Re Chan Sze Ming Michael

HCB 1385/2025

[2025] HKCFI 4401

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1385 OF 2025

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J U D G M E N T

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1.By Petition presented on 21 February 2025 the petitioner, The Bank of East Asia, Limited (“Petitioner”), seeks a bankruptcy order against the debtor, Mr Chan Sze Ming Michael (陳思銘) (“Debtor”), on the ground that he failed to comply with a statutory demand served upon him on 21 January 2025 (“SD”).

2.In the SD, the Petitioner required the Debtor to pay HK$1,164,972,222.57 (“Debt”), being the amount due and payable as of 21 January 2025 under 2 guarantees dated 23 May 2019 executed by the Debtor in favour of the Petitioner (together “Guarantees”) whereby the Debtor agreed to pay all the debts and liabilities owed by Asia Perfect Development Limited (“Asia Perfect”) and Nuo Feng Limited (“Nuo Feng”) (together “Borrowers”) under the facilities agreements entered into between the Petitioner and the Borrowers (as described in §§5-7 below)[1].

A.  BACKGROUND FACTS

3.The background facts are not in dispute. 

4.Asia Perfect was at all material times (and still is) a wholly owned subsidiary of Nuo Feng.  Nuo Feng was wholly owned by the Debtor’s father (Mr Chan Cheuk Yin) until 10 May 2019 when the Debtor became its sole shareholder.[2]  Since May 2019, the Debtor has been the sole director of Nuo Feng.[3]

A1.  AP Agreement, NF Facility & Guarantees

5.By a loan agreement dated 17 April 2012 entered into between Asia Perfect and the Petitioner (“AP Agreement”), the Petitioner agreed to advance a term loan of HK$500 million to Asia Perfect for the purpose of financing the development of 8 residential houses in Silverstrand, Sai Kung (collectively “Properties”), of which HK$350 million would be used to pay 50% of the land premium and HK$150 million to pay the construction cost. 

6.Between 8 September 2015 and 23 August 2024, the Petitioner and Asia Perfect entered into a total of 13 written agreements to vary the terms of the AP Agreement[4], details as follows:

(1)  In the “Supplement to Agreement” dated 8 September 2015 (prepared by Messrs. Mayer Brown JSM (“JSM”) and executed by Asia Perfect as a deed), the Petitioner agreed inter alia to increase the term loan for payment of construction cost from HK$150 million to HK$353.52 million.[5]

(2)  In the “Second Supplement to Agreement” dated 10 May 2017 (prepared by JSM and executed by Asia Perfect as a deed), the Petitioner agreed inter alia to further increase the term loan for payment of construction cost from HK$353.52 million to HK$383.52 million with final repayment date of 16 April 2018.[6]

(3)  By letter dated 26 April 2018 (signed by the Petitioner and Asia Perfect as borrower and Nuo Feng as shareholder), the Petitioner agreed that, in consideration of Asia Perfect paying a non-refundable arrangement fee of HK$183,380, the final repayment date under the AP Agreement be extended by 3 months, to 16 July 2018.

(4)  By letter dated 23 August 2018 (signed by the Petitioner and Asia Perfect as borrower and Nuo Feng as shareholder), the Petitioner agreed that, in consideration of Asia Perfect paying a non-refundable arrangement fee of HK$183,380, the final repayment date under the AP Agreement be further extended by 3 months, to 16 October 2018.

(5)  By letter dated 18 October 2018 (signed by the Petitioner and Asia Perfect as borrower and Nuo Feng as shareholder), the Petitioner agreed that, in consideration of Asia Perfect paying a non-refundable arrangement fee of HK$183,380, the final repayment date under the AP Agreement be further extended by 3 months, to 16 January 2019.

(6)  By letter dated 18 February 2019 (signed by the Petitioner and Asia Perfect as borrower and Nuo Feng as shareholder), the Petitioner agreed that, in consideration of Asia Perfect paying a non-refundable arrangement fee of HK$91,690, the final repayment date under the AP Agreement be further extended for 1.5 months, to 28 February 2019.

(7)  By letter dated 13 March 2019 (signed by the Petitioner and Asia Perfect as borrower and Nuo Feng as shareholder), the Petitioner agreed that, in consideration of Asia Perfect paying a non-refundable arrangement fee of HK$366,760, the final repayment date under the AP Agreement be further extended for 6 months, to 30 August 2019.

(8)  In the “Third Supplement to Agreement” dated 23 May 2019 (prepared by JSM and executed by Asia Perfect as a deed) the parties agreed, inter alia, that (a) the term loan would be increased to HK$1,150 million,[7] (b) the Debtor would execute a guarantee in favour of the Petitioner as replacement guarantee, (c) Asia Perfect would pay a non-refundable arrangement fee of HK$6,900,000 to the Petitioner, and (d) the parties shall be bound by the terms of the “Amended and Restated Loan Agreement” appended thereto (“2019 Restated AP Agreement”) as if they had been entered into between and duly signed by the parties.  Under the 2019 Restated AP Agreement (prepared by JSM), Asia Perfect shall repay the term loan by instalments in accordance with the dates stipulated in the fifth schedule with the final repayment date falling on 60 months after 23 May 2019 (i.e. 23 May 2024).

(9)  In the “Fourth Supplement to Agreement” dated 15 June 2020 (prepared by JSM and executed by Asia Perfect as a deed) (“Fourth Supplement”), the Petitioner consented to the “internal transfer”[8] of the Properties from Asia Perfect to the “Mortgagors”[9] and execution of replacement security by the Mortgagors in favour of the Petitioner.[10] The parties agreed to be bound by the terms of the “Amended and Restated Loan Agreement” appended to the Fourth Supplement (prepared by JSM) (“2020 Restated AP Agreement”).

(10)  In the “Fifth Supplement to Agreement” dated 1 March 2023 (prepared by JSM and executed by Asia Perfect as a deed), the Petitioner consented to the creation of a second mortgage over House no. 2 and 8 of the Properties in favour of Hang Seng Bank Limited.[11]

(11)  By letter dated 20 June 2023 (signed by the Petitioner, Asia Perfect as borrower, Nuo Feng as shareholder, the Debtor as guarantor and the Mortgagors), the parties agreed that, in consideration of Asia Perfect paying a non-refundable arrangement fee of HK$100,000, the repayment schedule under the 2020 Restated AP Agreement be replaced by the repayment schedule set out therein and the final repayment date remains unchanged (i.e. 23 May 2024).

(12)  By letter dated 28 December 2023 (signed by the Petitioner, Asia Perfect as borrower, Nuo Feng as shareholder, the Debtor as guarantor and the Mortgagors), the parties agreed that the amounts stated in the replacement repayment schedule had been repaid, and the balance in the amounts of HK$323,750,000, HK$275,513,900 and HK$441,236,100 were due on the final repayment date (i.e. 23 May 2024).

