Re Gregory Trevor

HCB 3171 & 3172/2024
(Heard together)

[2025] HKCFI 4591

HCB 3171/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 3171 OF 2024

________________________

________________________

AND 

HCB 3172/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 3172 OF 2024

________________________

________________________

(Heard together)

________________________

J U D G M E N T

________________________

1.Before the Court are 2 petitions, both presented by The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) on 9 May 2024 (“Petitions”), for bankruptcy orders against Mr Trevor Gregory (in HCB 3171/2024, “Mr Gregory”)  and Mr John Victor Bottomley (in HCB 3172/2024, “Mr Bottomley”)  on the ground that they have failed to comply with statutory demands served in November 2021 and January 2022 respectively.

2.Both Petitions are based on the liabilities of Mr Gregory and Mr Bottomley as guarantors for the debts of Can Build Management Limited (“CBM”)  owed to HSBC.  Mr Gregory and Mr Bottomley are shareholders and beneficial owners of the Company and, until it was wound up by the Hong Kong Court on 21 February 2022, its only directors.  Though arose out of the same underlying liabilities, the petitioning debts differ in amount[1] as the statutory demands were issued on different dates. There is no dispute as to either of the petitioning debts.

3.The only issue in contention is whether the Court has jurisdiction as provided under section 4 of the Bankruptcy Ordinance (Cap. 6)  (“BO”)  to make bankruptcy orders against Mr Trevor and Mr Bottomley.

4.Section 4 of the BO sets out the conditions, in terms of the debtor’s connection with Hong Kong, that must be satisfied for the Court to have jurisdiction to entertain a bankruptcy petition against him.  HSBC relies on the following 3 limbs against Mr Gregory and Mr Bottomley:-

(1)  the debtor is domiciled in Hong Kong (section 4(1)(a));

(2)  at any time in the period of 3 years ending with the date of the presentation of the petition the debtor has had a place of residence in Hong Kong (section 4(1)(c)(i)); or

(3)  at any time in the period of 3 years ending with the date of the presentation of the petition the debtor has carried on business in Hong Kong (section 4(1)(c)(ii)),

all of which are disputed by Mr Gregory and Mr Bottomley.

5.At the hearing, Mr Tom Ng, counsel for HSBC, focused his submissions on the “domicile” limb and the “carry on business” limb, although I understand HSBC continues to rely on all 3 limbs.

BACKGROUND FACTS

6.Both Mr Gregory and Mr Bottomley were born in the United Kingdom. They both hold British passports and Hong Kong permanent identity cards.

7.Mr Gregory came to Hong Kong in 1982 and Mr Bottomley came to Hong Kong in 1990. They both had background in construction project management, and they came to be acquainted while in Hong Kong through working in the same company.

8.In around 1993, they left their jobs in Hong Kong and set up a business together under the “Can Build” brand, specializing in the production of glassfibre reinforced products and providing services for glass reinforced concrete projects including design, fabrication, delivery and technical support.

9.It is said that several “Can Build” companies were incorporated in different jurisdictions, with CBM, which was incorporated in Hong Kong and acquired in 1994, being the main entity that managed all the “Can Build” companies and projects. Mr Gregory and Mr Bottomley were the only beneficial owners[2] and only directors of CBM.

10.They say that while they were based in Hong Kong, they spent much of their time working on “Can Build” projects outside Hong Kong, because between 1994 and 2022 “Can Build” had undertaken projects in Singapore, Mainland China, Macau, Malaysia, Vietnam, Philippines, various countries in the Middle East, Italy, United Kingdom and the USA.

11.CBM had a banking relationship with HSBC. By a facility letter dated 27 October 2015 (as amended and revised by facility letters dated 6 July 2016 and 3 January 2017), HSBC advanced various loans, overdraft, performance bonds and credit card facilities to CBM. One of the securities for the aforesaid facilities was a guarantee limited to US$8,149,660 from Mr Gregory and Mr Bottomley, which they executed on 26 November 2015.

12.It appears that around that time (in 2014 and 2015), “Can Build” encountered under-payment problems from the employers in 4 projects which adversely affected CBM’s cashflow and its ability to service its debts and pay its employees.  This led to:

(1)  HSBC commencing proceedings against CBM in 2017 in HCA No. 1224 of 2017, which resulted in a Judgment in HSBC’s favour for the sums of HK$23,046,434.98 and US$900,000 and interest and costs (“CBM Judgment”); and

(2)  the Labour Department prosecuting CBM and its directors, Mr Gregory and Mr Bottomley, in February 2018 for contravention of the Employment Ordinance (Cap. 57)  in failing to pay CBM’s employees, which resulted in a collective fine of HK$1,830,000.

