Re Ng Yiu Chi Eleanor

HCB 50/2025

[2025] HKCFI 4408

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 50 OF 2025

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J U D G M E N T

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A. Introduction

1.This is the substantive hearing of the Amended Petition presented by the Petitioner (“Philip”) and filed on 11 March 2025 against the Debtor (“Eleanor”) pursuant to s.6 of the Bankruptcy Ordinance (“BO”). Eleanor opposes the Amended Petition.

2.The Amended Petition is based upon the Debtor’s failure to comply with a statutory demand served on Eleanor on 10 May 2023 (“the SD”), requiring Eleanor to pay the costs and interests due to Philip under various costs orders. The Debtor has made an application for an order to set aside the SD in HCSD 21/2023. The setting-aside application was dismissed by Winnie Tsui J (“the Judge”) in a written decision handed down on 9 December 2024 (“the HCSD Decision”). In the said decision, the Judge also made an order pursuant to Rule 48(7) of the Bankruptcy Rules, authorizing Philip to present a bankruptcy petition against Eleanor on or after 23 December 2024.

3.On 3 January 2025, Philip filed the Petition herein. The Petition was amended and refiled on 11 March 2025.

4.Eleanor has lodged an appeal against the HCSD Decision (“the Appeal”), ie CACV 577/2024. The Appeal has not yet been heard.

5.In this hearing, Philip is represented by Mr Raymond Tsang, and Eleanor is represented by Ms Shirley Leung.

6.The background leading to the debt as stated in the SD has been comprehensively set out in the HCSD Decision, and I shall not repeat the same herein. For ease of reference, the abbreviations used in the HCSD Decision are adopted in this judgment.

7.The debt owed by Eleanor to Philip (“the Debt”) arose from the 3 costs orders (“the Costs Orders”) as set out in the HCSD Decision, ie the first costs order, the second costs order and the third costs order. As at 3 January 2025, the total amount owed by Eleanor to Philip under the Costs Orders is HK$20,938,585.61. Details are as follows:

		Taxed Costs	Interest
(1)	HCA 51/2007, 1040-1041/2009 (the first costs order)	$7,397,228.35	$5,440,903.79
(2)	HCA 523/2008, CACV 281/2012 and CACV 1/2013 (the second costs order)	$4,411,282.85	$3,190,514.87
(3)	CACV 21, 24-29/2016 (the third costs order)	$375,000.00	$123,655.75
	Total	$12,183,511.20	$8,755,074.41

B. Grounds of opposition

8.In the Notice of Intention to Oppose Petition filed by Eleanor on 9 April 2025, the grounds of opposition as stated therein can be summarized as follows:

(1) Eleanor has a reasonable prospect of success in the Appeal.

(2) Eleanor has a reasonable prospect of paying off her liabilities owed to Philip.

9.Eleanor’s position is that since she has a reasonable prospect of paying off her liabilities owed to Philip, of that Philip has unreasonably refused to accept the offers made by Eleanor, the Amended Petition should be dismissed under s.6D(3) of the BO. Alternatively, by reason of the aforesaid, and/or by reason of her reasonable prospect of success in the Appeal, these proceedings should be stayed pending the outcome of the Appeal.

C. DISCUSSION

10.With respect, I am of the view that there is no merit in the grounds of opposition put forward by Eleanor.

C1. Ground 1

11.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. It is not sufficient for the debtor to merely raise a cloud of objections on affidavits.[1]

12.Where the debt is based on a judgment, the Bankruptcy Court would treat the judgment as prima facie evidence that the debtor is indebted to the creditor. The Bankruptcy Court would not inquire into the judgment unless there is some evidence to suggest that the judgment was obtained by fraud, collusion or that there is a miscarriage of justice which impinges on the validity of the judgment.[2]

13.Where the judgment debtor has lodged an appeal or an application to set aside the judgment, the Bankruptcy Court may stay the petition to await the outcome of the appeal or application, if satisfied that the debtor has a reasonable prospect of success in the appeal or application.[3]

14.Ms Leung submits that Eleanor has a reasonable prospect of success in the Appeal. Ms Leung submits that the gist of the grounds in support of the Appeal is as follows:

(1) The Judge failed to give sufficient weight to the case and position advanced by Eleanor, as well as her limited role in the restructuring proceedings and the share proceedings. Eleanor should not be held jointly and severally liable for the relevant costs orders, which were also awarded against other members of the Mother Group.

(2) The Judge erred in finding that Eleanor had the burden to prove that Philip was not personally liable to the solicitors for all the costs of the receiving parties. Instead, Philip should bear the evidential burden to show he was personally liable to all the costs incurred (for the restructuring proceedings and the share proceedings) given he had claimed against Eleanor the entire sum of those costs orders.