(13)  In the “Sixth Supplement to Agreement” dated 23 August 2024 (prepared by JSM and executed by Asia Perfect as a deed) (“Sixth Supplement”), it recited that upon Asia Perfect’s application for extension of the final repayment date and amendment of the repayment schedule,[12] it was agreed between the parties inter alia that (a) the final repayment date be extended to 23 November 2024,[13] (b) Asia Perfect shall make available at least HK$84 million and apply such amount towards repayment of the principal amount outstanding under the NF Facility (as defined below),[14] and (c) on the final repayment date, Asia Perfect shall repay HK$323,750,000, HK$275,513,900 and HK$431,234,273 (totalling HK$1,030,498,173) to the Petitioner.[15]

7.By another facility letter dated 22 May 2019 (signed on 23 March 2019), the Petitioner agreed to advance a term loan of HK$180 million to Nuo Feng to finance its general working capital and corporate funding requirements (“NF Facility”)[16].  The terms of the NF Facility were subsequently amended by 7 written agreements, details as follows:

(1)  As recorded in the Sixth Supplement,[17] the NF Facility was supplemented and amended by 5 supplemental letters dated 19 May 2020, 12 June 2020, 8 July 2021, 20 June 2023 and 28 December 2023.   

(2)  By letter dated 22 August 2024 (signed by the Petitioner, Nuo Feng as borrower, the Debtor as guarantor and the Mortgagors as corporate guarantors), the Petitioner referred to the NF Facility (as supplemented and amended) and confirmed that taking into account the repayments of principal and interest on 24 May 2024, 28 June 2024, 2 July 2024 and 15 July 2024, the outstanding principal as at the date of the letter was HK$74,998,173.41.  At the request of Nuo Feng, the Petitioner agreed to extend the final repayment date of the NF Facility to 30 September 2024, subject to compliance with the conditions stipulated including execution of a second legal charge/mortgage over 5 of the Properties.

(3)  By another letter dated 14 October 2024 (signed by the Petitioner, Nuo Feng as borrower, the Debtor as guarantor and the Mortgagors as corporate guarantors), it was stated that at the request of Nuo Feng, the Petitioner agreed to extend the final repayment date of the NF Facility to 24 November 2024, subject to compliance with the conditions stipulated.

8.On 23 May 2019, the Debtor executed the Guarantees in favour of the Petitioner.[18]  Under the Guarantees, the Debtor agreed to repay all the amounts due and payable to the Petitioner under the AP Agreement and the NF Facility (as respectively amended and supplemented from time to time). 

A2.  Properties

9.By the end of 2019, the development of the Properties was completed.  At the request of Asia Perfect, the Properties were assigned to the Mortgagors and replacement security over the Properties was granted by the Mortgagors in favour of the Petitioner.  For this purpose:

(1)  The Petitioner and Asia Perfect entered into the Fourth Supplement dated 15 June 2020 (see §6(9) above). 

(2)  By agreements and assignments dated 16 June 2020, the Properties were assigned by Asia Perfect to the Mortgagors.[19]

(3)  By letter dated 12 June 2020, the Mortgagors agreed to guarantee Nuo Feng’s indebtedness under the NF Facility.[20] 

(4)  The Mortgagors executed the Debenture and Mortgage dated 16 June 2020 in favour of the Petitioner as security for Asia Perfect’s indebtedness under the AP Agreement.[21]

A3.  Extensions of final repayment dates

10.Between 15 June 2020 and 23 May 2023, Asia Perfect repaid HK$96.5 million to the Petitioner.[22]

11.As of 23 May 2024, over HK$1 billion and HK$83.9 million were due under the AP Agreement and the NF Facility respectively (see §§6(12) & 7(2) above).[23]

12.From April 2024 onwards, the parties began to discuss the refinancing options in relation to the amounts due under the AP Agreement and the NF Facility,[24] including by selling some of the Properties to raise funds.[25]

13.On 24 May 2024, a lunch meeting was held to discuss the state of affairs during which, inter alia, updates were provided about the intended refinancing, and the Debtor indicated that Nuo Feng and its direct and indirect subsidiaries[26] (collectively “NF Parties”) were open to consider any sale opportunities.[27]

14.At the meeting held on 19 August 2024, the Debtor informed the representatives of the Petitioner that he had received a potential offer to purchase all the Properties for HK$800 million, which he was negotiating with the potential purchaser to increase the offer price.  The Petitioner suggested that the NF Parties accept the offer and noted that even if the Properties were sold and the entire amount applied to repay the amount owed by the Borrowers, there would still be an outstanding amount of HK$310 million and, on this basis, requested the NF Parties to provide additional collateral for credit enhancement.[28]

15.As stated above, on 22 and 23 August 2024, the parties entered into written agreements to extend the final repayment dates of the NF Facility to 30 September 2024 (see §7(2) above)[29] and the AP Agreement to 23 November 2024 (see §6(13) above).

A4.  Default in repayment & 7 Jan Letter

16.From late August 2024 onwards, the Borrowers failed to  pay any interest payable under the AP Agreement and the NF Facility.[30]

17.Despite various further meetings and calls between the parties on 7 October 2024,[31] 21 November 2024,[32] 16 December 2024,[33] and 3 January 2025,[34] no further agreement was reached to extend the repayment dates or to vary any terms under the AP Agreement or the NF Facility. 

18.By letter dated 7 January 2025 (“7 Jan Letter”), the Borrowers referred to the AP Agreement and the NF Facility (as amended) (together “Facilities”) and the meeting on 3 January 2025 to explore a potential restructuring of the Facilities and stated as follows:

(1)  The Borrowers are “surprised and disappointed” to learn that the Petitioner has indicated at the meeting of 3 January 2025 that it “is not prepared to accept any orderly disposal proposal put forth by the Borrowers and intends to take imminent enforcement actions against the securities under the Facilities, including but not limited to, the appointment of receivers over the Properties” (underlined added).  (§4)

(2)  “As a result of the significant pressure on cash flow and liquidity constraints, the Borrowers have not made certain payments under the Facilities since August 2024” (§7).

(3)  The Borrowers have been approached by a potential buyer for the Properties in September 2024.  A MOU was entered into with the agent in October 2024.  The Borrowers approached the Petitioner to further discuss a potential settlement plan of the Facilities in November 2024 while using its best endeavours to prepare for the sale but the potential buyer did not proceed with the transaction, which “led to a sudden halt to the advanced stage settlement discussion of the Facilities with the [Petitioner]” (§9).

