified his trustee in bankruptcy of his itinerary and contact details before leaving Hong Kong. This imposed on the bankrupt a sanction for non-notification which meant that, when he exercised his right to travel and leave Hong Kong without giving the relevant notification, he would suffer the adverse consequence of an extension of his period pending automatic discharge from bankruptcy. As the Court held:
It is the need to notify, taken together with the sanction for failure to notify, which should properly be regarded as constituting the restriction on the right. The exercise of the right to travel triggers the need to notify and the sanction in the event of failure to notify.
The nexus between the exercise of the relevant right and the restriction imposed is consistent with the Court’s earlier judgment in Gurung Kesh Bahadur v Director of Immigration and is also reflected in Ribeiro PJ’s dissenting judgment in Chan Wing Hing:
Article 31 of the Basic Law guarantees Hong Kong residents ‘freedom to travel and to enter or leave the Region’ and, since s.30A(10)(b)(i) attaches a condition to the exercise of that freedom in the context of the administration of a bankruptcy, it is only valid if it constitutes a legitimate and proportionate limitation on the freedom.
In the present case, it was common ground between the parties that the “right to travel” contained in BL31 and BOR8(2) includes the freedom to leave Hong Kong and it was also contended by both parties that this must include the freedom to stay away from Hong Kong.
On that view of the scope of the right to travel, it was contended, the operation of section 30A(10)(a) does impose a sanction on a person declared bankrupt in his absence from Hong Kong whilst exercising his right to travel by imposing a sanction or adverse consequence on him, namely the non-commencement of the automatic period of discharge from bankruptcy. His right to stay away, it was contended, was infringed because a sanction or adverse consequence was attached to his exercise of that right.
In light of the common stance of the parties that section 30A(10)(a) infringes the right to travel, and in the absence therefore of full argument on an adversarial basis on this question, we are prepared to proceed to determine this appeal on the assumption that the scope of the right to travel in BL31 and BOR8(2) includes a right to stay away and that the operation of section 30A(10)(a) amounts to an infringement of that right. However, this assumption may well be debatable. A bankrupt who is absent from Hong Kong at the date when a bankruptcy order is made against him is not exercising a right to leave Hong Kong because he has already departed. There is no restriction imposed on him at the time he exercised that right to leave, since he already did so without any consequence being attached to his departure. Nor is there any restriction on his right to enter. Should he exercise his right to enter Hong Kong and present himself at an immigration control point, he would not be subject to any restriction or adverse consequence upon entry. It is only if one treats the right to travel as encompassing a continuous act of staying away from Hong Kong that there can be a nexus between any adverse consequence attached to being absent from Hong Kong and the exercise of the right. This judgment should not be taken to settle that issue.
The proportionality analysis
It is not suggested by the parties that the right to travel is an absolute right and this Court has previously accepted that it is a right which may be subject to restrictions. In Bahadur, it was assumed that this was so, but the Court held in Chan Wing Hing that the right to travel was one guaranteed by both the Basic Law and the BOR so that the proportionality test should apply to determine the constitutionality of any restriction on the right.
The questions to be addressed in applying the proportionality analysis have already been identified in paragraph 23 above. It is common ground between the parties, and consistent with the Court’s decision in Chan Wing Hing, that the restriction on the right to travel constituted by section 30A(10)(a) pursues a legitimate aim, namely to keep the bankrupt on the trustee’s radar in order to facilitate the effective administration of his estate, and that the restriction in question is rationally connected primarily to the protection of the rights of creditors and also to the public interest in the proper administration of bankrupts’ estates.
The sole question
Accordingly, the sole question for determination in the present case is whether section 30A(10)(a) is proportionate as being no more than is necessary to protect primarily the rights of creditors. Similarly, this was the single issue in respect of section 30A(10)(b)(i) in Chan Wing Hing. It will thus be convenient to begin with a summary of the Court’s decision in Chan Wing Hing.
Chan Wing Hing
As previously noted, in Chan Wing Hing, the Court decided by a majority that section 30A(10)(b)(i) of the Ordinance was unconstitutional as it constituted a disproportionate impairment of the right to travel. The Official Receiver did not invite us to revisit the decision in Chan Wing Hing and it was common ground between the parties that the judgment of the majority in that case is a correct statement of the law in respect of section 30A(10)(b)(i). As will be seen, however, it was the Official Receiver’s contention that there are material differences between section 30A(10)(a) and section 30A(10)(b)(i), such that the conclusion on proportionality in respect of the latter arrived at in Chan Wing Hing should not be reached in the present case in respect of the former.