13.Following the CBM Judgment, between 2018 and 2019, CBM made repayments totalling HK$14,853,155 to HSBC. This was followed by an agreement reached between CBM and HSBC on 24 December 2019 on the repayment schedule for HK$18,700,000 in full and final settlement of the CBM Judgment, and a revised agreement dated 21 September 2020, after Covid-19 began.

14.It is said that CBM was unable to fulfil either of the aforesaid agreements due the disruption to its business caused by Covid-19 save for certain sporadic repayments. In the end HSBC presented a creditor’s petition against CBM on 3 November 2021 and CBM was wound up on 21 February 2022.

15.Meanwhile, on 11 March 2021 HSBC issued a statutory demand against Mr Bottomley based on the then outstanding amount owed by CBM for which he was liable as guarantor, and on 11 November 2021 HSBC issued another statutory demand against Mr Gregory based on the then outstanding amount owed by CBM[3] for which he was liable as guarantor.

16.HSBC was not able to serve the statutory demands on Mr Gregory and Mr Bottomley personally. There were attempts to serve them electronically and at addresses in different jurisdictions known to HSBC.  In the end, after a course of correspondence up to at least February 2024 seeking to address the Registrar’s requisitions, HSBC eventually obtained leave to issue the Petitions which it then presented on 9 May 2024.

17.As mentioned above, Mr Gregory and Mr Bottomley do not dispute the petitioning debts; their only basis to oppose the Petitions is that HSBC has failed to meet the requirements of section 4 of the BO it relies on (see paragraph 4 above), and as such the Court has no jurisdiction in respect of the Petitions.

ISSUE 1 – DOMICILE

18.The issue falls to be determined within the following compass – there being no dispute that the domicile of origin of Mr Gregory and Mr Bottomley is the United Kingdom (as they were born and raised there):

(1)  Have they acquired Hong Kong as a domicile of choice? HSBC contends that they have; Mr Gregory and Mr Bottomley say they have not and their domicile of origin continued to subsist throughout their time here.

(2)  If they have acquired Hong Kong as a domicile of choice, have they abandoned it, with the result that their domicile of origin is revived? HSBC says that they have failed to demonstrate abandonment; they argue that they have in this alternative scenario.

A.   The Law

19.The principles in respect of domicile are not in dispute between the parties and are summarized below:

(1)  “Domicile” is a legal concept distinct from “permanent home”. The requirements of domicile go beyond those of permanent home. A person who desires to acquire a domicile in a country or place must intend to reside in it permanently or indefinitely.

(2)  An independent person can acquire a domicile by, and only by, residing there with the intention to reside there permanently or indefinitely.

(3)  In determining whether a person has the intention to reside permanently or indefinitely in a place, the court must have regard to the motive for which he has taken up residence there.

(4)  To acquire a domicile in a country or place, a person must freely choose to reside there and must not reside there because he is prescribed or dictated by external factors such as duties of office, the demands of creditors or the need to seek medical treatment.

(5)  If a person has a special purpose for going to and staying there and he will leave that place once the purpose is achieved, then he lacks the intention to stay in that place as required by law and hence cannot acquire a domicile in that place.

(6)  The intention of residence must be fixed and must be for the indefinite future. It is not enough that at any given point in time its length has not been determined.

(7)  The existing domicile of a person is deemed to continue until it is proved that he has acquired a new domicile, and he who asserts a change of domicile bears the burden of proving the truth of the assertion.

(8)  As abandonment or change of domicile is a very serious issue, satisfactory evidence is needed to prove an intention to change a domicile.

(9)  Further, a domicile of origin is distinguishable from a domicile of choice in 2 respects. Firstly, a domicile of original is more tenacious, in that it is more difficult to prove that a person has abandoned a domicile of origin than to prove that a person has a abandoned a domicile of choice. Secondly, if a person leaves the country of the domicile of origin, intending never to return to it, he continues to be domiciled there until acquiring a domicile of choice in another country; but if a person leaves the country of his domicile of choice, intending never to return to it, the domicile of choice is immediately lost, and unless and until a new domicile of choice is acquired the domicile of origin revives.

(10)  Any circumstance which is evidence of a person’s residence, or of his intention to reside permanently or indefinitely in a country, must be considered in determining whether he has acquired a domicile of choice in that country.

See Re Ip Pui Man Nina [2011] 3 HKLRD 299, §30; Re Cao Zhong [2021] HKCFI 3143, §§52-53; see also Dicey, Morris and Collins on The Conflict of Laws, 16^th edn, Vol 1, §6-034 (under Rule 11)  and §§6R-049-6-051 (under Rule 12)  for the propositions in (9)  and (10).[4]

20.Given the domicile of origin of Mr Gregory and Mr Bottomley is not disputed to be United Kingdom, HSBC bears the burden to show that they have acquired Hong Kong as a domicile of choice.  If HSBC is able to discharge that burden, Mr Gregory and Mr Bottomley bear the burden to show that they have abandoned Hong Kong as a domicile of choice.