(4)  The Borrowers consider that appointment of receivers will be detrimental to the realisable value of the Properties. The Petitioner’s concern is to have “certainty on the timeline in the disposal of the Properties, this can be achieved by agreeing to a specified time period for the Borrowers to orderly dispose the Properties” (underlined added).  (§§10-13)

(5)  To address the Petitioner’s “concern to reach a consensual solution as soon as practicable, the Borrowers are prepared to put forth a settlement proposal with respect to the Facilities to [the Petitioner] for further consideration and discussion in or around early February 2025” (§14).

(6)  If the Petitioner requires further information or clarification, it may contact the Debtor by email at [email protected] (“Specified Email”) or the representatives of the financial advisers at the email stated (§16).

19.By letter dated 21 January 2025 to the Borrowers (addressed to the Debtor), Messrs. Eversheds Sutherland (“Eversheds”) on behalf of the Petitioner, responded to the 7 Jan Letter[35] (“Response Letter”) stating that:

(1)  The Borrowers admitted that they had since August 2024 been in default of payment under the Facilities but have failed to put forward any constructive proposals for repayment of the outstanding debts both during the 3 January 2025 meeting and in the 7 Jan Letter (§2).

(2)  At the Borrowers’ requests, the Petitioner had on multiple occasions agreed to extend the final repayment dates and revised the repayment schedules.  This is evidenced by (a) the 6 supplemental agreements and 7 supplemental letters extending the final repayment date under the AP Agreement from 17 April 2016 to 23 November 2024; and (b) the 7 supplemental letters extending the final maturity date under the NF Facility from 23 May 2021 to 24 November 2024 (§3).

(3)  In respect of the Properties, the Certificate for Compliance had been issued on 4 December 2019 and despite repeated requests made by the Petitioner, the Borrowers have not been able to realise the Properties.  The Petitioner is entitled to take action to recover the debt without further notice to the Borrowers (§§4-6).

A5.  21 Jan Meeting

20.At the meeting held in the morning on 21 January 2025 at the Petitioner’s office (“Petitioner’s Office”) which was attended by the Debtor and representatives of the Petitioner[36] and the NF Parties[37] (“21 Jan Meeting”):

(1)  The parties discussed the potential restructuring put forward by the NF Parties, which was not accepted by the Petitioner;

(2)  The Petitioner provided the Debtor with the letters dated 21 January 2025 addressed to each of the Borrowers and the Debtor demanding (a) Asia Perfect and the Debtor to pay HK$1,079,493,976.54, and (b) Nuo Feng to pay HK$78,230,773.74, being the amounts outstanding as of 27 December 2024 under the Facilities and the NF Facility  respectively (“Demand Letters”); and

(3)  The process server, Mr Yuen Chun Wing (“Yuen”) of Eversheds, entered the conference room and provided to the Debtor a sealed envelope containing the SD, with Eversheds’ letter dated 21 January 2025 (“Cover Letter”) attached thereon.  Yuen asked the Debtor to acknowledge service by signing his name but the Debtor did not do so[38]. The Cover Letter is entitled “Statutory Demand” and “Debt due and owing to the [Petitioner]”.   

21.Thereafter, in the afternoon on 21 January 2025:

(1)  The SD was sent to the Debtor at the Specified Email.[39] 

(2)  Mr Wong Wai Tak of the Petitioner delivered the SD, the Demand Letters and the Response Letter to the Debtor’s office at 30/F, Tower One, Times Square (“Debtor’s Office”), which is also the registered office of the Borrowers.[40]

22.The Debtor did not comply with the SD. 

A6.  Petition

23.On 21 February 2025, the Petition was presented and was scheduled to be heard before a Master on 6 May 2025.  Pursuant to rule 68 of the Bankruptcy Rules (Cap. 6A) (“BR”), the Debtor is required to file with the Official Receiver and post to the Petitioner’s solicitors his notice of intention to show cause by 1 May 2025. 

24.On 28 April 2025, Messrs. Boase Cohen & Collins (“BCC”), solicitors for the Debtor, filed a notice of intention to oppose the Petition (“Notice”) stating that the Debtor intends to oppose the Petition on the following grounds:

(1)  The SD was “not validly and/or properly served” on the Debtor, and/or is defective in form and/or content (§1);

(2)  The Petition and its purported service “are void, defective, irregular, and/or invalid, including but not limited to the premature presentation of the Petition, that the Petition was not validly and/or properly served on him, and/or that it was based on a defective statutory demand” (§2);

(3)  The Petitioner is a secured creditor and has no standing, right or entitlement to present the Petition (§3);

(4)  There are bona fide disputes in respect of the Debt “as to its validity and/or enforceability (including by reason of misrepresentation and/or breach of agreement), and/or that the Petitioner is precluded, prevented, and/or estopped from enforcing (and/or has waived any rights to enforce) the same” (§4); and

(5)  Such further or other matters as would render it unfair and/or unjust for a bankruptcy order to be made against him (§5).

25.Pursuant to the order of Master Maurice Lam made on 7 May 2025 (“7 May Order”), the Petition was served on the Debtor by way of substituted service viz., (1) by post to the specified addresses including the Debtor’s residential address and the Debtor’s Office, (2) by advertisement, (3) by sending the same to the Specified Email, and (4) by sending the same by WhatsApp to the Debtor’s mobile number.

26.On 22 May 2025, Yuen 4^th was filed confirming that the Petition had been served on 13 May 2025 by all the means specified in the 7 May Order.  In addition, the Petition was also served on BCC on 13 May 2025.

27.Upon the joint application of the Petitioner and the Debtor by letter dated 11 June 2025, directions were given by the court requiring the Debtor to file his evidence in opposition by 30 June 2025, the Petitioner to file its affirmation in reply within 28 days thereafter, and the Petition to be heard before the Bankruptcy Judge on 11 August 2025. 

28.On 7 July 2025, the Debtor filed his affirmation (“Chan 1^st”) and an affirmation of Zhu Mengyu in opposition to the Petition[41] and a summons to set aside the 7 May Order (“Setting Aside Summons”). 

29.On 4 August 2025, the Petitioner filed Tang 1^st and Yuen 5^th in reply. 

30.At the 1^st callover hearing on 11 August 2025 before this Court:

(1)  Mr Martin Kok[42], counsel for the Debtor, (a) applied by summons belatedly filed on 8 August 2025 for leave to file 3 further “reply affirmations”, being the 2^nd affirmation of the Debtor, the affirmation of Liu Bei and the 2^nd affirmation of Zhu Mengyu, (b) sought directions on the Setting Aside Summons, and (c) tried to expand the grounds stated in the Notice by contending that the Debtor also disputed service of the Petition and had issued the Setting Aside Summons for that purpose. 

(2)  As this Court indicated at the hearing, the Debtor was not entitled to file any “reply affirmations” in reply to Tang 1^st and Yuen 5^th. It was not properly open to counsel to raise a ground which had not been stated in the Notice, when no application was made to amend the Notice. 