The reasoning of the majority leading to the conclusion that section 30A(10)(b)(i) was not proportionate was, in summary, as follows:
In considering whether the restriction was no more than necessary, it was important to bear in mind that, apart from section 30A(10)(b)(i) itself, there were other weapons available to the trustee and creditors when faced with a bankrupt’s failure to co-operate in the context of the scheme regulating discharge. They could object to the discharge of the bankrupt at the expiry of the relevant period on the grounds specified in section 30A(4), including the very fact of the bankrupt leaving Hong Kong without notifying the trustee of his itinerary and where he could be contacted.
The sanction under section 30A(10)(b)(i) was a harsh one because once triggered it operated indiscriminately at all times and irrespective of the circumstances. Thus:-
The sanction operated irrespective of the reason for the bankrupt’s failure to notify which triggered it, including wholly innocent reasons.
The sanction applied indiscriminately to all situations, irrespective of the stage reached in the relevant period and even when nearly at the end of that period, and irrespective of whether it had occasioned any prejudice to the administration of the estate or whether the bankrupt’s co-operation was not required or the administration of the estate was satisfactorily completed.
There was no discretion vested in the court to disapply the sanction or to mitigate its consequences, however meritorious or deserving the circumstances.
The Court of Appeal’s analysis in the present case
As in this Court, the only issue before the Court of Appeal was the proportionality of the restriction in section 30A(10)(a). Cheung JA held that this Court’s reasoning applicable to section 30A(10)(b)(i) set out in paragraph 38(2) above applied equally to section 30A(10)(a). He said:
Cheung JA rejected the Official Receiver’s submission that, without section 30A(10)(a), there would be difficulties in administering a bankrupt’s estate. He considered that this argument begged the question of whether the sanction satisfied the proportionality test, i.e. whether the restriction on the right to travel was no more than necessary to protect the interests of creditors.
Finally, Cheung JA considered the argument that there was a distinction between section 30A(10)(b)(i) and section 30A(10)(a) but rejected the contention that the provision was less onerous than section 30A(10)(b)(i). To the contrary, he suggested, section 30A(10)(a) was more onerous in that, unlike section 30A(10)(b)(i), its effect could not be avoided by mere notice to the trustee of absence from Hong Kong and location. Accordingly, he concluded that section 30A(10)(a) was also unconstitutional.
The Official Receiver’s submissions in support of the appeal
Ms Linda Chan SC, appearing on behalf of the Official Receiver, submitted that in the context of the Ordinance a significant margin of appreciation should be given to the Legislature and the appropriate test to determine the proportionality of section 30A(10)(a) was to ask whether it was “manifestly without reasonable foundation”.
On this basis, Ms Chan submitted that the restriction in section 30A(10)(a) was not manifestly without reasonable foundation since it served to tackle the problem of bankrupts who are absent from Hong Kong when the bankruptcy order is made. Section 30A(10)(a) was necessary, it was submitted, to ensure the bankrupt’s co-operation in the administration of his estate and to address the difficulties faced by trustees dealing with absconding bankrupts.
It was further submitted that the reasoning leading to the conclusion that section 30A(10)(b)(i) was not proportionate did not apply in the case of section 30A(10)(a), and that the latter was distinguishable from the former in that: the sanction in section 30A(10)(a) was not indiscriminate (like that in section 30A(10)(b)(i)) but was of limited application since it applied only to a bankrupt who left Hong Kong before the bankruptcy order was made or who, having returned, never got in touch with the trustee; it could only be invoked once and for all whereas the sanction under section 30A(10)(b)(i) was triggered every time the bankrupt leaves Hong Kong.
Ms Chan referred to empirical data provided by the Official Receiver to show a large number of absconding bankrupts who left Hong Kong before bankruptcy orders were made against them and who would, if the period of automatic discharge began to run notwithstanding their absence, obtain the benefit of a discharge without having done anything to assist the trustee in the administration of their estates. This demonstrated, it was contended, the necessity for the restriction in section 30A(10)(a).
