Case Document

100%Judiciary

HCB 1779/2024

[2024] HKCFI 1816

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1779 OF 2024

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Re:	CHEUNG SAU YIN (張秀賢),	Debtor
Ex Parte:	LAI TAK CHUNG (賴得鐘),	Petitioner

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Before:

Hon Linda Chan J in Court

Date of Hearing:	8 July 2024
Date of Judgment:	8 July 2024
Date of Reasons for Judgment:	11 July 2024

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REASONS FOR JUDGMENT

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1.At the hearing of the petition presented by the petitioner, I made a usual bankruptcy order against the debtor. These are the reasons for my judgment.

2.The debtor was indebted to the petitioner in the amount of HK$160,000 pursuant to 4 loan agreements entered into between them during the period from 11 November 2020 to 27 May 2021. The loan was repayable on demand. The debtor failed to repay the loan in February 2022 despite repeated demands made by the petitioner.

3.In October 2022, the parties reached a settlement agreement whereby the debtor agreed to repay HK$5,000 per month commencing from November 2022 until the loan was repaid in full.

4.In breach of the settlement agreement, the debtor only repaid HK$20,000 as follows:

Date Amount HK$

28/10/2022 $5,000

31/10/2022 $2,000

07/11/2022 $3,000

06/12/2022 $2,500

09/01/2023 $2,500

27/01/2023 $5,000

Total $20,000

5.The balance of HK$140,000 remained unpaid. On 29 August 2023, the petitioner commenced DCCJ 3728/2023 against the debtor claiming the amount of HK$140,000 together with interest.

6.On 19 October 2023, the petitioner obtained a default judgment against the debtor, requiring him to pay to HK$140,000 together with interest at judgment rate and costs at HK$6,630.00 (“Judgment Debt”). No payment was made by the debtor.

7.On 29 November 2023, the petitioner served a statutory demand on the debtor requiring him to pay the Judgement Debt within 21 days thereof (“SD”). No payment was made by the debtor, whereupon the petition was presented on 12 March 2024.

8.The debtor has not filed any notice to show cause as required by rule 68. Although the debtor filed an affirmation on 13 June 2024 asserting that (1) he intends to pay the Judgment Debt; (2) he communicated with the petitioner and his legal representative during the period from August 2023 to December 2023 and proposed a repayment plan, but the same was rejected; and (3) he repaid HK$20,000.00 by instalments during the period from October 2022 to February 2023.

9.At the hearing before the Master on 18 June 2024, the debtor stated that he intends to object the petition.

10.The debtor did not appear at the hearing. Nor did he lodge any submissions in opposition to the petition. Instead, shortly before the hearing, the debtor called the court’s clerk and claimed that he was ill. No document was produced to substantiate his assertion. As the debtor was aware of the hearing and the fact that the petitioner would seek a bankruptcy order against him but chose not to attend the hearing, there was no reason why the court should not hear the petition.

11.The principles are well established and have recently been stated in Re Tam Kwok Hung Johnson [2024] HKCFI 1573 as follows:

“11. The Debtor did not comply with the SD and was deemed unable to pay his debts by virtue of s.6A(1)(a) of the Bankruptcy Ordinance (Cap. 6).

12. The burden is on the Debtor to show that there is a bona fide dispute on substantial grounds in respect of the Judgment Debt by adducing sufficiently precise evidence which is believable, and must establish that he has a defence of substance, not just a fair probability of one (Re Leung Cherng Jiunn [2016] 1 HKLRD 850, §27). For this purpose, it is not sufficient for the Debtor to merely raise ‘a cloud of objections on affidavits’ (Artech Development Ltd v Posismo Ltd [2018] HKCFI 344, §10(4)).

13. Where, as here the debt is based on a judgment, the court will treat the judgment as prima facie evidence that the debtor is indebted to the creditor. Although the bankruptcy court may in an appropriate case ‘go behind’ the judgment, it would only do so where the judgment is obtained by ‘fraud’, ‘collusion’ or that there is a ‘miscarriage of justice’ which impinges on the validity of the judgment (Re Tam Mei Kam, CACV 87/2012, 8 May 2013).”

12.In the present case, the Judgment Debt is valid and enforceable against the debtor. The debtor did not comply with the SD and is deemed insolvent by virtue of s.6A(1)(a) of the Bankruptcy Ordinance (Cap. 6).

13.None of the 3 grounds raised by the debtor in his affirmation constitutes a bona fide dispute on substantial ground in respect of the Judgment Debt:

(1)  The first ground only states that he intends to pay. This is a tacit acknowledgement that the Judgment Debt remains payable but not paid.

(2)  The second ground confirms that the debtor is unable to pay the Judgment Debt. This is reinforced by his failure to comply with the SD, with the result that he is deemed unable to pay his debts.

(3)  The repayment of HK$20,000 has already been deducted from the amount owed and did not form part of the Judgment Debt.

14.As there is no bona fide dispute on substantial ground in respect of the Judgment Debt, the petitioner is entitled to seek a bankruptcy order against the debtor.