B.  DISCUSSION

B1.  Non-compliance with Rule 68

31.In the Notice, the Debtor adopted a “kitchen sink” approach and purported to state all possible grounds one might think of irrespective of whether he had a valid basis (legal or evidential) to raise them.  This is compounded by the very wide and general wordings and the repeated use of the words “and/or” with a view to cover all possible arguments. 

32.In my view, the Notice falls foul of the requirement of Rule 68 of the BR, which requires a debtor to file and post a notice “specifying the grounds on which he intends to show cause”.  The need for a debtor to specify the grounds is not just a formality, as the petitioner is required under Rule 70 to prove “any matters which the debtor has given notice that he intends to dispute”.  It is inconsistent with the statutory purpose of Rule 68 for a debtor to file a notice couched in very wide or general terms as the petitioner would have no means to know what evidence it should adduce in order to discharge the burden under Rule 70.  This is particularly so when the debtor has not filed any affirmation in opposition at the time when the notice is filed.   

33.Where, as here, the Notice filed by the Debtor failed to comply with the requirement of Rule 68, the court would and should do justice between the parties and only allow the Debtor to raise a ground not specifically stated in the Notice if the Debtor is able to satisfy the court that there are good reasons for the omission or that in all the circumstances, it is fair and appropriate for the court to exercise its discretion to give leave to the Debtor to amend the Notice by including the additional ground.   

34.A debtor who has not in the notice to show cause raised a specific factual dispute is also relevant to the bona fides of the factual dispute he seeks to raise in the affirmation filed subsequently.  This is because if a debtor has a genuine factual dispute on the debt, one would expect him to raise it at the time when he filed the notice.  If the notice does not raise such dispute, and there is no proper explanation for the omission, it would be said against the debtor that the dispute subsequently raised in the affirmation may well be an afterthought or a recent fabrication.       

35.In the present case, the very wide and general grounds stated in the Notice come down to 4 grounds:

(1)  No valid service of the SD such that the presentation of the Petition was “premature” (§§1-2 of Notice) (“Service of SD ground”);

(2)  The Petitioner is a secured creditor and hence has no locus to present the Petition (§3 of Notice) (“Secured creditor ground”); and

(3)  There are bona fide disputes in respect of (a) the validity and/or enforceability of the Facilities by reason of misrepresentation and/or breach of agreement (“Enforceability  ground”); and (b) the Petitioner is precluded, prevented, and/or estopped from enforcing (and/or has waived any rights to enforce) the Facilities (“Estoppel ground”) (§4 of Notice).

B2.  Secured creditor ground

36.The contention that the Petitioner is a secured creditor is misconceived:

(1)  The meaning of “secured creditor” is defined in s.2 of the Bankruptcy Ordinance (Cap. 6) (“BO”) as “a person holding a mortgage, charge or lien on the property of the debtor or any part thereof, as a security for the debt due to him from the debtor”. 

(2)  As the Petitioner does not hold any security on the Debtor’s property, it is not a secured creditor of the Debtor. 

(3)  As between a creditor and a guarantor of the debt, the creditor is not a creditor with security as personal guarantee is not a secured arrangement within s.2 of the BO (Re Kwok Chok Yee [2000] 2 HKC 543, at 546, per Le Pichon J). 

37.Mr Ambrose Ho SC,[43] counsel for the Debtor, rightly does not pursue the Secured creditor ground.

B3.  Enforceability ground

38.The assertion that the AP Agreement and the NF Facility are invalid or unenforceable is wholly devoid of merit:

(1)  Nowhere in Chan 1^st has the Debtor said anything in support of the bare assertion.  Nor has Mr Ho pursued the ground, whether in his written or oral submissions. 

(2)  The undisputed evidence set out in Sections A1, A3 & A4 above shows that since at least May 2019, the Debtor (on behalf of himself and the Borrowers) had treated the Facilities as valid and enforceable, and repeatedly asked the Petitioner to extend the final repayment dates, followed by putting forward proposals to repay the outstanding amounts payable by the Borrowers and him to the Petitioner.

B4.  Service of SD ground

39.Mr Ho submits that the Petitioner failed to serve the SD in compliance with Rule 46, such that the court has no jurisdiction to make a bankruptcy order against the Debtor.  His arguments run like this:

(1)  The bankruptcy jurisdiction is a statutory one. There are a number of conditions to be satisfied before the court can exercise its bankruptcy jurisdiction, including those under ss.6 and 6A of the BO (Re Lam Kwok Hung Guy (2023) 26 HKCFAR 119, at §14).

(2)  The bankruptcy court has no jurisdiction to make an order if an essential condition, such as that contained in ss.6(2)(b) or (c) of the BO is not satisfied (Re Leung Cherng Jiunn, HCB 244/2014, 21 May 2015[44], at §24, citing TSB Bank plc v Platts (No 2) [1998] BPIR 284 at 288H to 290A).

(3)  S.6(2)(c) of the BO provides that “[s]ubject to sections 6A to 6C, a creditor’s petition may be presented to the court in respect of a debt or debts if, but only if, at the time the petition is presented— (c) the debt, or each of the debts, is a debt which the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay;…”

(4)  Under s.6A of the BO, it is a necessary condition for the purposes of s.6(2)(c) (“if, but only if”) that “at least 3 weeks have elapsed since the [statutory] demand was served”, and it has been “neither complied with nor set aside in accordance with the rules”.

(5)  Thus, if the Petitioner had presented the Petition before “at least 3 weeks ha[d] elapsed” since the service of the SD, the Petition must fail for lack of jurisdiction.  As a jurisdictional issue, the precise date of service of the SD is critical and subject to genuine dispute in the present case.

(6)  On the hearing of a bankruptcy petition, the petitioner bears the burden of proving the matters which the debtor has given notice that he intends to dispute (Rule 70 of the BR; Re Li Man Hoo [2020] HKCFI 1354, §§15(4); 25-32).  The burden of proving valid service of a statutory demand rests with the petitioner (Re See Wah Fan, HCB 8895/2010, 15 June 2011 at §26, per Recorder Yuen SC).

(7)  Failure to serve the statutory demand properly is “an extremely serious matter” and “not just a formal defect or irregularity, it renders defective the petition founded on the demand.” (Re Lam Chik Sing [2009] 2 HKLRD 107, at §17, per Kwan J (as she then was)).

(8)  Whilst “personal service” of a statutory demand is not a strict requirement under the BR, Rule 46(2) provides that “[t]he creditor shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected”.

(9)  “When personal service is attempted and if a debtor refuses to take the document, it is necessary… for the server to at least inform the person to be served that it is a court document or the nature of the document. …Although a practical approach is to be adopted, the only concession to practicality where the person to be served refuses to accept the document is for the server to tell him what the document contains and leave it with or near him” (Re See Wah Fan, §23).