It was also contended that the harshness of the sanction in section 30A(10)(b)(i) which led the majority in Chan Wing Hing to declare that restriction disproportionate did not arise in respect of section 30A(10)(a). On this footing, Ms Chan submitted that the Court of Appeal was wrong in the present case to apply this Court’s analysis in Chan Wing Hing to section 30A(10)(a).
Additionally, in her oral submissions, Ms Chan argued that the contention that section 30A(10)(a) was disproportionate because it gave the court no discretion to disapply the sanction or to mitigate its consequences was met by the application of section 30B under which a bankrupt could apply for early discharge.
Finally, by reference to the facts of the present case, it was submitted that a significant injustice would result if section 30A(10)(a) were held to be unconstitutional.
(1) The threshold
It is necessary first to lay to rest a contention advanced by the Official Receiver that the threshold test in the context of the legislation now under scrutiny is whether the restriction is manifestly without reasonable foundation.
The argument is that in the case of legislation concerning socio-economic policies, it not for the courts to interfere with the legislature’s choice of restriction imposed to achieve an objective, unless the restriction in question is “manifestly without reasonable foundation.” The suggestion is that this is such a case.
Fok Chun Wah and Kong Yunming, from which the expression “manifestly without reasonable foundation” emerged, each addressed restrictions on the availability of social services and the distribution of public resources. The present case, as with Chan Wing Hing, is not of that category. The test to be applied arises from the fact that the impugned provision impinges upon fundamental rights. Included in the rights protected by BL31 and BOR8(2) are the right freely to move about within Hong Kong, the right to decide where in Hong Kong to live, the right to leave temporarily or permanently and the right of residents to return. These rights are an aspect of the liberty of the individual and it seems to us difficult, and contrary to established principle, validly to contend that restrictions on these rights are permissible unless they are manifestly without foundation. That self-evidently was not the test applied in Chan Wing Hing.
The correct approach to the two categories of rights is explained in Kong Yunming as follows:
This case has proceeded on the footing that section 30A(10)(a) restricts the freedom to travel. Since that is a fundamental right, the restriction can only survive constitutional scrutiny if it meets the minimal impairment test, the burden of showing which is on the party seeking to justify the restriction. That is not to say that the restriction must be the very least intrusive method of securing the objective which might be imagined or devised. What “minimal impairment” means in this context is that:
.... the law must be carefully tailored so that rights are impaired no more than necessary. The tailoring process seldom admits of perfection and the courts must accord some leeway to the legislator. If the law falls within a range of reasonable alternatives, the courts will not find it overbroad merely because they can conceive of an alternative which might better tailor objective to infringement .... On the other hand, if the government fails to explain why a significantly less intrusive and equally effective measure was not chosen, the law may fail.
(2) Is section 30A(10)(a) no more than necessary?
In considering the proportionality of the restriction imposed by section 30A(10)(a), it is important to note the context in which the provision operates, namely as part of a statutory scheme under which a bankrupt is entitled as a matter of right to discharge from bankruptcy after a specified period of time. Section 30A(10) regulates the running of that period of time, with subsection (a) governing the position of absence before the commencement of the bankruptcy and subsection (b) governing absence after its commencement. As such, section 30A(10) is clearly intended to operate as a coherent scheme regarding the running of time for the purposes of the period of automatic discharge from bankruptcy.
In the context of this coherent scheme, section 30A(10)(a) operates automatically and without exception in respect of any bankrupt who is already outside Hong Kong on the date when the bankruptcy order is made. Even where the bankrupt is willing to co-operate with the trustee, he may be prevented for reasons wholly outside his control from returning to Hong Kong so that the period of automatic discharge from bankruptcy can begin to run. Examples of such reasons precluding travel back to Hong Kong, which may be characterised as wholly innocent so far as the administration of the bankruptcy is concerned, might include illness, impecuniosity or incarceration. Moreover, the sanction imposed by section 30A(10)(a) applies regardless of whether the bankrupt is ready and willing to afford all co-operation to the trustee in the administration of his estate. Even if he were to communicate and co-operate directly with the trustee, fully and frankly providing all relevant documents and information that the trustee could reasonably require for the benefit of his creditors, the period of automatic discharge would still not run at all and, unless he returned to Hong Kong, he could never obtain a discharge from bankruptcy. Finally, section 30A(10)(a) does not vest in the court any discretion to disapply the sanction that arises by reason of a bankrupt’s absence from Hong Kong.
