Re China Zenith Chemical Group Ltd (Formerly Known As Xinyang Maojian Group Ltd)
Read the full judgment text of HCCW 243/2023 on BabelCite. This High Court CFI judgment was delivered on 10 October 2024.
1. The petition was last heard before the Hon Linda Chan J on 29 July 2024, after which she handed down her judgment on 12 August 2024 (“ 12 Aug Judgment ”). The relevant background and procedural history of the petition have been set out in the 12 Aug Judgment.
Cited by 5 cases · Cites 5 cases
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HCCW 243/2023 [2024] HKCFI 2769 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES (WINDING-UP) PROCEEDINGS NO 243 OF 2023 ________________________
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________________________ J U D G M E N T ________________________ A. Introduction 1.The petition was last heard before the Hon Linda Chan J on 29 July 2024, after which she handed down her judgment on 12 August 2024 (“12 Aug Judgment”). The relevant background and procedural history of the petition have been set out in the 12 Aug Judgment. 2.It suffices for present purposes to say that the petition has a chequered history, and was heard a number of times before the Hon Linda Chan J. At the hearing on 4 March 2024, she determined that there is no bona fide dispute on substantial grounds in respect of the original petitioner’s debt, which the Company later paid off to avoid the consequence of winding-up. 3.Although the original petitioner thus stepped out of picture, it did not escape Her Ladyship’s attention that (i) the Company seeks to dispute the original petitioner’s judgment debt when there was no valid ground to do so; (ii) numerous supporting creditors had already made demands and/or served statutory demands on the Company, and filed summonses for substitution; (iii) the claims of the supporting creditors are straightforward in nature, all of which being based on the HK$10 million bonds ostensibly issued by the Company, and (iv) the Company is, on the face of it, balance sheet insolvent according to its 2023 Annual Report (see 12 Aug Judgment [28]). 4.It was against such background that the Hon Linda Chan J moved on to consider the position of other supporting creditors at the hearing on 25 March 2024. Leave was given for Lyu Yiling (“Lyu”) to substitute as petitioner and file the Re-Re-Amended Petition. Further, the Hon Linda Chan J did not accede to the Company’s request to deal with the claims of the supporting creditors one after the other and considered it appropriate to require the Company to file evidence in opposition to the claim of Lyu and to state the brief grounds of opposition to the claims of other supporting creditors who have issued summonses for substitution. 5.At the hearing on 3 June 2024, whilst taking the view that more time is required to consider Lyu’s debt, Her Ladyship examined the claim of another supporting creditor, Xu Wenjing, who has made an application for substitution. After the court’s tentative indication that there is no bona fide dispute on substantial grounds in respect of Xu Wenjing’s debt, the Company offered an undertaking to pay within 42 days. Yet, shortly thereafter, the Company resiled from such position and sought the discharge of the undertaking, which the court granted at another hearing on 3 July 2024 to avoid further unnecessary arguments. 6.The petition was adjourned further to 29 July 2024 for the court to determine whether there is a bona fide dispute on substantial grounds in respect of the debt of Xu Wenjing. As the Hon Linda Chan J held at [49]-[58] of the 12 Aug Judgment, the Company failed to discharge the burden and the petition was ordered to be listed for hearing on 19 August 2024 for pronouncing a winding up order against the Company. Nevertheless, the court afforded an opportunity to the Company and directed that such hearing will be vacated if the Company does have the means to pay Xu Wenjing’s debt as it claims and provide evidence of payment by 15 August 2024. Eventually, the hearing was vacated. As it appears, the Company has paid Xu Wenjing’s debt but is also mounting an appeal at the same time. 7.Meanwhile, pursuant to the Order of the Hon Linda Chan J dated 3 June 2024 (albeit mistakenly dated as 3 May 2024), the Re-Re-Amended Petition by Lyu and the applications for substitution by three supporting creditors (namely Gu, Chen and Qin as defined below) have been adjourned to be heard together for substantive arguments, with 1 day reserved. These were fixed before this court on 19 September 2024. Prior to such hearing, applications for substitutions were made by three other supporting creditors. 8.At the hearing on 19 September 2024, the court was concerned with the following:
9.There is no dispute that the debt of Lyu should be dealt with in this hearing. In relation to Gu and Chen, it is their position that the court should also deal with their debts substantively and determine whether the Company has discharged its burden of showing there is a bona fide dispute on substantial grounds. Nevertheless, Mr John Scott SC took issue and complained that the Company had the onerous task of opposing the claims of so many alleged creditors in the course of one hearing, which is inappropriate. He submitted on behalf of the Company that a winding-up petition should not be used as debt collection scheme, and any order of substitution should be dealt with one at a time. Further, he refers to the Order dated 3 June 2024 and stresses that the supporting creditors’ Summonses are merely seeking substitution and it is not open to them to ask for winding-up immediately. 10.Notwithstanding the foregoing, when pressed by the court by reference to the 12 Aug Judgment, Mr Scott SC appeared to accept ultimately that the Company should deal with the claims of Lyu, Gu and Chen at this juncture. Whilst it is true that a winding-up petition is not a debt collection regime, the validity of his criticisms would turn on the merits of the Company’s defence. If there is in fact no bona fide dispute on substantial grounds, there is nothing inherently objectionable for creditors to seek winding-up. 11.Importantly, one must bear in mind the relevant context in considering the case management directions made by the Hon Linda Chan J. As outlined above, this case has a chequered history and on the face of it the Company is balance sheet insolvent. Moreover, the claims of the supporting creditors are similar in nature, stemming from the HK$10 million bonds purportedly issued by the Company. Against such context, the Hon Linda Chan J has decided that it is proper for the claims of Lyu, Gu, Chen and Qin to be dealt with at one hearing. 12.The apparent concern of the court is the undesirability of leaving it entirely to the Company to deal with each supporting creditor’s debt in turn whilst keeping similar claims of other supporting creditors at bay and, whenever the court finds that there is no bona fide dispute on substantial grounds for a claim, to then seek time to pay off only such claim and get it out of the way, only for the same process to repeat itself. As Mr Lau (on behalf of Gu) put it, the Company has turned these proceedings into a game of musical chair. The result is that, in the absence of active case management by the court, the petition could be dragged on disproportionately, despite a real risk that the Company may well be insolvent. 13.Of course, I am mindful that there are two competing concerns. On the one hand, the Company should be afforded a fair opportunity to resist winding-up relief pursued by various creditors, and it may be said to be unfair and onerous to compel the Company to deal with the claims of so many creditors in one go. On the other hand, if the Company does in fact have little merits in its defences to numerous claims which are similar in nature, it may be seen as part of a litigation tactics (if not abuse of process) for the Company to buy time and avoid the consequence of winding-up by contesting one claim after another consecutively (if not perpetually) on thin grounds, hoping that its financial condition may eventually turn around. Whilst there is no inherent bar or objection against a company seeking to adjourn a winding-up petition in reliance of fundraising or restructuring (which should however be properly advanced and argued), this is not to say that a company should be afforded a self-engineered “moratorium” to achieve such agenda by taking the time to oppose a winding-up petition and deal with similar claims one after another, particularly if there is a seeming pattern of new and unmeritorious defences being marshalled whenever the Company is on the verge of being wound up. 14.Nor does it seem to be correct for Mr Scott SC to submit that, on a proper interpretation of the Order dated 3 June 2024, the Hon Linda Chan J merely adjourned the applications for substitution for substantive arguments so that the issue is confined to substitution without determining whether there is bona fide dispute on substantial grounds. With respect, this does not reflect the understanding of the parties during the hearing. According to the transcript of the hearing on 3 June 2024, the following exchange took place between the Hon Linda Chan J and Mr Look Chan Ho on behalf of the Company:
15.The above is also the understanding of the Company. In the 7th Affirmation of Ma Kin Ling (“Ma”[1] and “Ma 7th”) filed for the Company on 16 September 2024, it is stated at §6 as follows:
16.The long and short of it is that, given the order and directions made by the Hon Linda Chan J, it does not seem open to the Company to complain and not deal with the substance of the claims of the supporting creditors. In any case, as far as the Company is concerned, it has already filed full evidence in response to the claims of Lyu, Gu, Chen and Qin, and there is no reason why this court should not (or could not) deal with them substantively as directed by the Hon Linda Chan J. This is subject to the caveat that, in the case of Qin, he has indicated that he would not be filing affirmation in reply or skeleton submissions. In these circumstances, I agree with Mr Scott SC that the court should not deal with Qin’s claim (at least not at this stage). 17.Insofar as Xu, Li YZ and Li WL are concerned, there are broad consensus that the court should grant directions for filing further evidence instead of determining their claims substantively at this stage. In any case, I accept the submissions by Mr Scott SC that Ma 7th is not intended to be exhaustive and the Company should be given fair opportunity to respond to these relatively recent applications. As I have indicated at the outset of the hearing, I would grant directions for the filing of further evidence by the Company in opposition within 28 days and the filing of further evidence in reply within 28 days thereafter, although such directions should only come into effect upon my handing down of the judgment and in circumstances where I determine that there are bona fide disputes on substantial grounds for the claims of Lyu, Gu and Chen or alternatively where I rule otherwise but the claims are later paid off, such that it becomes necessary to consider the debts claimed by other supporting creditors. Obviously, there would be no need for filing further evidence if eventually the Company is wound up on account of the claims of Lyu, Gu and/or Chen. 18.I should mention that there are also other supporting creditors but they have not taken an active role in the hearing on 19 September 2024. B. Summary of Claims of Lyu, Gu and Chen 19.For ease of reference, I would refer to Lyu (the Petitioner), Gu and Chen together as the “Supporting Creditors”. On the case of the Supporting Creditors, they are each a holder of a HK$10 million bond issued by the Company (“Bond”), all of which are governed by Hong Kong law and contain non-exclusive jurisdiction clause in favour of Hong Kong courts. 20.The claims of the Supporting Creditors may be summarised as follows:
21.Whilst the Company has mounted various defences, it may be noted that the Company does not dispute the status of Chen as bondholder but argues that (i) he has not surrendered the certificate of the Bond (“Bond Certificate”) and (ii) the quantum is in dispute. The Company also relies on Clause 5.2 of the Bond instrument (“Bond Instrument”). As regards Gu, the Company does not dispute that the Bond Certificate and the Bond Instrument were issued to him but argues that they are invalid (among other defences). For Lyu, the Company’s position is that Lyu is not a bondholder, and the Bond Certificate and the Bond Instrument produced by Lyu are forged. Although Lyu is the now the (substituted) petitioner, given that the claims of the Supporting Creditors are heard together, I consider it more convenient to deal with their claims in accordance with their complexity. I would thus deal with the claim of Chen first, followed by the claim of Gu, and lastly the claim of Lyu. It follows that, if I come to the view that there are no bona fide disputes on substantial grounds in respect of the claims of Chen and/or Gu, then it may not be strictly necessary to determine the claim of Lyu as the Company would be deemed to be insolvent anyway. That said, I would still express my views for completeness. 22.In terms of the relevant principles, there is no dispute among the parties that the burden is on the Company to demonstrate that there is bona fide dispute on substantial grounds. As the principles are trite, I would not go into them in the judgment, and would move on to examine the claims of the Supporting Creditors in turn. C. Chen’s claim 23.As mentioned, the Company does not challenge the status of Chen as a bondholder. The following are not in dispute:
24.The Company advances two major defences:
C1. Construction Argument 25.The Company’s argument is twofold, one being that the Company has no obligation to pay unless and until Chen produces the original of the Bond Certificate, and the other being the need to exchange for a fresh bond in partial redemption. The Company relies on Clause 5.2 of the Bond Instrument for the former: 1st Affirmation of Chan Yuk Foebe (“Chan Yuk” [2] or “Chan Yuk 1st”), §11. Alternatively, the Company prays in aid an alleged implied term under Chen 1st SA for the latter: Chan Yuk 1st §14. 26.As regards the former, a similar argument was advanced by the Company vis-à-vis other supporting creditors, including Xu Wenjing: see 12 Aug Judgment, [32(1)]. It was rejected by the Hon Linda Chan J in the 12 Aug Judgment, [33(1)-(4)]:
27.In a similar vein, DHCJ H Au-Yeung (as he then was) rejected such argument in Wang Yuexian x Xinyang Maojian Group Limited [2023] HKCFI 3236, [42]-[49] – a case concerning the claim by the original petitioner against the Company. Whist the judgment made no reference to Clause 6.1, it is significant that, like the Hon Linda Chan J, His Lordship placed emphasis on Clause 6.3 (quoted at [45]) and reasoned as follows at [46]-[48]:
28.I agree with the reasoning of the Hon Linda Chan J and DHCJ H Au-Yeung (as he then was). In particular:
29.Upon the maturity date, the Company’s obligation to redeem would crystallise, and the onus rests on the Company to make an appointment for redemption, whereupon payment shall be made in exchange for the Bond Certificate. In the case of Chen, there is no evidence from the Company that it has made any such appointment. It seems to me to be putting the cart before the horse for the Company to argue, despite failing to make any appointment, that it nevertheless has a complete defence on the pretext that Chen has failed and/or refused to surrender the original Chen Bond despite the Company’s repeated (but unparticularised) requests: Chan Yuk 1st §8. 30.In any case, Mr Cheng has confirmed during oral submissions that Chen is prepared to surrender the original Chen Bond for redemption. As such, this renders the Company’s argument academic anyway. It may be that the Company’s real argument is that Chen must surrender the Chen Bond for repayment of HK$4,250,000 only (see Chan Yuk 1st §9), whereas Chen’s position is that the Company should repay HK$6,750,000. However, even if one assumes that there is bona fide dispute on substantial grounds regarding quantum, there is no reason why the parties should be at a standstill such that the Company cannot pay on the one hand, whilst Chen cannot surrender the Bond Certificate on the other hand. For instance and without being exhaustive, the Bond Certificate could perhaps be surrendered upon the Company paying the undisputed HK$4,250,000 to Chen and the disputed HK$2,500,000 into court, pending resolution of the quantum dispute; or the Company could perhaps pay the undisputed HK$4,250,000 with the Bond Certificate kept by a stakeholder or in escrow, pending resolution of the quantum dispute. In any case, it cannot be right for the Company to insist on Chen surrendering the Bond Certificate without any further recourse upon the receipt of the lesser sum of HK$4,250,000 only. Indeed, in such context, any complaint that Chen refused to surrender the Bond Certificate would be circular as it begs the question whether full payment will be made. 31.As to the alleged need to exchange for a fresh bond, the Company says that a section for recording partial redemptions is specifically included at the bottom of the Bond Certificate. However, even if that is the case, at most it may be said that the particulars of the partial redemptions should be written down on the Bond Certificate. This does not mean that a fresh bond has to be issued. In any case, assuming that such particulars should be filled in but they are not, it is difficult to see how this would then give rise to a defence to the Company for not paying the balance if, as Chen agrees, he is prepared to surrender the original Chen Bond upon redemption (i.e. when balance of payment is made). Upon surrender of the Chen Bond in exchange for full payment of outstanding balance, there is plainly no more need for a fresh bond. 32.Further and in any event, there is force in Mr Cheng’s submissions that various partial payments were already made by the Company prior to the alleged refusal on Chen’s part to surrender the original Bond (in exchange for a fresh bond or otherwise), and the Company has either waived such requirement or is estopped from insisting on such requirement. 33.Hence, there is no merit in the Construction Argument. C2. Quantum Argument 34.On the Company’s case, the following repayments have been made:
35.There is no dispute between the parties on the second to the fifth entries. The only disputes are the first and last entries. 36.In relation to the first entry, the Company simply relies on the “admission” in Chen 1st §9 that the Company had paid Chen HK$2,000,000 as of 15 November 2022, as well as Chen’s draft Re-Re-Amended Petition to similar effect. In my view, such argument cannot withstand close scrutiny. 37.First, as explained in Chen 2nd §§26 and 33, Chen’s previous confirmation of receipt of HK$2,000,000 as of 15 November 2022 is mistaken, and is based on the erroneous assumption that such amount was paid on time in accordance with Chen 1st SA. Hence, the Company cannot simply rely on the so-called “admission” without going into the actual evidence. 38.Second, Chen 2nd §26 set out the particulars of the total sum of HK$1,000,000 received, comprising 4 payments of HK$250,000 each with particulars of date and amount (as two of them are wholly or partly in RMB but agreed to be treated as HK$250,000). Chen also detailed the circumstances of receipt of each of the 4 payments and provided documentary evidence in support, save for the first payment which is nevertheless supported by Chen 1st SA: see Chen 2nd §§27-32. In contrast, the Company has not produced any documentary evidence of the payment of HK$2,000,000 as of 15 November 2022. 39.Third, Chen 2nd §34 challenges the Company to produce evidence of any payment to him if the Company disagrees and maintains that HK$2,000,000 in total was paid. Chen 2nd was filed on 22 August 2024, but the Company has not applied for leave to adduce documentary evidence to the contrary (which, if available, should not be difficult to produce). 40.Fourth, Chen’s case finds support by reading Chen 2nd SA alongside Chen 1st SA. Chen 2nd SA was dated 2 December 2022. Under Clause 1, the parties agreed to amend the payment schedule from 15 September 2022 to 15 January 2023. The obvious implication is that payments supposed to be paid from 15 September 2022 onwards were not yet paid – hence the need to amend. If one cross-references that to Chen 1st SA, there are three outstanding payments since 15 September 2022 up to the date of Chen 2nd SA, namely (i) HK$250,000 by 15 September 2022; (ii) HK$250,000 by 15 October 2022; and (iii) HK$500,000 by 15 November 2022 (altogether HK$1,000,000). This is convincing proof that, out of the scheduled payments of HK$2,000,000 in total by 15 November 2022, the Company has not yet paid HK$1,000,000 – in other words the Company only paid HK$1,000,000. 41.This is also borne out by Clause 2 of Chen 2nd SA which provides that the Company shall pay the sum of HK$1,900,000 not yet repaid by the Company for the period from 15 September 2022 to 15 January 2023 under Clause 1. If one cross-references that to Chen 1st SA, the scheduled payments during such period should add up to HK$2,000,000. This means the Company has not paid those sums at all except HK$100,000 (which seems referable to the undisputed payment of HK$100,000 on or about 5 December 2022). 42.As regards the last entry, the Company alleges that, in or around mid-2023, Chen instructed the Company to make payment of RMB1,350,000 to a PRC company called “安慶市財康貿易有限公司” (“PRC Company”). In my view, there is no merit in such allegation. 43.First, notwithstanding the fact that the parties saw fit to reduce things into writing as evidenced by Chen 1st SA and Chen 2nd SA, the Company is unable to produce any written agreement, correspondence, communications, email or other records to show that Chen authorized or instructed such payment. Instead, all that the Company could produce is a payment instruction by the Company to a redacted entity (purportedly its subsidiary) to make payment of RMB1,350,000 to the PRC Company as partial repayment to Chen on its behalf. This is an internal document not communicated to or confirmed by Chen. It is, with due respect, a self-serving document. 44.Second, Chen has categorically denied the Company’s assertion, and is adamant that he has no business relationship with the PRC Company or its shareholders or directors: Chen 2nd §§24-25. Yet, the Company is unable to adduce any evidence to demonstrate any connections or links between Chen and the PRC Company. 45.Third, the circumstantial evidence about the PRC Company is rather dubious. Chen has instructed his solicitors to conduct a company search and it transpires that the PRC Company was established on 12 July 2023 but dissolved on 9 November 2023: Chen 2nd §25. All these cast further doubts on the credibility of the Company’s allegation that Chen indeed instructed the Company to make repayment to such entity. 46.Hence, there is no merit in the Quantum Argument either. 47.For all these reasons, I hold that the Company has not discharged the burden of showing that there is a bona fide dispute on substantial grounds in respect of Chen’s debt. D. Gu’s claim 48.Gu’s claim is made on the basis of the Bond Instrument and the Bond Certificate (both dated 26 March 2014) in the principal amount of HK$10 million. In essence, it is Gu’s case that:-
49.The Company’s case is that:-[5]
50.The Company advances the following arguments:
D1. Gu Bond Not Fully paid for? 51.The Company’s case is that Gu fails to prove payment of HK$10 million reaching the Company, and the Company only received HK$4 million from ZIL. At most, ZIL could have transferred a bond to Gu in the principal sum of HK$4 million. The Gu Bond, which is for the principal sum of HK$10 million, must be invalid. The Company further argued that Gu is estopped from asserting otherwise due to ZIL’s agreement to pay HK$6 million by 2 April 2014 and its representation not to release the Gu Bond Certificate to Gu until the monies had been paid. The Company also produced the following:
52.On behalf of Gu, Mr Lau argues that the Alleged Cancellation is irrelevant in law, and the Company’s factual allegations are unbelievable in any event. As explained below, having the benefit of submissions from both sides, whilst I consider it legally open to the Company to mount such defence, I am ultimately not convinced that it is factually believable. 53.On the legal argument, Mr Lau says that it is not in dispute that the Company executed the Gu Bond Instrument and the Gu Bond Certificate, and Gu’s rights stem from being holder of the Gu Bond Certificate, and not from ZIL. Thus, dealings between the Company and ZIL are irrelevant. Mr Lau also stressed that Gu did pay HK$10 million and to the extent the Company denies having received it, this is only a condition precedent to the issuance of the Gu Bond Certificate which has either been satisfied or waived by virtue of the Company issuing the Gu Bond Certificate in favour of Gu. In his oral submissions, Mr Lau emphasised that the Gu Bond Certificate refers to the Bond in its entirety (本金總額港幣$10,000,000的債券之全部) and provides for unconditional obligation by the Company to pay Gu the principal amount of HK$10,000,000 and interest. 54.There is some force in such argument particularly having regard to the nature of the Bond Certificate as a deed. Moreover, on its face, the Bond Certificate is drafted in clear and unequivocal terms, and it may be said that it is intended to be a conclusive proof of the rights of the bondholder. That said, Mr Lau has not cited any specific authority in support. On the other hand, during the hearing, Mr Scott SC has produced additional authorities in support of the legal proposition that a deed may be delivered in escrow: Chitty on Contracts (35th Ed.), [1-107], [1-117], [1-120]; Hunt v Fisher (unreported, HCA 10072/1993, 19 January 1995), pp.9, 12, 13; Hunt v Fisher [1995] 3 HKC 417 at 426. In particular, as set out in Chitty on Contracts, [1-120]:
55.Therefore, if the Company has put forth a credible account that the Gu Bond was delivered by the Company to ZIL on the condition that the balance of HK$6 million be paid, it seems open in law for the Company to contend that it was delivered as an escrow and shall not take effect as the condition was not satisfied. I should mention that Mr Lau has in his oral submissions drawn my attention to various clauses in the Gu Bond, including for instance the written variation clause contained in Clause 9 of the Gu Bond Instrument. However, whilst such clause may have the effect of precluding any alleged oral variation after the Gu Bond takes effect, this does not seem to be an answer to the legal argument of Mr Scott SC which, if it prevails, would mean that the Gu Bond has not yet taken effect to begin with. 56.Therefore, it seems open in law to the Company to rely on the defence of delivery of the Gu Bond as an escrow, and it is ultimately a question of fact. In his oral submissions in reply, Mr Lau has fairly accepted that he could not dispute the above legal proposition. Rather, his better point is that such defence is not open to the Company on the facts. 57.Whilst the court should not attempt to resolve a factual dispute by a mini-trial, it does not mean that the court should not properly assess the merits of the defence including whether it is factually credible or believable. Having considered the evidence, I come to the view that the defence is not believable. 58.First, the Company’s case has changed substantially over time, from the Alleged Extension, to the Alleged Non-Payment, and now the Alleged Cancellation. Worse still, the Company’s current defence is diametrically opposed to its initial defence of Alleged Extension. By alleging previously that the Gu Bond is extended, the Company must logically accept the validity of the Gu Bond – otherwise there is nothing to be extended. This casts grave doubt on the credibility of the Company’s latest defence. 59.Second, when putting forth the Alleged Extension, the Company has produced the Alleged Gu SA and positively relied on it. The Alleged Gu SA bears the signature of Chan Yuk on behalf of the Company. In addition, the Company produced a cheque in the sum of HK$750,000 drawn on 29 March 2022 in favour of Alpha (“Cheque”), purportedly as payment in accordance with the Alleged Gu SA. The Cheque also bears the signature of Chan Yuk. Yet, despite having the opportunity to respond, Chan Yuk 3rd did not give any explanation as to why Chan Yuk executed the Alleged Gu SA and the Cheque on 26 March 2022 if, as alleged, the Company had already cancelled the Gu Bond back in 2014. There could be little excuse because the same Chan Yuk purportedly executed the Alleged Demand Letter on behalf of the Company. It is thus incredible that having cancelled the Gu Bond, Chan Yuk saw fit to sign the Alleged Gu SA and the Cheque. 60.Third, the defence of the Alleged Extension was maintained by the Company for a long period of time spanning at least a year, as can be seen in letters issued by Wellington Legal on 30 May 2022, 20 June 2022, 14 September 2022 and 17 May 2023. It was a position taken seriously by the Company. In the letter dated 17 May 2023, the Company categorically denied that the Alleged Gu SA was forged and maintained its position that “the date of maturity of the Bond has been extended to 26 May 2025 pursuant to parties’ agreement”. It was not until the lapse of another year that the Company changed its stance to the Alleged Non-Payment in March 2024, and ultimately the Alleged Cancellation in August 2024. Having committed to a contrary position for such a long time, the present allegation by the Company represents a stark U-turn, which bears the hallmark of recent fabrication. 61.Fourth, despite the fact that Gu has been pursuing the Company for outstanding interest payment and met Ma in late 2019 (see Gu §8, which is not refuted in Chan Yuk 3rd), and has instructed solicitors to demand repayment since March 2022, the Company never alleged that it only received HK$4 million from ZIL until August 2024. Worse still, the Company only produced the Alleged Undertaking and the Alleged Demand Letter in August 2024. If such documents did exist, it seems rather unbelievable that the Company has failed to produce the same despite the lapse of a few years (alternatively at least 2 years). This is another hallmark of recent fabrication. 62.In this regard, there is also force in Mr Lau’s submissions that the court should be wary of the Company’s tendency or tactics to come up with new evidence in a piecemeal manner or after the court has determined an issue in dispute, as in how the Company sought to reopen the dispute (by new evidence) with the original petitioner after the original petitioner has obtained a summary judgment against the Company and even after the original petitioner prevailed on appeal (see 12 Aug Judgment [5]-[16]). A similar incident happened with regard to the evolution and change of defences put forth by the Company against Xu Wenjing (see 12 Aug Judgment [21], [26], [32]-[55]). All these echo my point above although, for the avoidance of doubt, I need only rely on the evidence pertaining to Gu’s claim. 63.Fifth, the Company’s defence is inherently improbable. By the Alleged Undertaking, ZIL asked the Company to issue and then cancel the Gu ZIL Bond, complete the transfer procedure and issue the Gu Bond all on 26 March 2014, even though the balance of HK$6 million will only be paid by 2 April 2014. There is no good explanation advanced as to why the Company would accede to such unreasonable request to have the bonds issued before full payment. In particular, if ZIL promised to pay the balance by 2 April 2014 which was just a week after 26 March 2014, why was there the rush to take all these steps before receiving full payment? 64.The Alleged Demand Letter fares no better. The non-payment of HK$6 million must be something major. It is difficult to believe that there is only one documentary proof of follow-up. Whilst the letter itself refers to repeated demands, such demands were not particularised or evidenced by other documents. Most suspiciously, the Alleged Demand Letter merely requests ZIL to return the Gu Bond before 21 April (rather than immediately). Worse still, the Gu Bond is not returned, and is still kept by Gu even up till now. It seems unbelievable to suggest that the Company gave such a relaxing timeline, and did nothing whatsoever after 21 April 2014 (for a period of over 10 years). 