15.In my view, Eleanor cannot rely upon the Appeal to resist the Amended Petition.

(1) In the circumstances of this case, one must bear in mind that the Debt is a judgment debt, and the judgment giving rise to the judgment debt is not the HCSD Decision, but is the Costs Orders. The Costs Orders constitute prima facie evidence that Eleanor is indebted to Philip for the sums as shown in the Costs Order. Merely showing a reasonable prospect of success in the Appeal (which is an appeal against the HCSD Decision, not an appeal against any of the Costs Orders) would not be sufficient for rebutting the prima facie evidence for her indebtedness.[4]

(2) It is an indisputable fact that as to the Costs Orders, Eleanor has not lodged any appeal. Eleanor has also not made any application to stay the execution of the Costs Orders.

(3) There is no allegation, let alone evidence, suggesting that the first costs order, the second costs order, and/or the third costs order were/was obtained by fraud, collusion or that there is a miscarriage of justice which impinges on the validity of the Costs Orders.

(4) Accordingly, Philip is entitled to enforce the Costs Orders against Eleanor at once.

(5) All the costs under the Costs Orders have been taxed. Eleanor has not lodged any challenge against the taxed costs.

(6) As rightly pointed out by Mr Tsang, in the taxation proceedings of the first costs order and the second costs order, Eleanor filed lists of objections jointly with other unsuccessful defendants. Further, Eleanor did not raise any issue of apportionment before the taxing master. Bearing all these in mind and looking at the allocaturs issued by the taxing master, it is plain that Eleanor and other paying parties are jointly and severally liable to pay the sums as stipulated in the allocaturs to the receiving parties.

(7) As to the contention that Philip is only one of the receiving parties under the first costs order and the second costs order, and hence Philip would only be entitled to claim the costs which he had personally incurred in the proceedings, the Judge has dealt with this contention succinctly at §§75 to 86 of the HCSD Decision. The Judge refused to accept this point made by Eleanor, and the refusal is based upon the principle stated in Re Chan Chi Loi (a debtor)[5] and approved by the Court of Appeal in Cheung Sun Lam v Lai Kam Man[6]. I am of the view that the Judge’s ruling is unimpeachable.

(8) Further, as submitted by Mr Tsang, the grounds put forward by Eleanor in support of the Appeal are merely repetition of the arguments which have already been rejected by the Judge in the HCSD Decision. By merely repeating those arguments in the Appeal, Eleanor has not shown a reasonable prospect of success in the Appeal. I agree. It is well established that an appeal from the judgment made by a judge of the Court of First Instance to the Court of Appeal is not a de novo hearing. In the notice of appeal, the appellant has to identify a justifiable basis upon which the Court of Appeal may interfere in the decision of the judge below. The appeal is not a retrial or a de novo rehearing of the application which has already been determined by the court below. Merely repeating the arguments which have been rejected by the court below would not be considered as constituting any valid ground of appeal.[7]

16.In my judgment, while the Debt arose from the Costs Orders, and there is no appeal against the Costs Order and there is no order staying the execution of the Costs Order, the mere existence of the Appeal (which is an appeal against the HCSD Decision only) would not constitute a valid ground for opposing the Amended Petition. Further or alternatively, I am of the view that Eleanor does not have a reasonable prospect of success in the Appeal. There is no merit in Ground 1.

C2. Ground 2

17.S.6D(3) of the BO provides:

“The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied —

(a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented;

(b) that the acceptance of that offer would have required the dismissal of the petition; and

(c) that the offer has been unreasonably refused,

and, in determining for the purposes of this subsection whether the debtor is able to pay all his debts, the court shall take into account his contingent and prospective liabilities.”

18.The principles concerning s.6D(3) have been succinctly summarized by Linda Chan J in Re Chiu Margaret[8], in which the learned judge said:

“47. The test for determining whether a creditor’s refusal of an offer is unreasonable for the purpose of s 6D(3)(c) was stated by Deputy Judge Timothy Lloyd QC in Re A Debtor (No 32 of 1993) [1995] 1 All ER 628, a case involving s 271(3) of the Insolvency Act 1986 which is in all material respects the same as our s 6D(3). The learned Deputy Judge held that the reasonableness or otherwise of the refusal is to be judged at the date of the hearing and the test is an objective one:-