In light of the principle that the burden of justifying the reach of a restriction on a protected right rests upon the party who seeks to support it, the argument of the Official Receiver and the evidence presented in support of it fails to show why a materially less rigid regime would not equally protect the rights of creditors and the public interest in the administration of the estates of bankrupts; why, for example, the same objective would not reasonably be met if there were provision to cater for innocent cases and cases of co-operation notwithstanding the absence from Hong Kong and which afforded the courts a discretion to mitigate the sanction.
The reasons set out in paragraph 55 which demonstrate the harshness of the operation of section 30A(10)(a) are, it will be observed, the same in substance as those which apply mutatis mutandis to section 30A(10)(b)(i). However, the position in respect of section 30A(10)(a) is even harsher. In order for the sanction not to apply, the bankrupt must physically return to Hong Kong and notify the trustee of his return. This is plainly a more onerous obligation than the mere notification requirement of section 30A(10)(b)(i), which required a bankrupt to notify the trustee of his itinerary and where he could be contacted before he left Hong Kong or else the period of automatic discharge would be suspended during his absence.
Since this Court has concluded, in Chan Wing Hing, that section 30A(10)(b)(i) is not proportionate and therefore unconstitutional, and it is not suggested that we should depart from that decision, it is material to consider whether the reasoning leading to the Court’s conclusion in Chan Wing Hing regarding section 30A(10)(b)(i) applies to section 30A(10)(a) or whether there is any material distinction between the operation of the two subsections so that the reasoning and conclusion in Chan Wing Hing should not apply to section 30A(10)(a).
Despite Ms Chan’s able submissions, we are unable to accept her argument that the two subsections are relevantly distinguishable. It is true that section 30A(10)(a) only applies once and for all prior to the commencement of the period of automatic discharge from bankruptcy, whereas section 30A(10)(b)(i) may operate at any time during that period. However, the consequences of the sanction imposed by section 30A(10)(a) are, as already observed, all the harsher since it requires the bankrupt to return to Hong Kong and notify the trustee whereas section 30A(10)(b)(i) is a mere notification requirement. There is simply no difference as regards the potentially indiscriminate operation of the two subsections: section 30A(10)(b)(i) might have applied to a bankrupt who left Hong Kong immediately after the making of the bankruptcy order and who then chose never to have any contact with the trustee, just as section 30A(10)(a) might apply to a bankrupt who chose to stay away to defeat the trustee’s efforts to administer his estate for the benefit of his creditors.
Indeed, the consequence of accepting the Official Receiver’s submissions in this appeal would be surprising and anomalous. A bankrupt who waited until a bankruptcy order was made but who then left the next day, without attending upon the trustee to receive the form necessary for the preparation of his statement of affairs, would be able to stay away from Hong Kong for a period of eight years and, since section 30A(10)(b)(i) has been declared unconstitutional, take advantage of the automatic discharge from bankruptcy. In contrast, on the footing that section 30A(10)(a) were constitutional, a bankrupt who was outside Hong Kong on the date of the bankruptcy order would not, until his return, be able to take advantage of the scheme of automatic discharge from bankruptcy and, if he did not return, would remain bankrupt indefinitely. Yet, as already noted, he might be unable to return for reasons beyond his control and notwithstanding his readiness and willingness to co-operate fully with the trustee.
As to the empirical data relied upon by Ms Chan, this showed that of the undischarged bankrupts who were absent from Hong Kong when the bankruptcy orders against them were made, almost 90% of them had either never returned to Hong Kong at all or returned but never notified the trustee of their return. It is reasonably clear that section 30A(10) was intended to catch absconding bankrupts. But whilst the injustice of absconding bankrupts taking advantage of the period of automatic discharge from bankruptcy might be a reason justifying legislative intervention to prevent abuse, it cannot justify a provision which catches all bankrupts outside Hong Kong regardless of the circumstances that lead to their being absent from Hong Kong and unable to return.