65.Sixth, the Company knew at the outset that ZIL was involved. Indeed, ZIL had been involved in the claims of many supporting creditors. There is a public announcement issued by Chan Yuk on behalf of the Company on 17 June 2014 disclosing the appointment of ZIL as the Company’s bond agent (債券代理) from that day for a period of 90 days or such longer period as may be agreed in writing. According to Ma 3rd §63, the Company still had business transactions with ZIL until at least the end of 2018. Yet, the Company now claims that it cannot reach ZIL or get in touch with it to find out what happened, which seems suspicious. Notably, despite the rather straightforward claims made by the bondholders, the Company managed to come up with documents belatedly which bear the footprint of ZIL. For instance, Clauses 3 and 4 of the Alleged Gu SA provide for payment of HK$750,000 and subsequent interest to Alpha, apparently a company related to ZIL. The Alleged Undertaking was issued by ZIL, and the Alleged Demand Letter was issued to ZIL. All these give rise to doubts that the Company has private dealings with ZIL and manages to come up with documents bearing ZIL’s input to contradict what are otherwise very straightforward claims in reliance of the Bond Certificates. 66.Seventh, as submitted by Mr Lau, after the alleged cancellation of the Gu Bond in April 2014, there is a marked absence of evidence on what becomes of the HK$4 million admittedly received by the Company. Indeed, if ZIL had paid HK$4 million only and both the ZIL Gu Bond and the Gu Bond were cancelled in 2014, it is inexplicable that the Company would nevertheless cling onto such payment of HK$4 million and did not return the same to ZIL. Nor is there any sound reason why ZIL did not pursue the Company for the refund of HK$4 million if the aforesaid bonds were indeed cancelled. The lack of any follow-up and refund of HK$4 million tend to suggest that this is nothing but a recent fabrication by the Company. 67.Eighth, Gu has produced a letter issued by the Company on 20 April 2015 which certifies that Gu invested HK$10 million in the Bond via ZIL as the appointed bond agent, and that Gu’s name is registered in the register of the Bondholders. Yet, the Company has not adduced any credible evidence to rebut such evidence. Nor does the Company produce the register of the Bondholders to refute such point. Indeed, if the Company were right that the Gu Bond was cancelled in 2014, his name would not appear in the register of the Bondholders. The Company could just produce it as proof, but it has chosen not to do so (despite being given leave to file evidence in response to Gu’s claim). 68.Ninth, there are little merits in the Company’s challenge that Gu cannot prove payment of HK$10 million to ZIL (and ultimately the Company). The Company has raised various peripheral (if not tenuous) points which I have considered. I do not think it is necessary to address each of them in details. In the course of his oral submissions, Mr Gu has submitted a list of documents relied upon by Gu and drawn my attention to the same. In my view, Gu has produced sufficient documentary evidence in support. Among others, Gu produced the Gu SPA dated 5 March 2014 and HK dollar deposit slip of HK$10 million to Kingston on 19 March 2014. I have also been shown statements issued by Kingston to Gu evidencing the deposit of HK$10 million, followed by withdrawal of HK$10 million and deposit of the Gu Bond. Gu has also produced instructions to Kingston to pay HK$10 million to ZIL. The Company’s suggestion that the HK$10 million had been withdrawn but may not be paid to ZIL seems fanciful and speculative. In my view, there is cogent and convincing proof of payment of HK$10 million by Gu to ZIL. Further, the fact that the Gu Bond was issued by the Company is itself a strong indicator that the Company did receive payment of HK$10 million (failing which the Company should not have issued the Gu Bond). 69.The above is corroborated by the letter dated 20 April 2015 from the Company (see [67] above) and a letter dated 11 November 2016 from Kingston which refers to Gu’s CIES application and confirms that he is the holder of the Gu Bond. Given such evidence, I do not accept the criticism by Ms Scott SC that Gu failed to ask Kingston to give evidence in support. In any event, this cuts both ways as there is no proper evidence before the court that the Company has approached Kingston to verify the facts either[6], bearing in mind that the onus is on the Company to demonstrate bona fide dispute on substantial grounds. D2. Private agreements between Gu and Sam Yau / ZIL? 70.The Company argues that, on Gu’s own evidence, there is clearly more than meets the eye in respect of the transfer of the Gu Bond from ZIL to Gu, as he and Sam Yau entered into a number of private arrangements which were inconsistent with the express terms of the Gu Bond, namely:
71.It can be seen from the above that the Company’s argument revolves around the payment of interest. Whilst Gu said he received interest from Sam Yau or his associated entities such as ZIL, one must not forget that ZIL was at least at one stage the bond agent of the Company. Moreover, Ma 3rd §63 accepted that the Company had business transactions with ZIL until at least end of 2018, but he gave no particulars of such business transactions. It could be said that the Company had some private agreements with ZIL too, and so this point cuts both ways. 72.The fundamental point remains whether the Company’s version about the payment of only HK$4 million by ZIL and the cancellation of the Gu Bond in April 2014 is credible. If it is not, the fact that interest payments were made by Sam Yau is, at best, a neutral factor. Indeed, it may equally be said that, if the Gu Bond is already cancelled, there is no reason for Sam Yau to pay interest to Gu at all. Moreover, if Gu’s case prevails, that would inevitably point to the existence of private dealings between the Company and Sam Yau / ZIL which enable the Company to come up belatedly with evidence such as the Alleged Undertaking and the Alleged Demand Letter. Therefore, if, as I have found, the Company’s case is not credible, it would inevitably implicate ZIL as well – i.e. ZIL was assisting the Company to perpetuate the advancing of false defences. As such, the mere fact that ZIL somehow assisted the Company in the payment of interest in the past would indeed be consistent with such collaboration, and in any event will not unsettle the above conclusion. 73.Further, there is force in Mr Lau’s submissions that, even if it can be shown that Sam Yau / ZIL took advantage of Gu, it is difficult to see how that would assist to lend credibility to the Company’s case. In my view, the second argument raised by the Company would rise and fall together with the first argument anyway. D3. Gu’s inconsistent and unreliable evidence? 74.The Company criticises Gu’s evidence with regard to the Alleged Gu SA. In short, the Company says that, whilst disputing the authenticity of the Alleged Gu SA, Gu has included it as one of the documents for his CIES application in 2023. The Company further notes that the certificate of true copy purportedly issued by ImmD to Gu is missing a chop and date. Therefore, the Company submits that Gu has not been frank and forthcoming in his evidence. 