‘… whether a reasonable creditor, in the position of this petitioning creditor, and in the light of the actual history as disclosed to the court, would have accepted or refused the offer. However, I think it has to be borne in mind that there could be a range of reasonable positions on the part of the hypothetical reasonable creditors. In order to conclude that the refusal was unreasonable, it seems to me that the court has to be satisfied that no reasonable hypothetical creditor would have refused the offer, and that the refusal of the offer was therefore beyond the range of possible reasonable actions in the context.’ (at 639d – f) (underlined added)

48. Since Re A Debtor (No 32 of 1993), the test has been consistently applied and followed by the courts in subsequent decisions. The relevant principles and considerations applicable to s 6D(3)(c) have been summarised by DHCJ Lok (as he then was) in Re Ho Sik Tung Terry [2012] 5 HKLRD 777 (at §10) as follows:

‘(a) in determining whether a petitioner’s refusal of the debtor’s offer is unreasonable, the court has to be satisfied that no reasonable hypothetical creditor in the petitioner’s position, and in the light of the actual history, would have refused the offer: Re a debtor (No. 32 of 1993) [1995] 1 ALL ER 628, 639d-f and 640a-b;

(b) the position should be considered only as between the petitioner and the debtor without regard to the position of other possible creditors or the impact on the entire body of creditors: Re a debtor (No. 32 of 1993), p. 640g;

(c) in considering the debtor's offer, the petitioner is entitled to have regard to his own interests and is not required to balance his interests against those of the debtor, or to take a chance, or to show patience or generosity, even though some creditors might do so. Acting reasonably is not the same as acting justly, fairly or kindly: IRC v. a Debtor [1995] BCC 971, 974B-F;

(d) if a debtor wishes his proposals to be looked at with sympathy, it is incumbent on him to be full, frank and open with the petitioner in respect of his statements of his position: Re a debtor (No. 32 of 1993), p. 640a-c;

(e) in considering a debtor’s ability to repay the debt, no regard should be given to future contingencies such as profit or income from future contracts if he is permitted to carry on his business: Re: Phillip and Lion Far East Ltd, CWU No. 130 of 1991 (17 May 1991); Re: Lam Ngai Fung Tony, HCB 4641/ 2001 (3 December 2001);

(f) future income may be relevant only as part of the total circumstances to be considered regarding whether a debtor’s offer to secure or compound for a debt has been unreasonably refused by the petitioner: Re: Lam Ngai Fung Tony.’”

19.See also Re Li Shu Chung[9], in which Au-Yeung J said:

“112. The court may dismiss a petition if the debtor has made a reasonable settlement offer which, if accepted, would have led to a dismissal of the petition, but which the petitioner has unreasonably refused to accept: s.6D(3) BO and Cheung Wah v China State Bank Ltd [1999] 4 HKC 185, at 190D-E, Ribeiro J (as he then was).

113. The reasonableness or otherwise of the refusal is to be judged at the date of the hearing. The test is whether a reasonable creditor, in the position of this petitioning creditor, and in the light of the actual history as disclosed to the court, would have accepted or refused the offer. In order to conclude that the refusal was reasonable, the court has to be satisfied that no reasonable hypothetical creditor would have refused the offer, and that the refusal of the offer was therefore beyond the range of possible reasonable actions in the context. See Cheung Wah, at 191; Kong King Ong Alexander, HCB 10771/2008 (unrep, 27 August 2009) §19(2), Barma J (as he then was).

114. The petitioner is entitled to have regard to his own interests and may have regard to the fact that in a bankruptcy there will be an investigation of the debtor’s affairs. He is not required to balance his interests against those of the debtor, or to take a chance, or to show patience or generosity. Acting reasonably is not the same as acting justly, fairly or kindly”. See Kong King Ong Alexander, §19(4); Re Cheng Ka Lun Grand, HCB 17553/2002, 23 December 2002, at §10, Kwan J (as she then was).

115. The test is whether the debtor can pay it out of cash or readily realizable assets in his hands. No regard may be given to future contingencies, because those events may or may not happen. See Re Lam Ngai Fung Tony, HCB 4641/2001 (unrep, 3 December 2001), at §§12-13, per DHCJ To.” (Emphasis added)

20.The burden is on the debtor to establish that the petitioner acted unreasonably in refusing to accept the offer made by the debtor.[10]

21.Eleanor has made 3 offers to Philip to secure or compound the Debt. All these offers were rejected by Philip.

22.Ms Leung submits that Philip’s refusal to accept the offers made by Eleanor is unreasonable. Ms Leung invites this Court to exercise the discretion conferred by s.6D(3) of the BO to dismiss the Amended Petition.

23.Before going to discuss the 3 offers, it would be necessary to briefly explain some terms mentioned in these offers first.

