Re Cheung Chung
Read the full judgment text of HCB 5509/2018 on BabelCite. This HCB judgment was delivered on 7 November 2019.
1. On 26 September 2018, Deng Wenyun (the “Petitioner”) presented a bankruptcy petition against Mr Cheung Chung (the “Debtor”) on the ground that the Debtor is indebted to the Petitioner in the aggregate sum of HK$37 million which became due and owing on 17 April 2018 (the “Petition”).
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HCB 5509/2018 [2019] HKCFI 2770 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDINGS NO 5509 OF 2018 ______________
______________ Before: Deputy High Court Judge William Wong SC in Court Date of Hearing: 7 November 2019 Date of Judgment: 7 November 2019 ________________________ JUDGMENT ________________________ 1.On 26 September 2018, Deng Wenyun (the “Petitioner”) presented a bankruptcy petition against Mr Cheung Chung (the “Debtor”) on the ground that the Debtor is indebted to the Petitioner in the aggregate sum of HK$37 million which became due and owing on 17 April 2018 (the “Petition”). 2.The Petition is based on the Debtor’s non-compliance with a statutory demand dated 1 June 2018 (the “Statutory Demand”). The Statutory Demand was founded on the debt due and owing by the Debtor under a Debt Repayment Agreement signed on or around 27 March 2018 (the “Debt Repayment Agreement”). 3.There is no dispute that the Statutory Demand was validly served on the Debtor by way of personal service on 25 June 2018. 4.There was no application to set aside the Statutory Demand. 5.Under the Debt Repayment Agreement, the Debtor is obliged to make repayment of the debt of HK$37 million to the Petitioner. 6.The Debtor has made partial repayment to the Petitioner by the transfer of certain shares in the amount equivalent to HK$5.76 million,leaving HK$31.24 million still outstanding (the “Outstanding Debt”). Applicable legal principles 7.Recently, I have set out the applicable legal principles in Re Han Catherine, ex p Zhongtai Financing (Hong Kong) Ltd [2019] HKCFI 2274 (HCB 1612/2019, unreported, 16 September 2019), at §§3 and 5 where I said:
8.In Re Leung Lai Hing Cindy HCB 6777/2015, unreported,3 April 2017, Mr Justice Ng at §6 said:
9.It is also well established that where only part of the petitioning debt is disputed on substantial grounds, the statutory demand still stands and a bankruptcy petition can properly be presented on the basis of the statutory demand, unless the undisputed or indisputable portion of the debt has been paid. (See Re Wong Mui Kuen Joanna HCB 1631/2014,unreported, 12 January 2015 per Ng J.) Analysis 10.The Debtor’s primary defence is that he had not signed on the Debt Repayment Agreement, despite his name “張聰” were signed on both pages on the said agreement. Mr Kok for the Petitioner submitted that the Debtor’s bare denial is insufficient for the purposes of demonstrating any defence of substance. 11.He referred this court to a line of authorities which demonstrates that it is not sufficient for the debtortoraise a bare denial as to his or her signature on a document. (See Re Yuen Mun Wa (debtor) [2012] 5 HKLRD 108 at §§15, 20 per Recorder Anthony Chan SC and Smart Marine Co, Ltd v Wong Chung Fai HCSD 42/2013, unreported, 27 February 2015), §§12 – 22 per Au-Yeung J.) However, each case depends on its own facts. As far as signature is concerned, sometimes, a debtor can do more than stating that the relevant signature was not his or hers. 12.What is important, however, is for the Court to examine the veracity of the assertion against the totality of the evidence before it. In the present case, the assertion of the Debtor that he did not sign on the Debt Repayment Agreement has to be viewed against the contemporaneous documents and evidence. 13.First, this Court was referred to certain contemporaneous WeChat conversations between the Petitioner and the Debtor at or around the time of the Debt Repayment Agreement (ie late March to April 2018),which demonstrate the Debtor’s acceptance of his indebtedness to the Petitioner. In particular, the WeChat conversations contained the following exchanges: (1) WeChat correspondence on 20 March 2018:
(2) WeChat correspondence on 28 March 2018:
14.Mr Kok for the Petitioner submitted that from the above WeChat conversations, the Debtor had clearly assured the Petitioner that he would “盡快還錢” to the Petitioner on 20 March 2018, to which the Petitioner made clear that the outstanding indebtedness was HK$37 million (ie the amount stated in the Debt Repayment Agreement). 15.Further, the Petitioner’s reference to “首付的一百萬” on 28 March 2018 clearly refers to the Debtor’s obligation to make partial payment of HK$1 million to the Petitioner pursuant to Clause 2(2) of the Debt Repayment Agreement. 16.It is of importance that the Debtor has not disputed the accuracyor veracity of the aforesaid WeChat conversations between the Petitioner and Debtor. In view of the undisputed contemporaneous documentary evidence, I find that the Debtor’s bare assertion that he had not signed the Debt Repayment Agreement is not capable of being believed. 17.Secondly, the Petitioner has given a clear account of the circumstances upon which the Debt Repayment Agreement was discussed and signed, namely at the Petitioner’s former office at Central Plaza (the “Office”) on or around 27 March 2018. The said meeting was attended byMr Chan King Chung (“Mr Chan”) and one Mr Yip Chi Kin (“Mr Yip”). 18.Mr Chan has filed an affirmation confirming that he was at theOffice with the Petitioner and Mr Yip, when the Debtor attended the Office for the purposes of signing the Debt Repayment Agreement. Mr Chan also confirmed that he had witnessed the negotiation of terms between the Petitioner and the Debtor, before leaving the meeting around half an hour later (prior to the signing of the Debt Repayment Agreement). 19.In relation to Mr Yip, the Petitioner has adduced contemporaneous WeChat conversations between the Petitioner and Mr Yip, which showed inter alia that (i)the Petitioner had sent a draft Debt Repayment Agreement to Mr Yip to forward to the Debtor for his signing on 15 March 2018, (ii)Mr Yip told the Petitioner on 16 March 2018 that theDebtor was still liaising with his lawyers in relation to the draft agreement (“昨天的協議書小張還沒簽，他說正在和律師溝通，溝通後再簽”), and had suggested to come to the Petitioner’s office for signing in the following week, and (iii)Mr Yip told the Petitioner on 23 March 2018 that the Debtor had suggested to meet the Petitioner on the following Tuesday (ie 27 March 2019). 20.The fact that Mr Yip was present and witnessed the signing of the Debt Repayment Agreement is also evidenced by a subsequent recorded conversation between the Petitioner, Mr Yip, and Mr Chan on around 18 June 2018, a transcript of which was provided by the Petitioner. The discussion as recorded in the said transcript shows that the Debtor had attended the Office in the evening of 27 March 2018, and signed the Debt Repayment Agreement sometime after 6 pm. 21.Mr Chan also gave evidence that the Petitioner had instructed him to engage a debt collecting agent after the signing of the Debt Repayment Agreement, for the purpose of recovering the Outstanding Sum from the Debtor. The debt collecting agent informed Mr Chan that the Debtor had never denied signing the Debt Repayment Agreement,but instead made a settlement offer to the Petitioner in respect of the outstanding debt (which was rejected by the Petitioner). 22.In view of the above evidence, I agree with Mr Kok for the Petitioner that the Debtor’s bare denial that he had signed the Debt Repayment Agreement is incredible and cannot operate as a bona fide defence to the petitioning debt. 23.Further, it has not escaped this Court’s attention that the Debtor’s outstanding liabilities, inter alia, arose from his failure to pay theamounts owed pursuant to his Undertaking (承諾書) dated 29 January 2018, which was referred to in the Preamble to the Debt Repayment Agreement. However, in the affirmations filed by the Debtor, he has never raised any disputes in relation to the said Undertaking, and/or his indebtedness arising therefrom. 24.Importantly, the Debtor has also never challengedthe Petitioner’s case that the Debtor had made partial repayment to the Petitioner by the transfer of 8 million shares in the listed company (stock code: 8156), at an amount equivalent to HK$5.76 million. This transfer was evidently made in partial performance of the Debt Repayment Agreement,which provided that the Debtor would transfer 20 million of shares in the aforesaid listed company to the Petitioner by 30 June 2018, by way of partial settlement of the debt due and owing by the Debtor. 25.Additionally, Mr Kok for the Petitioner also reminded this Court that when the present Petition came before Master Au-Yeung on 21 November 2018, at which the Debtor appeared without serving a noticeof intention to appear and without filing a notice to show cause, he did not deny that he had signed the Debt Repayment Agreement, even though it was the basis of the Petition and the Statutory Demand. In fact, the Debtor failed to give any reasons to dispute the Outstanding Debt, but he merely stated that he had consulted a few lawyers but could not agree on fees. It was not until 13 January 2019 that the Debtor first alleged that he did not sign the Debt Repayment Agreement. 