(10)  “Where the creditor asserts that it is impracticable to cause personal service of the statutory demand, it must satisfy the Court that personal service is impracticable for the reasons stated, and that the steps actually taken were all that was reasonable to bring the statutory demand to the debtor’s attention, in the actual circumstances of the case.  It is not sufficient for the creditor to blindly adopt the same steps, whatever the prevailing situation and outcome of the facts” (Re Li Xiaoming [2020] HKCFI 361 §25, per Mimmie Chan J; Rule 46(2) of BR).

(11)  Moreover, “where a creditor has one or more addresses for a debtor, personal service should ordinarily be effected at each of those addresses”.  Further, “the burden of showing that a step could not or would not have led to the statutory demand coming to the debtor’s attention does lie squarely upon the creditor.  If the evidence leaves it uncertain whether or not the step would have been of utility, it would be right to give the debtor the benefit of any doubt which the court might have in this respect, given the purpose of the rules and the consequences which ensue for the debtor as a result of his failing to comply with a statutory demand of which he was unaware” (Re Pang Mei Lan May [2005] 1 HKC 319, §§26, 36).

(12)  Bankruptcy proceedings are summary in nature and are not meant to be used for the purpose of debt collection.  The jurisdiction to make a bankruptcy order will only be exercised in very clear cases (Re Li Man Hoo, at §15(1)).

40.The main plank of Mr Ho’s argument is that while Rule 46(2) does not mandate personal service, where personal service is effected, the process server must inform the debtor that the document being served is a “court document” or a statutory demand.  I am unable to accept the argument. 

41.The procedural requirements governing the contents, service and application to set aside statutory demand are prescribed by Rules 44-49 of the BR.  In particular, the requirements as to service of statutory demand are governed by Rule 46,[45] which provides as follows:

“(1) Rule 49 has effect as regards service of the statutory demand, and proof of that service by affidavit to be filed with a bankruptcy petition.

(2) The creditor shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected.” (underlined added)

42.As is clear from the wordings of Rule 46(2), there is no requirement that a statutory demand must be served on a debtor personally.  This is reinforced by the wordings of Rule 49(5), which refer to a situation where the statutory demand has not been served personally on the debtor.  Mr Ho’s argument is also inconsistent with the authorities cited:

(1)  In Re Pang Mei Lan May, §§25, 27, Barma J (as he then was) explained what would constitute “all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention” where a creditor elected to serve a statutory demand on a debtor personally. 

(2)  In Re Li Xiaoming,§25, Mimmie Chan J noted that Rule 46(2) does not make personal service a prerequisite in every case, the creditor is required to do “all that is reasonable” in order to bring the statutory demand to the attention of the debtor. 

(3)  In Re See Wah Fan, §21, Recorder Yuen SC also noted the requirement of Rule 46(2), which requires a creditor to do “all that is reasonable” in order to bring the statutory demand to the attention of the debtor. 

43.As regards the learned Recorder’s observation that “a creditor should do all that is reasonable for the purpose of informing the debtor that the document to be served on him or her is a statutory demand (or at least a document relating to intended bankruptcy proceeding)” (Re See Wah Fan, §24):

(1)  It was based on his acceptance of counsel’s submission that “the cases concerning personal service under Order 65 rule 2 provide useful guidance in determining whether a statutory demand has been validly served” (§§22-23). 

(2)  With greatest respect to the learned Recorder, I do not think that Order 65 rule 2 or the cases decided thereon have any application to service of a statutory demand, which are governed by Rules 44-49 of the BR.  There is no basis to impose or apply any rules and practice applicable to service of documents under the Rules of the High Court (“RHC”) to service of statutory demand.[46]

(3)  A similar view was reached in A v R [2022] HKCFI 3390, where Recorder Eugene Fung SC (as he then was) analysed the statutory regime of bankruptcy and held that a creditor is not required to effect personal service of statutory demand on a debtor; and the provisions on personal service (Order 10 rules 1 and 5 of RHC) are generally concerned with the service of writs, originating summonses, originating motions and petitions, and are inapplicable to service of a statutory demand (§8).    

44.Indeed, the position regarding service of statutory demand and what the court would normally consider as compliance with the requirements of Rule 46(2) and Rule 49(9) has been clearly stated in PD3.1 §§1.1-1.6 and 2.1-2.4.[47]  In particular, as regards service of statutory demand, §2.1 states as follows:

“2.1 Rule 46(2) provides that ‘[t]he creditor shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected.’. The steps set out in this paragraph would normally be regarded as compliance with his obligation under Rule 46(2):

(a) If the debtor is represented by a solicitor, an attempt should be made to arrange an appointment for personal service through such solicitor. Rule 49(4) of the Bankruptcy Rules enables a solicitor to accept service of a statutory demand on behalf of his client; or

(b) If the debtor has agreed with the creditor to use any electronic means (which include emails, WhatsApp, WeChat or other similar means of communications (“Electronic Means”)) to receive any documents relating to the debt the subject of the statutory demand, or the debtor has during the period of 12 months immediately preceding the date of the statutory demand used any of the Electronic Means to communicate with the creditor, and the creditor has sent the statutory demand to the debtor through the Electronic Means; or

(c) The steps set out in paragraph 3.2 below.”

45.The step set out in PD 3.1 §2.1(b) reflects the commercial reality that, with the advancement of modern technology and the frequent use of electronic means for communications, sending a statutory demand to the debtor by electronic means should be regarded as “reasonable for the purpose of bringing the statutory demand to the debtor’s attention” provided that such means has been used by the debtor and the creditor to communicate during the period of 12 months immediately preceding the date of the statutory demand, or that the debtor has agreed to use such means to receive any documents relating to the debt, the subject matter of the statutory demand.   

46.In the present case, the Petitioner sent the SD to the Debtor by 3 different modes, each of which is sufficient to meet the requirement of Rule 46(2), for the reasons explained in §§47 - 57 below.

47.First, there is no dispute that the SD was provided to the Debtor at the 21 Jan Meeting. 