(1) Anton Street Proceeds – Hultucktong Enterprises Limited (“HEL”) is a family company. The shareholders of HEL are CAGL and Well Arts Enterprises Limited (“Well Arts”). HEL used to own some properties on Anton Street, which had been sold under a compulsory sale in 2018. In return, HEL is entitled to some sale proceeds (“the Anton Street Proceeds”). Due to the dispute over the directorship and shareholdings of HEL in HCA 51/2007, HCA 1040-1041/2009, CACV 21, 24-29/2016, the Companies Registry has withheld the registration of HEL’s company documents. As a result, the Anton Street Proceeds were withheld by the trustee handling the compulsory sale. Although the dispute over HEL was resolved in CACV 21/2016 and 24-29/2016, Eleanor has commenced HCMP 1248/2023 to challenge the validity of the allotment of the shares by HEL to CAGL and Well Arts. HCMP 1248/2023 was struck out by the Court on 5 March 2024, but Eleanor has lodged an appeal against that decision. Due to the ongoing dispute, the trustee has paid the Anton Street Proceeds into the Lands Tribunal on 15 July 2024. HEL is still unable to file the company documents to the Companies Registry.

(2) Canadian Estate – This is the estate of the late father of the family in Canada. Eleanor is one of the beneficiaries under the Father’s estate in Canada. Mother is the administratrix of the Father’s estate in Canada.

24.On 22 April 2025, Eleanor made the first offer to Philip. Eleanor suggested that the Debt be repaid in the following way:

(1) a monthly payment of HK$100,000 for 5 consecutive years (total: $6M);

(2) by the end of the 5-year period, the registration matter concerning HEL would be resolved and the Anton Street Proceeds held by HEL would then be released and available; and

(3) the Canadian Estate, valued at around CAD$2 million, would provide further security to Philip.

25.On 25 July 2025, Eleanor made the second offer to Philip. Eleanor suggested the following in this offer:

(1) Eleanor agreed and undertook to take all necessary steps to facilitate the prompt distribution of the Canadian Estate according to Canadian Law;

(2) Eleanor (and/or other members of the Mother Group) will assign or transfer her (or their) shares in CAGL to Philip for settling the Debt;

(3) to facilitate the distribution of the Anton Street Proceeds, Eleanor (and/or other members of the Mother Group) agreed to withdraw, remove and/or annul all company returns filed with HEL and provide written confirmation that all disputes concerning the ownership and directorship of CAGL and HEL had been settled; and

(4) Eleanor (and/or other members of the Mother Group) are prepared to pledge their respective shareholdings in CAGL to secure the Debt.

26.On 3 September 2025, Eleanor made the third offer to Philip. In this offer, Eleanor said the following should be sufficient for settling the Debt :

(a) Eleanor referred to the Opening Submissions of Philip Group in HCA 51/2007, in which it is stated the in 2012, the value of 12.26% of CAGL shares was HK$8,759,770. The Hong Kong real estate market has experienced significant appreciation since 2012. Based upon all these, Eleanor said that the 18 shares of CAGL held by herself and Angela should be worth more than HK$18 million.

(b) Her entailment and Angela’s entitlement under the Canadian Estate should be HK$2,096,190; and

(c) Anton Street Proceeds entitled by Eleanor and Angela, which should be substantial.

27.Mr Tsang submits that Philip’s refusal to accept the offers made by Eleanor is not unreasonable:

(1) The Anton Street Proceeds in fact belong to HEL, a subsidiary of CAGL. Even if the Anton Street Proceeds are to be distributed by HEL to CAGL as dividends, such money still legally and beneficially belongs to CAGL, instead of Eleanor. Further, the Registrar of Companies is only prepared to accept the rectification of the company returns if a court order under s.42 of the Companies Ordinance is obtained. It would certainly take time for HEL to make the necessary applications to rectify the company records of HEL. It thus remains unclear when the Anton Street Proceeds would finally be released by HEL.

(2) CAGL is currently co-owned by (a) members of the Philip Group, (b) Eleanor and Angela, and (c) the trustees-in-bankruptcy of the estates of Jeremy[11], the mother and Andrew[12].

(a) Even if Eleanor can persuade Angela to sell the shares held by them to Philip, there is no indication as to how the shares in CAGL now held by the trustees-in-bankruptcy would be administered.