26.For all the reasons stated above, I am of the view that there is no substance in the Debtor’s defence that he had not signed the Debt Repayment Agreement. He has not discharged his burden that there is any bona fide dispute as to the Outstanding Debt. 27.Mr Lee for the Debtor first submitted that the amount of the debt as stated in the Undertaking was only HK$31 million and therefore an increase of HK$6 million as set out in the Debt Repayment Agreement is a breach of section 24 of the Money Lenders Ordinance, Cap 163. Hence, the Debt Repayment Agreement is unenforceable as a matter of law. I am of the view that there is no substance in such submission. The Undertaking clearly states that the underlying debt consists of two sums of HK$8 million and HK$31 million and not just a sum of HK$31 million. Mr Lee for the Debtor very fairly accepted that the correct amount of debt as stated in the Undertaking should be HK$39 million. So there is nothing in the point. 28.Secondly, Mr Lee raised the point that in both of his affirmations dated 2 October 2018 and 8 March 2019, the Petitioner has not stated his residential address but use his solicitors’ address. As there is no challenge to the identity of the Petitioner, I am of the view that there is nothing in this point as well. In Top Flying Investment Ltd v Open Mission Assets Ltd [2006] 4 HKLRD 83, at §§28 – 29, Recorder McCoy SC said:
29.Mr Lee for the Debtor also sensibly did not press on with this point. 30.Thirdly, Mr Lee for the Debtor complained that the Petitioner has refused to allow the Debtor to inspect the original of the DebtRepayment Agreement. Mr Kok for the Petitioner referred this Court to thecorrespondence and pointed out that what the Petitioner did was to request the Debtor to identify a ground for the requested inspection. The Debtor then never identified any specific ground. I am of the view that again there is nothing in this point. The Debtor is at liberty to take out an application to inspect the original of the Repayment Agreement. He chose not to do so and that is the end of this complaint. 31.Fourthly, the Debtor has adduced an additional affirmation which exhibited a set of bought and sold notes to make the point that his signatures there are different from the signatures in the Debt Repayment Agreement. I also observe that the Debtor’s signature in the Undertaking is also different from his signatures in the Debt Repayment Agreement. However, this is not relevant. In Re Chow Wing Kun, ex p Kinform Ltd HCB 7058/2012, unreported, 18 July 2013, Recorder Jat SC at §37 said:
32.In Smart Marine Co, Ltd v Wong Chung Fai HCSD 42/2013,unreported, 27 February 2015, Madam Justice Au-Yeung at §14 said:
33.I am of the view that the issue of signature cannot be examinedin vacuum but has to be viewed against the totality of the contemporaneousdocumentary and other evidence in the present case which I have analysed above. 34.Fifthly, the Debtor also referred to the fact that he made a complaint to the Wanchai Police Statement on 11 February 2019. I am of the view that that is irrelevant. This Court would not give weight to the Debtor’s unproven and unsubstantiated complaints to the police in relation to the alleged forgeries (see Nan Fung Finance Ltd v Chan Sun HCB 8045/2005, unreported, 21 November 2006, at §13 per Barma J (as he then was). This Court is also informed that the Police has not even approached the Petitioner in the course of any investigations. 35.Finally, insofar as the Debtor’s argument that the Statutory Demand should have stated that the Debtor owed HK$31,240,000 only,as opposed to HK$37,000,000, I am of the view that there is no substance in it. The indisputable portion of the debt of HK$31,240,000 is suffice for a bankruptcy order to be made: Re Wong Mui Kuen Joanna (supra) at §8. Disposition 36.For all of the reasons stated above, I make the usual bankruptcyorder against the Debtor. 37.I also make a costs order that the Debtor is to pay the costs of the Petition to the Petitioner on the party to party basis, to be taxed if not agreed. 38.Finally, I thank Mr Kok for the Petitioner and Mr Lee for the Debtor for their helpful assistance to this Court.
Mr Martin Kok, instructed by DLA Piper Hong Kong, for the petitioner Mr Lee Po Wing Simon of Paul Kwong & Co, for the debtor Attendance of the Official Receiver was excused |
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