48.Ms Natalie So, counsel for the Petitioner, submits that the evidence shows that the SD was served on the Debtor personally in that:

(1)  On 21 January 2025 at 10:52 a.m., Yuen entered the conference room at which representatives of the Petitioner and the Debtor were having a meeting.[48]

(2)  Yuen called out the Debtor’s Chinese name, and a staff of the Petitioner identified the Debtor.  Yuen then approached the Debtor and asked, “Are you Chan Sze Ming?” – to which the Debtor did not reply.[49]

(3)  Yuen produced the sealed envelope containing the SD, with the Cover Letter thereon, and informed the Debtor that he was a staff member of the law firm acting for the Petitioner, and that he was serving on the Debtor a legal document.[50]  A man sitting next to the Debtor asked Yuen if he was a lawyer, and Yuen responded saying he was a staff member of a law firm.[51]

(4)  Yuen asked the Debtor to acknowledge service by signing on a copy of the Cover Letter, but the Debtor refused.  Yuen then placed the sealed envelope on the table in front of the Debtor, during which he deliberately touched the Debtor’s arm with the sealed envelope.[52]  The Debtor did not respond, but pushed the envelope away from him.[53]

49.Ms So submits that in Chan 1^st, the Debtor does not actually dispute too much of the above factual narrative.  He confirms that a “courier” entered the conference room, and asked him to acknowledge receipt of a document in a sealed envelope; when he failed to do so, the courier left the envelope on the table and left.[54]

50.On the other hand, Mr Ho contends that:

(1)  The Debtor’s “unequivocal evidence is that the courier neither informed him that the sealed envelope contained a court document, nor explained to him the nature of the document.  Instead, the courier merely asked [the Debtor] to sign for receipt of a ‘document’ in the sealed envelope”.[55]

(2)  The above step was “insufficient for effective valid service of the SD under Rule 46(2)”, relying on Re See Wah Fan §23.[56]

(3)  The Petitioner’s evidence “is both inconsistent and incredible, and [the Petitioner] has belatedly and impermissibly expanded its initial case to construct a purported case for service” in Tang 1^st and Yuen 5^th.[57]

51.I am unable to accept Mr Ho’s argument. 

(1)  A statutory demand is not a court document.  The practitioners have been reminded of that in PD 3.1 §2.2.  The process server cannot be required to mis-state the nature of the document in the manner suggested. 

(2)  For the reasons explained in §§41-43 above, I do not think there is any basis to impose the requirements governing personal service of documents under the RHC to Rule 46(2).  Rule 46(2) does not require the process server to state that the document being served is a statutory demand. 

(3)  In any event, the Debtor could see by himself that the envelope left in front of him contained a statutory demand as it was so described in the Cover Letter.   

(4)  I do not think that the Petitioner has changed its evidence regarding personal service of the SD at the 21 Jan Meeting.  The minor discrepancies in the narratives identified by Mr Ho do not detract from the fact that the SD was provided to the Debtor personally. 

(5)  Nor do I think that the Petitioner has “expanded” its factual account on personal service on the Debtor. In Yuen 2^nd filed on 11 April 2025, the account on service at the 21 Jan Meeting was set out in §§3-7, and the Debtor has the opportunity to provide his version of event in Chan 1^st filed on 7 July 2025. 

52.Second, it is indisputable that the SD was sent to the Debtor through the Specified Email.  This was done pursuant to the step set out in PD 3.1 §2.1(b) and is sufficient for the purpose of compliance with Rule 46(2).   

53.Mr Ho submits that service of the SD through the Specified Email did not constitute “all reasonable steps to bring the SD to [the Debtor’s] attention” for the following reasons:[58]

(1)  The Petitioner did not in Yuen 2^nd refer to service of the SD by any other modes.  It is “impermissible” for the Petitioner to introduce alternative modes of service in Tang 1^st and Yuen 5^th (Sze Ching Lok v China Resources Power Holdings Co Ltd, HCMP 1655/2013, 31 December 2013 §§17-29).  

(2)  The contemporaneous documents confirm that the Petitioner had previously communicated with the Debtor via (a) WeChat messages; and (b) the Debtor’s email at [email protected] (“Other Email”).  Mr Tang admits that the Debtor has been his WeChat contact since October 2024.[59]  The Debtor also communicated with the Petitioner’s representatives via telephone calls.[60]

(3)  The Petitioner’s inexplicable failure to use these known communication channels strongly points to its failure to effect valid service of the SD.  Even if there may be any uncertainty about the utility of these steps (which is not accepted), the Debtor is entitled to the benefit of any doubt (Re Pang Mei Lan May, §§36, 44(1); DBS v Ng Hi Yin Hydi, HCB 15655/2009, 11 May 2012, §22).

(4)  It is not disputed that the Debtor never used the Specified Email to communicate with the Petitioner at all, let alone “during the period of 12 months immediately preceding the date of the statutory demand”.[61]  This is not a “bare assertion”— the Debtor provided screenshot which confirms that no emails were sent to the Petitioner from the Specified Email.[62] In this regard, the Petitioner cannot rely on the 7 Jan Letter to justify its purported “service” through the Specified Email, as it was raised for the first time in Yuen 5^th,[63] which is impermissible. 

54.The suggestion that the Petitioner only introduced alternative modes of service in Tang 1^st and Yuen 5^th is clearly wrong.  On as early as 21 February 2025, the Petitioner already filed the Certificate of Service, which referred to the fact that the SD had been sent to the Debtor through electronic means pursuant to PD 3.1 §2.1 in that the SD was sent by Yuen to the Specified Email on 21 January 2025 at 12:10pm. 

55.As for Mr Ho’s argument that service of the SD through the Specified Email does not fall within PD 3.1 §2.1(b), Ms So submits (and I agree) that:

(1)  In the 7 Jan Letter, the Borrowers (acting by the Debtor) stated that the Debtor could be contacted at the Specified Email (§16) (see §18(6) above). 

(2)  At least one version of the Debtor’s business card also used the Specified Email.

(3)  Given the above context, the Debtor’s bare assertions that he had not used or accessed the Specified Email are incredible.[64]  By sending the SD to the Specified Email in addition to personal service at the 21 Jan Meeting, the Petitioner had gone above and beyond to ensure that the SD would be brought to the attention of the Debtor, particularly when the Debtor himself confirmed that the Petitioner’s representatives said that the contents of the sealed envelope served at the Meeting would be emailed to him.[65]

56.In the 7 Jan Letter, it was the Debtor who suggested the Petitioner to contact him through the Specified Email regarding the Facilities.  This constituted the Debtor’s agreement to use the Specified Email to receive documents relating to the Debt for the purpose of PD 3.1 §2.1(b).  It was perfectly proper and reasonable for the Petitioner to send the SD to the Debtor through the Specified Email for the purpose of bringing the same to his attention.

57.Third, it is indisputable that the SD was also sent to the Debtor’s Office in the afternoon on 21 January 2025.  The fact that this was the Debtor’s office had been stated in Yuen 1^st filed on 11 April 2025,[66] which the Debtor did not take issue in Chan 1^st.  Although Mr Ho submits that this was only raised by the Petitioner in Tang 1^st and Yuen 5^th, the fact remains that the SD was left at the Debtor’s Office on 21 January 2025.  It was reasonable for the Petitioner to leave the SD at the Debtor’s Office for the purpose of bringing the SD to his attention.

