Re Wu Lianmo

HCB 5250/2019

[2020] HKCFI 152

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5250 OF 2019

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Before:  Hon Au-Yeung J in Court

Date of Hearing:  25 November 2019

Date of Judgment:  25 November 2019

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J U D G M E N T

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1.This is an adjourned hearing of the petitioner’s bankruptcy petition amended on 12 November 2019 against the debtor, Mr Wu.

2.The debtor filed a notice of intention to oppose the petition on 18 October 2019 disputing the subject debt.  The sole ground relied on by him was that he made a settlement proposal to the petitioner. This was not a proposal agreed upon by the parties as of today.

3.The relevant facts of this case have been set out in the judgment of this court in HCSD 24/2018 on 30 May 2019 (“the Decision”). The background was such that the debtor owed the petitioner an aggregate sum of RMB5,741,000, the debt under a repayment agreement dated 21 December 2016.

4.Pursuant to the repayment agreement, the debtor agreed to repay the debt due under a Chinese agreement between the petitioner and 海瑞德(深圳)基金管理有限公司, dated 13 April 2015 in the total amount of RMB8,441,000 by 31 December 2017.  To date, RMB2.7 million had been paid.

5.The present petition is based on a statutory demand served on Mr Wu on 21 June 2019.  Mr Wu made an application to set aside the statutory demand which was dismissed by this court by the Decision.  There has been no appeal against that decision.  Since that decision, the petitioner has filed the petition.

6.In the present case, the debtor, Mr Wu, has not challenged the validity of the repayment agreement and his obligation to repay, nor the quantum in dispute.  The sole ground relied on was his possible ability to repay in January 2020.  In my view, this ground is not sustainable in law.  The court will not just consider a suggestion to repay. 

7.The law is clear.  The court may dismiss a petition if the debtor has made a reasonable settlement offer which, if accepted, would have led to a dismissal of the petition but which the petitioner has unreasonably refused to accept.

8.The reasonableness or otherwise of the refusal is to be judged at the date of the hearing.  The test is whether a reasonable creditor in the position of this petitioning creditor and in the light of the actual history as disclosed to the court would have accepted or refused the offer.  In order to conclude that the refusal was reasonable, the court has to be satisfied that no reasonable hypothetical creditor would have refused the offer and that the refusal of the offer was, therefore, beyond the range of possible reasonable actions in the context.

9.The petitioner is entitled to have regard to his own interests and may have regard to the fact that in a bankruptcy there will be an investigation of the debtor’s affairs.  He is not required to balance his interests against those of the debtor or to take a chance or to show patience or generosity.  Acting reasonably is not the same as acting justly, fairly or kindly.  The test is whether the debtor can pay it out of cash or readily realisable assets in his hands.  No regard may be given to future contingencies because those events may or may not happen.  See Re Li Shu Chung [2019] HKCFI 2500, Au-Yeung J, §§112 to 115.

10.The suggestion to repay indicated that there was a future contingency.  Mr Wu did not show himself to have cash or readily realisable assets in his hands to meet his own suggestion.  In his letter dated 21 October 2019, Mr Wu reiterated that it would be far too onerous and financially unviable for him to consider either partial or full payment before January 2020.  To date, he has not indicated the source of funds which he has to meet his suggested date of repayment in January 2020.

11.On top of all this, this court has in the Decision referred to the following facts:

(a)  The debtor, Mr Wu, was blacklisted on the 全國法院失信被執行人名單, published on the official website of the PRC judiciary since as early as May 2017 until at least the date of the Decision and was described as a dishonest judgment debtor who had failed to comply with multiple monetary judgments in the PRC; and

(b)  He has persistently failed to repay the petitioner.  The Decision has set out the various attempts of Mr Wu to evade service of the statutory demand.  His present suggestion of repaying the petitioner by January 2020 sounded hollow.

12.The debt due from Mr Wu has been due for long, as far back as the repayment agreement.  Even for the present hearing, Mr Wu has failed to appear.  This court has been informed that on 22 November, last Friday, the petitioner served the skeleton submission and hearing bundle on Mr Wu’s solicitors, then Tam, Pun & Yipp.  On the same day, after service, the petitioner’s solicitors received a letter from Tam, Pun & Yipp enclosing the debtor’s “notice of intention of party to act in person” dated 19 November 2019 and filed on 20 November 2019.

13.According to that notice, Mr Wu intended to act in person in the present proceedings.  There was no valid reason why that notice of intention of party to act in person was not served expeditiously and immediately after it was filed on 20 November 2019 on the petitioner’s solicitors. 

14.The petitioner’s solicitors have made last-minute attempts in the urgency of the situation to serve the skeleton submission and hearing bundle on the debtor on 22 November 2019.  The process server was not permitted to serve the papers at the reception area so the documents were left in the mailbox of Mr Wu.  The 3^rd affirmation of Wang Jingtian has set out the attempts to serve the skeleton submission and hearing bundle on Mr Wu.

15.These last-minute attempts to inform the petitioner’s solicitors of his acting in person were but instances of Mr Wu trying to evade the consequences of a petition.  Today he has not even attended this hearing, nor to seek an adjournment to consider the submission and hearing bundles served on him.

16.Since the notice to show cause does not disclose a reasonable defence for the petition and given the evasive attitude of the debtor to these proceedings and the debt being above the statutory minimum, I am of the view that it is appropriate to issue a bankruptcy order and I order accordingly.

Ms Sakinah Sat, instructed by LT Lawyers, for the petitioner

The debtor was not represented and did not appear

Ms Sharon Ng, instructed by the Official Receiver, for the OREC