We reject Ms Chan’s argument that, by reason of section 30B, it was incorrect for the Court of Appeal to say that there was no discretion on the part of the court to disapply section 30A(10)(a). Section 30B(1) provides:
Notwithstanding that the relevant period under section 30A has not yet expired, a bankrupt who –
apply to the court for an order discharging him from bankruptcy.
Section 30B(2) then sets out certain grounds under which the court may not make an order under the section. Ms Chan submitted that the grounds in sub-paragraphs (c) to (i) were all instances of a bankrupt failing to co-operate with his trustee and reflected the circumstances under which, pursuant to section 30A(4), the trustee might object to the automatic discharge from bankruptcy.
However, section 30A(1) provides that:
Subject to this section, a bankrupt is discharged from bankruptcy by the expiration of the relevant period under this section.
Two points should be noted.
First, section 30A(1) is subject to the other provisions in section 30A, including section 30A(10).
Secondly, automatic discharge depends on the expiration of a relevant period and therefore a period which must begin to run and come to an end by reason of expiration.
Section 30B(1) only applies to “the relevant period under section 30A” and therefore only applies to a relevant period that has commenced to run.
Moreover, under section 30B(2) there are circumstances under which the court is obliged not to make an order for the early discharge of a bankrupt. Ms Chan suggested these reflected the grounds of objection in section 30A(4) and therefore involved an element of fault on the part of the bankrupt. Whilst that is correct in respect of sub-paragraphs (c) to (i), it is not the case in respect of (b), so that a bankrupt who was unable to return to Hong Kong for wholly innocent reasons but to whom those circumstances applied would not be able to apply for early discharge.
Finally, it may be an inescapable conclusion that, if the Court were to conclude that section 30A(10)(a) is unconstitutional, this would result in an unmeritorious outcome on the facts of the present case. Ms Chan would seem to be correct in saying that the appellant has chosen to stay outside Hong Kong during the entire 4 year period following the making of the bankruptcy order against him and has neither performed any of the obligations imposed on him by the Ordinance nor rendered any assistance or co-operation to the Trustees. This has frustrated the Trustees’ attempts to make progress in the administration of his estate. The previous objection to discharge filed by the Trustees under section 30A(4) is now moot, since more than 8 years has elapsed since the making of the bankruptcy order. In short, the appellant has been able to walk away from his debts of over HK$255 million by the expedience of staying outside Hong Kong for a sufficiently long period of time. However, the constitutionality of section 30A(10)(a) is not to be measured on the basis of a just end justifying disproportionate means.
For all these reasons, we would conclude that, in the light of the Court’s earlier decision in Chan Wing Hing in respect of section 30A(10)(b)(i) and the absence of any material distinction in the operation of section 30A(10)(a), section 30A(10)(a) cannot be regarded as no more than necessary to protect the rights of creditors and does not satisfy the proportionality test. Accordingly, it is unconstitutional and a declaration to that effect must follow.
Bankruptcy (Amendment) Bill 2015
We have quite properly been informed by the appellant that there is presently before the legislature the Bankruptcy (Amendment) Bill 2015. The Bill has passed the Bill’s Committee stage but has not yet been reported to the House Committee. The proposed commencement date is 1 November 2016.
The Bill, as currently framed, envisages repeal of section 30A(10) and its replacement by a regime pursuant to which the trustee may apply to the court for a non-commencement order where the bankrupt fails to attend the initial interview or to provide the trustee with information requested.
The fact of this development, a consequence no doubt of the decision in Chan Wing Hing, bears no impact upon our reasoning and counsel has not suggested that it should. It can have no effect on any bankruptcy order made before the commencement date.
For these reasons, we would dismiss this appeal.
We would make an order nisi that the appellant pay the respondent’s costs of the appeal, with a certificate for two counsel, and direct that the respondent’s own costs be taxed in accordance with the Legal Aid Regulations.
Lord Millett NPJ
I agree with the joint judgment of Mr Justice Fok PJ and Mr Justice Stock NPJ.
Justice Ribeiro PJ
The Court unanimously dismisses the appeal and makes the order nisi as to costs set out in paragraph 71 above.
 (Cap.6) (“the Ordinance”).
 The effect of which is set out in paragraph 14 below.
 Chung J, HCB 5227/2006, unreported.
 Cheung, Yuen, Barma JJA, CACV 110/2013, 11 December 2014, unreported.