75.However, it is important to understand what is the real issue in respect of Gu’s claim. Gu relies on the Gu Bond issued by the Company, and the current defence put forth by the Company is that it only received HK$4 million from ZIL and it is a condition that the balance of HK$6 million be paid before ZIL could deliver the Gu Bond to Gu. Such defence hinges on alleged agreement and representations between the Company and ZIL. Gu is not privy to such alleged agreement and representations. Therefore, the court would assess the credibility of the Company’s defence based on the Company’s own evidence and circumstantial evidence (including for instance the contradictory stance, the late evidence, the quality of evidence, the inherent probabilities of the Company’s case, etc), as opposed to the evidence of Gu himself. Thus, the Company’s attack on Gu’s credibility does not add much to its case. 76.That said, it is fair to say that Mr Lau is not able to explain why the Alleged Gu SA was included in the application in 2023. However, it seems plain that even before 2023, Gu’s stance is blatantly clear and he has adamantly maintained that he did not sign the Alleged Gu SA and had reported the matter to the Police. Hence, whilst there is no evidence to explain the inconsistency and whether for instance it may arise because of mistake or otherwise, I do not think that much mileage could be gained by the Company out of such collateral attack given the issue I have identified above. 77.Moreover, even if one is to assume that, contrary to Gu’s stance, the Alleged Gu SA was entered into, this is not going to assist the Company. To the contrary, the Alleged Gu SA militates against the Company’s present defence because, if the Gu Bond was cancelled in 2014, the Company would not have extended its validity by executing the Alleged Gu SA. 78.As regards the certificate of true copy issued by ImmD to Gu, nothing in the Company’s defence turns on the authenticity or otherwise of such certificate. In any case, during the hearing, Mr Lau has produced the original of the certificate for examination by the court and the Company’s legal team. It is clear that the whole pack of document is bound together with a red label of ImmD, which tends to suggest this is a single set of document from ImmD and has not been tampered with, even though such original still does not bear a chop and date. In the circumstances, I do not think there is sufficient basis to question the authenticity of such certificate, and in any event the Company’s defence does not turn on it. D4. Gu’s failure to surrender the original Gu Bond for redemption? 79.The Company relies on Clause 5.2 of the Gu Bond and argues that, unless it receives the original Gu Bond Certificate, the Company does not have to bear any obligations in relation to redemption of the Gu Bond. The Company further contends that Clause 6.1 does not unsettle the above interpretation, and that Clause 6.3 reinforces Clause 5.2. Further, the Company argues that Clause 6.3 does not impose an obligation on the Company to fix a time and place for redemption. 80.I have already dealt with a similar argument advanced by the Company in respect of Chen’s debt at Section C1 ([25]-[33]) above. I will adopt my reasoning therein which should apply, mutatis mutandis, to Gu’s debt. In particular, given the clear obligation for the Company to redeem the Gu Bond arising from Clause 6.1, I do not accept that the Company can refuse to pay by not making any appointment and then resorting to the excuse that it is up to either party to propose one. 81.Indeed, irrespective of whether Gu may propose an appointment, this should not relieve the Company from its contractual liability to pay. Once the maturity date has arrived, there is an obligation on the part of the Company to redeem and pay pursuant to Clause 6.1, and it cannot be right that the Company can wriggle out of such obligation by failing to propose a reasonable appointment to facilitate the same. This is a fortiori the case as Gu’s solicitors has requested for redemption since 17 May 2022. 82.In any case, it has been stated in Gu’s written submissions that “Gu is ready and willing to deliver up Gu’s Bond Certicate for the purpose of redemption”. In the course of oral submissions, Mr Lau confirms that Gu is willing to surrender the original Gu Bond. In these circumstances, the Company’s argument is academic anyway. 83.For all these reasons, I hold that the Company has not discharged the burden of showing that there is a bona fide dispute on substantial grounds in respect of Gu’s debt. E. Lyu’s claim 84.It is Lyu’s case that:
85.On the face of it, Lyu’s claim is a straightforward one. She relies on the Lyu Bond Certificate which is signed by Chan Yuk and another director of the Company, and the Lyu Bond Instrument which is signed by Chan Yuk. 86.The Company’s case is that:
87.The Company argues that it has valid defence because:
E1. No proper explanation of how the Lyu Bond was obtained? 88.The Company says that there were only two methods for an investor to obtain a bond issued by the Company, namely:
89.The Company stresses that the two routes are distinct and mutually exclusive. An investor cannot directly subscribe for a bond and also obtain the same via transfer. The Company then critiques Lyu for failing to explain which of the two methods she used to obtain the Lyu Bond, and further submits that Lyu has not provided full supporting documents for either route. For the direct subscription route, Lyu has not exhibited a subscription agreement between her and the Company. As regards the Transfer Route, Lyu relies on a sale and purchase agreement with ZIL dated 1 September 2015 (“Lyu SPA”) but has not exhibited any transfer form signed by her and ZIL. 90.In my view, whilst there is superficial attraction in the Company’s argument, this does not really go to the crux of the matter in dispute. The undeniable fact is that Lyu has produced the Lyu Bond Instrument and Lyu Bond Certificate which are prima facie sufficient for Lyu’s claim. As the Company denies that those documents were issued, it must mean that the documents including the signatures of Chan Yuk and another director thereon were forged. Whether the Company can demonstrate a bona fide dispute on substantial grounds in this respect would turn on whether such case of forgery is credible or believable. The critique as to how Lyu actually obtained the Lyu Bond does not offer a sufficient answer and fails to grapple with this point. 91.Moreover, it can be seen from the claims of numerous supporting creditors against the Company that a lot of them had enlisted the assistance of ZIL to acquire the Bond, and ZIL was at least at one stage the bond agent of the Company. The Company contends that the appointment of ZIL was only for a term of 90 days since 17 June 2014 but this ignores the fact that the public announcement says that it could also be for a longer term as may be agreed in writing between the Company and ZIL. Investors like Lyu (and indeed Gu) would not be privy to the arrangement between the Company and ZIL, and the Company has not given much details save by saying that there are no further business transactions between them after the end of 2018 (see Ma 3rd §63). As Mr Tommy Cheung, Counsel for Lyu, has put it, Lyu acquired the Lyu Bond through the assistance of ZIL. What matters to her is that the relevant Bond Instrument and Bond Certificate were issued in her favour, and she would have little reason to care whether there is any direct subscription or transfer. 92.In any case, on the face of the Lyu SPA, it might be said that Lyu would acquire the Bond by way of transfer from ZIL. If so, this would be similar to the case of Gu which acquired the Bond from ZIL. Yet, even in the case of Gu which the Company accepted that it had executed the Gu Bond (albeit allegedly as an escrow), Gu has not produced any transfer form executed between Gu and ZIL, but the Company did not take any issue. It seems to me that the argument now put forward by the Company is a technical one. With respect, this should not distract one from the real issue, namely whether the Lyu Bond was genuine or authentic. In relation to such issue, evidence pertaining to the register of bondholders, the authenticity of the signatures by Chan Yuk and another director, and the non-receipt of HK$10 million by the Company, etc (as opposed to the precise route) would assume primary importance. I would address these in conjunction with the Company’s next argument below. E2. No payment made to the Company? 93.At the heart of the Company’s submissions is that the purported payment of HK$10 million Lyu seeks to rely upon was a payment from ZIL which the Company ultimately refunded to ZIL on ZIL’s request:-[9]