58.As the SD was served on the Debtor in compliance with Rule 46(2) on 21 January 2025, and the Debtor failed to pay the Debt within 21 days thereof, the Petitioner was entitled to present the Petition on 21 February 2025. 

59.For the above reasons, the Service of SD ground must be rejected. 

60.For completeness, I do not think it is right to characterise a failure to comply with Rule 46(2) as a “jurisdiction issue”. 

61.While non-compliance with the BR including Rule 46(2) is a serious matter, it does not follow that the Bankruptcy Court is precluded from making a bankruptcy order at the hearing of the petition whenever there was non-compliance with the BR. 

(1)  As is clear from s.5(3) of the BO, the power of the court in dismissing a petition for non-compliance with the BR is broad and general, and is not fettered in the way contended by Mr Ho. 

(2)  This is reinforced by s.124(1) of the BO, which provides that “no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court.” (underlined added).  It is for the party seeking to invalidate the proceeding to raise and prove the injustice (Butterworths Hong Kong Bankruptcy Law Handbook, 8^th ed., [124.05]). 

62.In the present case, there is no evidence of any injustice which has been caused by the service of the SD.  Even if, contrary to my view, the service of the SD on 21 January 2025 were not in compliance with Rule 46(2), it is clear that no injustice, let alone substantial injustice, has been caused to the Debtor. 

(1)  On the Debtor’s own case, he received and saw the Petition and the SD on 28 February 2025.[67]  Thereafter, he instructed BCC to file the Notice on 28 April 2025.[68]

(2)  There is no suggestion, still less evidence, to show that had the SD been brought to his attention before 28 February 2025, he would have been able to pay the Debt or otherwise comply with the SD.   

(3)  There is therefore no basis to contend that the court must dismiss the Petition or that the court cannot waive any non-compliance with Rule 46(2) and make a bankruptcy order against the Debtor.

B5.  Estoppel ground

63.In opposing a bankruptcy petition, a debtor bears the burden of showing that there is a bona fide dispute on substantial grounds in respect of the debt, and for this purpose, the debtor has to adduce sufficiently precise factual 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, at §27, per Kwan JA (as she then was); Re Soetrisno Farida [2019] HKCFI 2756, at §11, per Ng J).  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, at §10(4), per Ng J).

64.As submitted by Ms So, the Debtor’s case is that, at sometime around the 2 meetings held in May and August 2024 (see §§13-14 above), the NF Parties, the Debtor and the Petitioner allegedly entered into 2 oral agreements (defined as “First Agreement” and “Second Agreement”)[69]:

(1)  By the First Agreement, inter alia, the Petitioner “shall not enforce…the Guarantees…” whilst the Mortgagors shall pursue the sale of the Properties separately with a view to repaying the Facilities, and be afforded “reasonable time to secure and complete such sales” (§60.1).

(2)  By the Second Agreement, inter alia, the Petitioner “shall not enforce…the Guarantees” whilst the Mortgagors are afforded a reasonable time to secure and complete the sale of the Properties, prioritising/pursuing an en bloc sale under a potential offer put forward in around early August 2024 (§§74.1-74.2).

65.Mr Ho submits that there are bona fide disputes on the Debt for 2 reasons:

(1)  By reason of the First and Second Agreements, the Petitioner “induced” the Debtor to reasonably believe that the Mortgagors would be afforded reasonable time to complete the sale of the Properties (with repayment dates subject to further negotiations).

(2)  It is inequitable for the Petitioner to resile from its “promises and/or assurances”, including by seeking to strictly enforce the Guarantees based upon the “formal documentation” by reason that (a) the NF Parties had to forego their existing offers due to the Petitioner’s insistence on prioritising the en bloc sale, and (b) they incurred substantial costs and expenses to achieve the sales of the Properties[70] (Little v Olympian [2024] EWHC 1766 (Ch), §§100 to 101).

66.The above contentions are based on the “promises and/or assurances” allegedly made by the Petitioner and relied upon by the NF Parties and the Debtor.  In addition, Mr Ho argues that the same allegations contained in Chan 1^st also gave rise to “collateral agreements” which are enforceable as independent contracts in that:

(1)  The First and Second Agreements constituted oral collateral agreements.[71] As observed by the CFA in Bank of China v Fung Chin Kan (2002) 5 HKCFAR 515, the modern tendency is to take a “far less restrictive view” on collateral agreements, the courts are “much more willing to accept that a pre-contractual assurance gives rise to a collateral contract, so that such collateral contracts are no longer rare” (§55).  A collateral agreement “must be objectively viewed”, and the parties’ objective intention must be assessed “[o]n the totality of the evidence” (§57).

(2)  The First and Second Agreements were supported by consideration, including (a) entering into formal extensions for repayment under the Facilities,[72] and (b) the “practical benefits” to the Petitioner from the Debtor/Mortgagors’ efforts to sell the Properties (en bloc or individually) so as to maximise the Petitioner’s recovery prospects.  The court “nowadays should be more ready to find the existence of consideration”, and the notion of “practical benefit” is now recognized to encompass maintaining good business relations (Appotech Ltd v 深圳今日芯科技有限公司 [2025] HKCFI 2485, §§30-31).  The court would take a “pragmatic” view on the question of consideration, in light of the longstanding business relationship between the parties.   

(3)  As a matter of law, a collateral agreement takes precedence over the inconsistent wording of a signed contract (Thinc Group v Helen Armstrong [2012] EWCA Civ 1227,  §83).  The Petitioner’s reliance on the “entire agreement” or “no oral variation” clauses in the Facilities[73] is inapplicable, since the First and Second Agreements are independent collateral agreements supported by their own consideration (MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2019] AC 119, 129F).

(4)  The Petitioner’s contention that the written extensions of repayment dates undermine the First and Second Agreements, misses the point.  It was agreed as part of the First and Second Agreements that these extensions were “formal documentation” only, with repayment dates to be subject to further negotiations between the parties.[74]

(5)  A “no oral modification” clause does not preclude estoppel defence — such matters in turn raising “factual disputes which necessitate a careful examination of all relevant oral and documentary evidence” (Re Mega Gold Holdings Ltd [2024] 4 HKLRD 583, §§81-82).  Notably, in MWB, Lord Sumption expressly declined to “explore the circumstances in which a person can be estopped from relying on a contractual provision laying down conditions for the formal validity of a variation” (§16). 

67.In my judgment, the alleged First and Second Agreements bear all the hallmarks of a recent fabrication and cannot constitute a bona fide dispute on the Debt, let alone on substantial ground. 

68.First, the First and Second Agreements were never mentioned in any of the correspondence exchanged or at the meetings held between the parties (each of which was recorded in a call report prepared by the Petitioner): 

(1)  The Debtor is unable to produce any document, be it letter, email or message sent to the Petitioner, where the NF Parties/the Debtor have ever referred to the alleged First and Second Agreements. 