 The section 29 issue was not pursued on appeal.
 For a summary of the reasoning of the Court of Appeal, see paragraphs 39 to 41 below.
 Those amendments introduced certain recommendations made by the Law Reform Commission of Hong Kong in its Report on Bankruptcy published in May 1995 (“Report on Bankruptcy”).
 Report on Bankruptcy at [17.1].
 Section 30A(1) and (2) of the Ordinance.
 Official Receiver & Trustee in Bankruptcy of Chan Wing Hing v Chan Wing Hing & Secretary for Justice (2006) 9 HKCFAR 545 (“Chan Wing Hing”) at -.
 Chan Wing Hing at , setting out section 30A(4) of the Ordinance.
 Chan Wing Hing at -.
 Report on Bankruptcy at [17.24].
 Rule 150 of the Bankruptcy Rules (Cap.6A) also imposes relevant duties on the bankrupt in respect of his statement of affairs. It provides: “(1) As soon as a bankruptcy order is made, the trustee shall provide the bankrupt with a form for the preparation of his statement of affairs. (2) The trustee may hold interviews with the bankrupt for the purpose of investigating the bankrupt’s affairs. (3) It shall be the duty of the bankrupt to attend at such times and places as the trustee may appoint.”
 Chan Wing Hing at -.
 Section 30A(4), set out in paragraph 15 above.
 Chan Wing Hing at -.
 Li CJ, Bokhary PJ, Chan PJ and Sir Anthony Mason NPJ (Ribeiro PJ dissenting).
 Chan Wing Hing at  and .
 Catholic Diocese of Hong Kong v Secretary for Justice (2011) 14 HKCFAR 754 at ; Kong Yunming v Director of Social Welfare (2013) 16 HKCFAR 950 at .
 Mok Charles v Tam Wai Ho (2010) 13 HKCFAR 762 at ; Kong Yunming v Director of Social Welfare (supra) at -.
 Ng Ka Ling & Others v Director of Immigration (1999) 2 HKCFAR 4 at pp.28I-29A; Chan Wing Hing at .
 In Gurung Kesh Bahadur v Director of Immigration (2002) 5 HKCFAR 480 at .
 Chan Wing Hing, per the majority, at ; and see also per Ribeiro PJ at .
 Ibid. at .
 (“Bahadur”) (2002) 5 HKCFAR 480 per Li CJ, with whom the other members of the Court agreed, at .
 Chan Wing Hing at .
 Bahadur at  and .
 Chan Wing Hing at -, .
 Ibid. at -, .
 Ibid. at , .
 Ibid. at .
 Ibid. at .
 Ibid. at .
 Ibid. at .
 Ibid. at .
 Yuen JA and Barma JA agreeing.
 CA Judgment at [21.2].
 CA Judgment at [22.2].
 CA Judgment at [23.2].
 CA Judgment at [23.16].
 Appearing with Mr Wilson Leung.
 This phrase being taken from the Court’s judgments in Fok Chun Wa v Hospital Authority (“Fok Chun Wa”) (2012) 15 HKCFAR 409 at  and Kong Yunming v Director of Social Welfare (“Kong Yunming”) (2013) 16 HKCFAR 950 at .
 RJR-Macdonald Inc v Canada  3 SCR 199 at .
 See Chan Wing Hing at -.
 Under Rule 150 of the Bankruptcy Rules (see FN 14 supra).
 Report on Bankruptcy at [17.49].
 Section 30B(2)(b) provides that: “The court shall not make an order under this section if the bankrupt – .... (b) has unsecured liabilities that exceed 150% of the income that the trustee determines was derived by the bankrupt during the year immediately before the date of the bankruptcy order”.
Linda Chan SC and Wilson Leung, instructed by the Department of
Justice, for the Appellant.
Ronny Tong SC and Margaret Ng, instructed by Zhong Lun Law
Firm,assigned by the Director of Legal Aid, for the 1st Respondent.
Attendance of the 2nd Respondent was excused.
Linda Chan SC and Wilson Leung, instructed by the Department of Justice, for the Appellant.
Ronny Tong SC and Margaret Ng, instructed by Zhong Lun Law Firm,assigned by the Director of Legal Aid, for the 1st Respondent.
Attendance of the 2nd Respondent was excused.
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