94.Based on the foregoing, the Company contends that it has not received the HK$10 million as it was refunded. The Company also submits that Lyu has not been able to provide satisfactory evidence that she had in fact paid HK$10 million to the Company. As such, there would have been no reason for Chan Yuk to execute the Lyu Bond Instrument, nor any reason for Chan Yuk and another director to execute the Lyu Bond Certificate, which must therefore be forged. 95.Having considered the evidence, I am of the view that the Company’s account is not credible or believable. 96.First, on behalf of Lyu, Mr Tommy Cheung argues that the Company’s assertion that it does not have any record of Lyu’s Bond is a self-serving response, particularly when neither the then chairman (Chan Yuk) nor the director of the Company (羅子平) has prepared affirmation evidence denying their signatures. Mr Cheung submits that adverse inferences can be drawn against the Company, but Mr Scott SC highlights that at the hearing on 3 June 2024, Mr Look Chan Ho on behalf of the Company has indicated that a director of the Company denied having signed the documents in question but the Company was refused leave to put in further evidence. 97.In my view, there is some force in the submission by Mr Scott SC that adverse inferences ought not be drawn given that the Company attempted to seek leave (which was however refused) to put in further evidence. However, this does not mean that the court is handicapped and could not at least assess the quality and veracity of the evidence placed before it. One must not forget that directions were already given by the court at the hearing on 25 March 2024 for the Company to file evidence in opposition to Lyu’s claim. In response, the Company chose to file Ma 3rd on 17 May 2024, which contains a section on “Suspected Forgery of Documents Provided by the Substituted Petitioner” (at §§38-41). The Company must be left with no doubt that the authenticity of the documents provided by Lyu (including in particular the signatures thereon) is in issue, and yet the Company has not asked Chan Yuk or the other director to come forward to file any affirmation to deny having signed the same; nor did the Company give any good reason why it was not in a position to do so. In these circumstances, the court should at least be entitled to consider and assess the quality of evidence put forward, even putting aside the question of adverse inference. In the premises, the absence of any affirmation evidence from Chan Yuk and the other director simply means that there is insufficient evidence to substantiate the Company’s version of events. 98.Second, the above is fortified by the failure of the Company to produce the register of the Bondholders. Such failure is particularly egregious as Lyu has produced and relied on a letter dated 14 September 2015 issued by the Company (“Company Confirmation Letter”) stating inter alia that:
99.The Company Confirmation Letter was submitted to ImmD as part of Lyu’s CIES application. It bears a chop of the Company. As the Company denies the authenticity of the Company Confirmation Letter, one would expect the Company to produce the full register of the Bondholders if, as alleged, the Company in fact had no records of the Lyu Bond and Lyu is not registered in the register. There is no apparent or good reason why the Company relies on the mere say-so by Ma: see Ma 3rd §7. 100.On behalf of Lyu, Mr Cheung refers to following exchange between the Hon Linda Chan J and Mr Look Chan Ho for the Company as recorded in the transcript of the hearing on 3 June 2024:
101.Again, Mr Scott SC stresses that the Company attempted to seek leave (which was refused) to put in further evidence, and hence adverse inference ought not be drawn against the Company for failing to produce the register of the Bondholders. However, for similar reason as I have expressed in relation to the lack of affirmation evidence by Chan Yuk and the other director, the court must at least be entitled to assess the quality of the evidence, namely that the Company alleges that there is no record of Lyu as a holder of any bond without producing the register of Bondholders. This is particularly the case given the serious nature of the allegation of forgery of documents, which cannot be lightly pursued and entertained in the absence of cogent evidence commensurate with the seriousness of such allegation. 102.In an attempt to reconcile the above, Mr Scott SC argues in his oral submissions that the Company has done its best. He asks rhetorically how can the Company prove a negative, and what more can the Company do other than that it has examined the records and cannot find Lyu’s name. With respect, that misses the point. If there is no such thing as a register of the Bondholders, then it may well be said that it is for Lyu to prove her entitlement rather than for the Company to prove a negative. However, since a register has been kept, it is a contemporaneous document which can of course be produced – indeed it was confirmed by Mr Look Chan Ho on behalf of the Company in the hearing on 3 June 2024 that it could be produced. Such register would prima facie be an objective and contemporaneous record as to who is or is not registered. Instead of producing it as contemporaneous records in support (which would lend credibility to the Company’s case), the Company relies on a mere say-so contained in Ma 3rd which compromises the quality or veracity of the evidence. 103.I should also add that, whilst the Company was not granted leave to put in further evidence in response to Lyu’s claim, there is force in Mr Cheung’s argument that (i) the Company had had the opportunity to put in evidence earlier but chose not to do so; and (ii) the Company was given leave to file evidence in response to Gu’s claim but yet the Company still has chosen not to adduce the register of Bondholders. Given the Company’s case that the Gu Bond was only delivered as an escrow and it was in any event cancelled in April 2014, it must necessarily be the Company’s case that Gu’s name is not registered in the register of the Bondholders. There is therefore no good reason for the Company’s failure to produce the register of the Bondholders anyway. 104.Third, there are little merits in the Company’s criticism of Lyu’s failure to provide satisfactory proof of payment.
105.The Company has also made other tangential points which are either immaterial or without merits.
106.Fourth, despite the overwhelming evidence of payment of HK$10 million by Lyu, the Company contends that the HK$10 million was refunded as evidenced by the Alleged Note and the payment of HK$8.8 million to Omega and Willing Peace. However, it should be noted that:
E3. No claim for interest 107.The Company further questions Lyu for not seeking payment of interest from the Company under the Lyu Bond. The argument is that a decision to forego such a substantial sum of interest is devoid of common and commercial sense and accords with the Company’s case that Lyu is not in fact a bondholder of the Company. However, as explained by Mr Cheung, Lyu is the substituted petitioner and she is relying on the outstanding principal amount of the Lyu Bond for the purpose of winding-up. If the Company is wound up, there is nothing to prevent Lyu from filing proof of debt for both the principal amount and interest. It is therefore incorrect to suggest that Lyu has decided to forego a substantial claim of interest. 108.Further, given the fact that the Company Confirmation Letter states the interest rate at 6% whilst the terms of the Lyu Bond provide for a rate of not higher than 7.5%, it seems understandable (and in any case not something unusual) for Lyu to confine herself to the outstanding principal amount for the purpose of seeing winding-up relief, lest it may be suggested that there is bona fide dispute on substantial grounds in relation to the claim for interest. 