(b) Further, CAGL is exposed to Jeremy’s claim (amongst others) in HCA 188/2010, which concerned the ownership of another subsidiary of CAGL, Excellent Best Development Limited (“Excellent Best”), and the landed properties owned by Excellent Best. Despite HCA 188/2010 has been struck out by the decision made by Mimmie Chan J on 18 September 2025 (ie one day before this hearing), it is not known whether Jeremy would lodge an appeal against that decision. At the moment, it cannot be said that the litigation in HCA 188/2010 has been finally settled. That litigation would certainly affect the value of CAGL.

(c) There is another litigation (ie HCA 1942/2024) between Excellent Best on the one hand and Jeremy and others on the other hand. In that litigation, Excellent Best is seeking an order to recover possession of some properties occupied by Jeremy. On 15 August 2025, in breach of an unless order made in that case, Jeremy filed a defence and counterclaim in that action, in which Jeremy claims that Excellent Best is holding the properties on trust for his children and the estate of Jeremy’s late wife. Jeremy has made an application for relief from sanction, that application has been heard but decision on the application is pending. The outcome in HCA 1942/2024 would also affect the value of CAGL.

(d) Against the aforesaid background, understandably, Philip has no interest to acquire further shares in a company of such chaotic state. Further, CAGL is a private company. Coupled with the ongoing litigation and the chaotic state of the company’s records, it is also virtually impossible for Philip to realize the offered shares to settle the Debt in the foreseeable future.

(3) Regarding the Canadian Estate, no steps have been taken by the mother to distribute the same, and no explanation has been given for the delay. Up to the present, the Canadian Estate remains to be undistributed. Eleanor did not explain how she could facilitate the distribution of the Canadian Estate when the administratrix was adjudged bankrupted, and has taken no action there since. Further, the total value of the Canadian Estate is only around CAD2.3 million. Even taking into account Angela’s entitlement, their shares of the Canadian Estate are only around CAD376,335.84 (approximately HK$2.1 million), which is only around 10% of the Debt. Eleanor certainly cannot rely upon the Canadian Estate to make out a satisfactory offer.

28.I agree with Mr Tsang and accept his submissions.

29.Further, as to the alleged support from Angela, all Eleanor can produce is only a written consent (“the Written Consent”) dated 1 September 2025 purportedly signed by Angela. Even taking the Written Consent at its face value, what Angela has said therein is that she is willing to use her entitlement in the Anton Street Proceeds and her shares in CAGL to support Eleanor to repay the Debt. Angela has not said that she would use her entitlement in the Canadian Estate to support Eleanor. For the reasons set out in §27(1) and §27(2) above, even with the Written Consent, Philip’s refusal to accept any offer based upon the Anton Street Proceeds and the CAGL shares cannot be said as unreasonable.

30.Ms Leung also submits that Philip has unreasonably ignored the requests for information of CAGL made by Eleanor. The refusal to provide information of CAGL to Eleanor is an unreasonable conduct on Philip’s part. Ms Leung has drawn my attention to the following:

(1) On 29 December 2023, before Philip presenting the Petition herein, Eleanor had offered to pledge or to sell her shareholding in CAGL to Philip to settle the Debt under the SD. To ascertain the value of her shareholding in CAGL, Eleanor requested Philip to disclose the financial information of CAGL since 1997 and obtain a fair and current valuation of the company via engaging a mutually agreed independent auditor.

(2) On 7 November 2024, Eleanor made the second request to Philip for disclosure of the audited financial statements of CAGL from 1997 to the date of the letter.

(3) On 22 April 2025, when Eleanor made the first offer to Philip, she reiterated her disclosure request for up-to-date audited financial accounts of CAGL since 1997.

31.There is no dispute that the aforesaid disclosure requests were ignored by Philip. However, the unreasonableness in s.6D(3)(c) of the BO is unreasonableness in refusing to accept the offer made by the debtor, not unreasonableness of any other kind. In my view, by reason of the matters as set out in §27(2) above, irrespective of value of the shares of CAGL, those shares cannot be readily realizable assets. That being the case, it cannot be said that Philip is unreasonable in refusing to accept any offer made by Eleanor based upon the shares of CAGL.

32.In my judgment, Ground 2 is not made out.

D. DISPOSITION

33.As said in the above, the Debt is a judgment debt, arose from the Costs Order. Philip is prima facie entitled to enforce the Costs Order by the Amended Petition. Eleanor has not put forward any valid ground in opposition. Accordingly, the Amended Petition must be allowed.

34.I make the usual bankruptcy order with costs against Eleanor.

35.It remains for me to express my gratitude to both Mr Tsang and Ms Leung for the helpful assistance rendered to the Court.

Mr Raymond Tsang, instructed by Philip S.W. Chan & Co., for the Petitioner

Ms Shirley Leung, instructed by HK & YJ Solicitors, for the Debtor