(2)  It is inconceivable that had the NF Parties/the Debtor entered into the alleged First and Second Agreements, they would not have referred to and relied on them during the entire period from August 2024 (when the Borrowers default on the Facilities) to January 2025 (when the 21 Jan Meeting was held) during which the parties actively discussed repayment or restructuring proposals in respect of the Facilities.  This is particularly so when on the Debtor’s case, the alleged First and Second Agreements had the effect of taking away the Petitioner’s right to enforce the Guarantees.

(3)  No explanation, let alone credible explanation, has been proffered by the Debtor as to why he or the NF Parties never referred to the alleged First and Second Agreements in all the communications they had with the Petitioner.

69.Second, more tellingly, even after the Petitioner had informed the NF Parties that it would take enforcement action including appointment of receivers over the Properties, in their 7 Jan Letter, there was still no mention of the alleged First and Second Agreements.  Instead, in the 7 Jan Letter, the NF Parties acknowledged the Petitioner’s right to take immediate enforcement action against them, but sought to persuade the Petitioner not to do so. 

70.Even in the Notice filed on 28 April 2025, there was still no mention of the alleged First and Second Agreements. 

71.Third, the undisputed evidence and the contemporaneous documents (see §§6-7 above) show that in the past 10 years, on each of the 20 occasions when the parties came to an agreement to vary the terms of the Facilities including extension of the final repayment date, such agreement was invariably made in writing and was executed by all relevant parties, either in the form of a supplement prepared by JSM and executed by the Borrowers under seal, or in the form of a letter prepared by the Petitioner and signed by all the NF Parties and the Debtor.  It is wholly incredulous that the Petitioner, having all along insisted on following the formality to record any variation on the terms of the Facilities, would suddenly agree to enter into 2 oral agreements, particularly when such agreements would have the effect of taking away its right to take immediate enforcement action in respect of all the security provided by the Borrowers, the Debtor and the Mortgagors. 

72.As submitted by Ms So, as a matter of inherent probabilities, the Petitioner could not have reached 2 oral agreements with the NF Parties and the Debtor during the period when, inter alia, the parties had entered into a number of written supplemental letter agreements to extend the repayment dates.[75]

(1)  If the parties had agreed on specific parameters for extension of time or forbearance to sue, the same were clearly set out in a supplemental agreement, especially when everyone involved were sophisticated commercial parties.[76]

(2)  This was particularly so when the importance of written documentation was well known to all parties involved:

(a)  In WeChat messages from the Petitioner’s representatives, repeated references were made to the need for written documentation for any possible extension or postponement for repayment.

(b)  Even on the Debtor’s own case, the First and Second Agreements purportedly included terms which expressly referred to the need for “formal documentation” for the extension of repayment dates.[77]

73.Fourth, it is also inconceivable that the Petitioner would have agreed to the alleged First and Second Agreements, which only work to the advantage of the NF Parties and the Debtor, but without any benefit to the Petitioner. 

(1)  As can be seen from the summary in §§6-7 above, in the past 10 years, every time the Petitioner agreed to extend the final repayment date, it was invariably subject to the NF Parties/the Debtor satisfying the condition precedents stated in the supplements or letters (including payment of arrangement fees on some occasions). 

(2)  There was no reason (none has been articulated by the Debtor) as to why the Petitioner would suddenly and gratuitously agree to extend the final repayment date for an uncertain period such as a “reasonable time” (during which the Petitioner cannot take any enforcement action) without any condition or additional benefit in return.   

74.Fifth, the alleged First and Second Agreements are lacking in the most basic particulars, which is a telltale sign of recent fabrication.  In Chan 1^st, the Debtor has not been able to state (1) when and where did the parties enter into the alleged oral agreements, (2) who on behalf of the Petitioner entered into the alleged agreements, and (3) who on behalf of the NF Parties entered into the alleged agreements.

75.Sixth, as pointed out by Ms So, there are express terms under the Facilities which require any amendments to the terms to be in writing:  

(1)  Clause 24 of the NF Facility is an entire agreement clause which supersedes any previous (unwritten) understandings – and subsequent supplemental letters reiterated that the written terms of the NF Facility remained unchanged and continued in full force and effect.[78]

(2)  Clause 21.01 of the AP Agreement provides that no provisions may be amended or waived without an instrument in writing signed by the party. 

76.The above “no oral modification” clauses are binding upon  all parties to the Facilities.  The Debtor has not articulated any basis as to why the NF Parties are not bound by these clauses.  It is futile to refer to the observations of the courts in the cases cited by Mr Ho when the observations were made in the specific context of the evidence considered by those courts.   

77.Seventh, as regards Mr Ho’s argument that the alleged First and Second Agreements are “collateral agreements”, I agree with Ms So that such “collateral agreements” are not supported by any consideration:

(1)  A promise to pay a sum which a debtor is already bound by law to pay does not afford consideration to support a contract (Bank of China (Hong Kong) Ltd v Cosan Limited & Ors,CACV 331/2006, 11 May 2007, §§25-26, citing In re Selectmove Ltd[1995] 1 WLR 474, 480). 

(2)  At the time the NF Parties/the Debtor allegedly entered into the First and Second Agreements, they were already under an obligation to make repayment.  There is no consideration moving from the NF Parties/the Debtor to re-confirm their obligations to make repayment. 

(3)  The Petitioner had since at least August 2024 been entitled to enforce the mortgages over the Properties including taking steps to sell the Properties or appoint receivers over the Properties.  The alleged “promise” to secure and complete a sale of the Properties by the NF Parties would not confer any practical benefit to the Petitioner.  In any event, the alleged “promise” would not work as any sale of the Properties would require the agreement of the Petitioner (qua mortgagee).

(4)  There is no evidence on the alleged “good business relations” alluded to in Mr Ho’s submissions. 

(5)  The costs and expenses incurred by the NF Parties in engaging advisers to assist their work or prepare legal documents[79] do not confer any benefit to the Petitioner. 

78.Lastly, the suggestion that there was any detrimental reliance on the part of the Debtor on any alleged “promises and/or assurances” is based on the allegation that the NF Parties “forego” certain “offers” allegedly received by the NF Parties.  The allegation cannot be true as the NF Parties themselves stated in the 7 Jan Letter that they had not been able to sell the Properties, rather than having foregone any “offers”.   

C.  DISPOSITION

79.For the reasons set out, the Debtor fails to show any valid ground in opposition to the Petition.

80.As the Debtor has failed to comply with the SD and is deemed unable to pay his debts, the Petitioner is entitled to seek a bankruptcy order against the Debtor. 

81.I make a usual bankruptcy order against the Debtor.