Disclosure by liquidator of transcripts of pr ivate examinations under Companies Ordinance s 221 to police – Whether disclosure required court’s leave – Whether disclosure without leave amounted to contempt – Companies Ordinance (Cap 32)s 221 – Companies (Winding-up) Rules (Cap 32H) r 62

KENNEDY v CHENG [2009] 6 HKC 454

Court of Final Appeal
Final Appeal No 30 of 2008 (Civil)
Bokhary, Chan and Ribeiro PJJ;
Mortimer and Lord Millett NPJJ
5, 6, 20 October 2009

Robin Dicker QC and Roxanne Ismail (Clifford Chance) for the appellant.
John Jarvis QC, Joseph Fok SC and Eugene Yim (Barlow Lyde & Gilbert) for the respondents.
Linda Chan (Official Receiver) for the Official Receiver.

The appellant was the court appointed liquidator of Wing Fai Construction Co Ltd and the respondents were former directors of the company. The appellant disclosed transcripts of the respondents’ private examinations under the Companies Ordinance s 221 to the police, alleging the respondents had inter alia committed perjury and misappropriated money f rom the company. The respondents argued that disclosure required the court’s leave and sought to have appellant committed for contempt of court. At first instance, Kwan J found the liquidator had no case to answer (see [2004] 3 HKC 411). The Court of Appeal allowed an appeal and remitted the matter to the Court of First Instance for rehearing (see [2007] 5 HKC 75). The liquidator further appealed.

Held, allowing the appeal:

A liquidator’s functions included serving the wider public interest by investigating
wrongdoing and reporting the same to the authorities so as to enable them to take appropriate action. A liquidator was entitled to apply for an order for private examinations. He might use any information obtained through such examinations to perform his functions, including that of reporting wrongdoing to the authorities. In so reporting, he might disclose such information. And he might make such disclosure by supplying the transcripts of private examinations to the authorities. In doing that, he would not be violating any confidence. No restriction against the disclosure of information obtained under compulsory powers would arise unless making such disclosure would put the information to a use beyond the purposes for which those powers were conferred. Rule 62 of the Companies (Winding-up) Rules was not for the protection of the examinee, but of the liquidation.

If in any given case an examinee was prosecuted and the prosecution sought to make direct use of his or her transcripts supplied to the authorities, it would be for the criminal court to rule whether that was to be permitted. A court’s overriding duty to ensure a fair trial invested the court with a judicial discretion to exclude even admissible evidence, including a voluntary confession, if doing so was necessary in order to secure a fair trial. In Hong Kong, the right to a fair trial
was guaranteed by Art 87 of the Basic Law of the HKSAR as well as by Art 10 of the Hong Kong Bill of Rights Ordinance entrenched through Art 39 of the Basic Law. Those were the safeguards in the circumstances of cases such as the present one. The safeguards did not lie in r 62.

A liquid at or who reported wrongdoing to the police might supply them with the transcripts of private examinations, and did not need the court’s leave to do so. Mr Kennedy was entitled to do what he did. It could not be contempt on his part.

Obiter
If leave had been required, disclosure without leave would not have been contempt unless the person making such disclosure without leave had acted in the knowledge that the court’s leave was required and had made the disclosure intending to circumvent such requirement and pre-empt a decision by the court
on disclosure. Contempt had to be proved beyond reasonable doubt and there was no evidence capable of supporting a sure conclusion that Mr Kennedy had the requisite knowledge or intent for contempt.