109.In the circumstances, I do not consider such point to the material (let alone determinative) of the merits of the defence put forth by the Company, namely that the Company did not receive payment and the Lyu Bond is forged. E4. Further submissions by the Company 110.In the course of his oral submissions, Mr Scott SC confirms that the Company’s case is that Lyu was putting forth the forged documents. This is of course a serious allegation against Lyu. In support of that, Mr Scott SC submits that there are five indications of fraud. Whilst some of these have been addressed above, it is prudent for the court to set out and deal with them here for completeness. 111.First, Mr Scott SC submits that the records of SBI produced by Lyu were tampered with. He also relies on Ma 3rd §41 and stresses that the text size, font type and character spacing of the SBI statements are different from other examples. 112.With respect, it seems to me that the Company’s case is rather speculative. The SBI statements have been submitted by Lyu to ImmD at the outset for Lyu’s CIES application. It is a very serious allegation to suggest that Lyu fabricated or tampered with the SBI statements to deceive ImmD. Cogent evidence is required to mount such serious accusation. Yet, all that the Company relies on is the alleged difference in formatting of the SBI statements. As Mr Cheung has submitted, given that the SBI statements are printed out from computer systems, there could be all sort of reasons for any difference in formatting. 113.Moreover, SBI is part of a leading financial services group which remains in operation today. As such, there is no sound reason why the Company should advance such serious accusations against Lyu before verifying with and obtaining confirmation from SBI. Whilst Mr Scott SC says that that the Company has written to SBI but has received no response, this does not thereby support the Company’s allegation. Instead, the fact remains that the Company’s accusation of forgery is not corroborated by SBI. 114.In any case, it does not appear to be the Company’s case that the pay-in slip issued by ICBC is forged. If Lyu did instruct ICBC to remit HK$10 million odd to SBI, then plainly Lyu must have maintained an account with SBI to which such money was deposited for the purpose of acquiring the Lyu Bond. There would have been no need for Lyu to fabricate or tamper with statements from SBI. 115.Second, Mr Scott SC complains about the discrepancy in the pay-in slip (or receipt) issued by ICBC and the receipt issued by SBI, as there is a discrepancy of HK$135 apparently due to the computation of service charge at HK$150 for the former and at HK$15 for the latter. As explained in [105(1)] above, nothing turns on such difference. 116.Third, Mr Scott SC relies on Ma 3rd §§47-48 and argues that there was no payment by Lyu to the Company. I do not consider this to be meritorious for the reasons set out in [104]-[106] above. Mr Scott SC further points to the erroneous reference to interest at 6% in the SBI Confirmation Letter. For reasons similar to those set out in [105(3)] above, I do not consider this to be material either. 117.Fourth, Mr Scott SC refers to the Company’s case on payment and refund in Ma 3rd §§23-30. This has been addressed in [104]-[106] above. 118.Fifth, Mr Scott SC stresses that Lyu never claimed repayment of interest and says this certainly requires investigations. This has been addressed in [107]-[109] above. 119.Further, it appears from Ma 3rd §62 that Company also takes the point that Lyu has never produced the original Lyu Bond for inspection, and that Lyu has not even suggested that she is able to tender the same. However, this point is not developed further in the Company’s written and oral submissions. In any event, I have already dealt with a similar argument advanced by the Company in respect of Chen’s debt at Section C1 ([25]-[33]) above. I will adopt my reasoning therein which should apply, mutatis mutandis, to Lyu’s debt. If necessary, the Company can always request that payment to Lyu be accompanied by the simultaneous surrender of the Lyu Bond, and there is no indication by Lyu that she will oppose the same. 120.For all these reasons, I hold that the Company has not discharged the burden of showing that there is a bona fide dispute on substantial grounds in respect of Lyu’s debt. F. Conclusion 121.For the above reasons, I hold that the Company has not discharged the burden of showing that there are bona fide disputes on substantial grounds in respect of the debts of Chen, Gu and Lyu. 122.I order that the petition be listed for hearing on 28 October 2024 for pronouncing a winding up order against the Company. If the Company does have the means to pay the debts of Chen, Gu and Lyu and provide evidence of payment by 24 October 2024, the hearing will be vacated and the directions granted by me at [17] above should come into effect from the date of vacating such hearing. 123.As for costs, I order that the costs of and occasioned by the Re-Re-Amended Petition and the applications for substitution by Chen and Gu (including the costs of the hearing on 19 September 2024) be paid by the Company to Lyu, Chen, Gu and the Official Receiver, to be assessed by way of gross sum assessment on paper and be paid forthwith. I further direct that skeleton bills of costs be lodged by them within 7 days, and the Company be given leave to lodge a list of objections within 7 days thereafter. Save as aforesaid, the costs of and occasioned by the applications for substitution by other supporting creditors are reserved and may be dealt with at the adjourned hearing of the petition (as directed on 28 October 2024 or, if such hearing is vacated, at such other date to be fixed in future). 124.Last but not least, it remains for me to thank all Counsels and also Mr Lau for the helpful assistance given to the court.
Mr Tommy Cheung, instructed by Li, Kwok & Law, for the Substituted Petitioner (Lyu Yiling) Mr John Scott SC, Mr Look Chan Ho and Mr Han Sheng Lim, instructed by Wellington Legal LLP, for the Company Mr Lau Chun Ming (Solicitor Advocate) of Stevenson, Wong & Co., for the supporting creditor (Gu Yandong) Mr Alvin Cheng, instructed by Christine M. Koo & Ip, Solicitors & Notaries LLP, for the supporting creditor (Chen Shaohua) Ms Clara Wong, instructed by Chiu & Co., for the supporting creditor (Li Wenli) Ms Nicole HK Liu, instructed by LT Lawyers, for the supporting creditor (Li Yizhou) Mr Xizhen Wang, instructed by Zhong Lun Law Firm, for the supporting creditor (Xu Lingyan) Lee & Yik Lawyers, for supporting creditor (Qin Yu Huan (秦宇歡)), is absent David Fenn & Co., for the supporting creditor (Jiang Shan (姜山)), is absent K T Chan & Co, for the supporting creditor (Weng Junling), is absent S W Wong & Associates, for the supporting creditor (Wu Yuanhong (also known as Wu Yuan Hong)), is absent Chiu Liang & Co., for the supporting creditor (Xu, Wenjing (徐汶靖)), is excused from attendance Official Receiver is excused from attendance [1] Ma is (and at all material times has been) the Chief Financial Officer of the Company. [2] According to Chan Yuk 1st, Chan Yuk is the ex-director and ex-Chief Executive Officer of the Company. Further, as stated in the 12 Aug Judgment at [3], Chan Yuk had since at least 2013 been the chairman, chief executive officer and executive director of the Company. Notably, she is one of the two purported signatories of the Bond Certificates (including that of Lyu which is alleged to be forged), in her capacity as Chairperson (主席) and director (董事) of the Company on the face of the Bond Certificates. [3] Clause 6.1 in the bond instrument there (which is also contained in the Chen Bond) provides as follows: “到期贖回 依照本文據條款於到期日未贖回或兌換之所有債券須由發行人於到期日以與該等債券本金完全相等的金額自動贖回。除按本文據條款或獲得債券持有人書面事先同意，發行人不得在到期日前要求提前贖回債券。” [4] Clause 6.3 in the bond instrument there (which is also contained in the Chen Bond) stipulates that: “贖回須於第8條規定之發行人位址進行。在其規定的時間和位址，進行贖回的登記債券持有人須向發行人交付相關債券憑證以供其取消，發行人須向債券持有人交付香港持牌銀行開出金額相當於應付贖回款項之銀行本票，或（按持有人要求）向該等持有人（或債券持有人提前三個營業日向發行人發出書面通知之其他人）支付該等債券的應付贖回款項。” [5] Chan Yuk 3rd §§12-17 [6] In his oral submissions, Mr Scott SC informed the court that there had been attempts by the Company to contact Kingston. However, this is not canvassed in Chan Yuk 3rd filed for the Company. [7] Ma 3rd §§7-8 [8] Ma 3rd §11 [9] Ma 3rd §§23-30 |
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