21.In either case, the burden can only be discharged on satisfactory evidence.

22.Mr Ng complained about the affidavit evidence filed by and on behalf of Mr Gregory and Mr Bottomley, saying that they consisted of bare assertions or assertions which should have been supported by documentary evidence available to them (for example their travel records in and out of Hong Kong obtained from the Immigration Department), and invited the Court to draw adverse inference against them.

23.In my view, Mr Ng’s complaint goes to the quality of the evidence. This is not a case of drawing adverse inference because Mr Gregory and Mr Bottomley (and Mr Bottomley’s wife, who also swore an affidavit)  did set out the relevant facts with some particularity (for example, how many days in which month they were present in Hong Kong, and the hotel they stayed in on that occasion). So it is not a case that they clearly have knowledge about certain facts relevant to the issue which they fail to adduce evidence on.

24.As to the quality of the evidence, I have to look at them holistically and in their proper context. As indicated above, Mr Gregory and Mr Bottomley have condescended with some particularity as to the details of their lives, their families, and their comings and goings since 2018. HSBC also relies on those sworn testimony to substantiate its case on acquisition of domicile of choice. In the circumstances, I do not consider I should discount their evidence simply on the basis that they could in theory (say)  go to each of the hotels they stayed in since 2018 and ask for documentary proof that they did stay there. Accordingly I will consider the evidence in the light of their particularity, their consistency against documents that are available, their inherent probabilities, and bearing in mind that any assertion of subjective intention (as opposed to a fact)  may have a self-serving dimension to it given the parties are in dispute and have taken opposing positions. 

B.   The facts – Mr Gregory

25.Mr Gregory was born in the United Kingdom in 1955.  He was raised there and received education there. After he left school he worked in 2 construction companies in the United Kingdom until 1982.  He holds a British passport.

26.In 1982, Mr Gregory moved to Hong Kong with his family (his former wife and their eldest son)  to take up employment with Leighton Contractors (Asia)  Limited.  He only stayed there for a year and moved to work for Construction Techniques Limited (“CTL”)  in Hong Kong in 1983. There he met Mr Bottomley, who moved to Hong Kong to work for CTL in 1990.

27.In 1993, Mr Gregory and Mr Bottomley left CTL and set up their own business under the “Can Build” brand. As mentioned in paragraphs 9 and 11 above the main entity managing the various “Can Build” companies and projects was CBM, a Hong Kong company of which Mr Gregory and Mr Bottomley were the only beneficial owners and directors, and CBM was also the main treasury company that obtained financing and received payments for the projects.

28.Both Mr Gregory and Mr Bottomley stated that while they were “based in Hong Kong” or “[used] Hong Kong as a hub”, they had to work and reside out of Hong Kong for periods ranging from a few days to several months to work on the “Can Build” projects all over the world (see paragraph 10 above).

29.Although he had to travel and leave Hong Kong for work, Mr Gregory’s family lived in Hong Kong. After he and his former wife moved here, they have 2 more children, born in 1983 and 2000 in Hong Kong. They were all schooled in English Schools Foundation schools here, until 1989 when the eldest son went to the United Kingdom for boarding school, and 1993 when the second daughter went to the United Kingdom also for boarding school.

30.Mr Gregory applied for and obtained a Hong Kong permanent identity card and he still holds one, which he considers to be useful as it absolves him of the need to apply for a work visa to continue working in Hong Kong.

31.In addition to CBM, Mr Gregory was a director to 17 other Hong Kong companies, though all of those appointments were made before May 2021 and the vast majority of those companies have already been dissolved.

32.In 2015, Mr Gregory’s former wife and his youngest son moved to the United Kingdom, and they have lived there since together with the second daughter (the eldest son lives in Bali).

33.In 2018, CBM took on a very substantial private construction project in the United Kingdom, and Mr Gregory says that he decided to leave Hong Kong in March 2018 and based himself back in the United Kingdom.

34.Before he left in March 2018, Mr Gregory rented a very small service apartment on his own at Baybridge at Castle Peak Road (“Baybridge Apartment”). After he left in March 2018 he continued to rent the Baybridge Apartment and kept his personal belongings there.

35.In September 2018, Mr Gregory accepted a job offer to work in Duhai. Between 2018 and 2021 he was travelling between the United Kingdom and Dubai to work on both projects. He obtained a Dubai resident card since October 2018. He is now based in Dubai and claims that he intends to stay there for the foreseeable future.

36.He returned to Hong Kong on 8 January 2020 to vacate the Baybridge Apartment, because he said he had decided to make his home in Dubai and would not be returning to Hong Kong.

37.Thereafter he had stayed in Hong Kong on 4 occasions (though he accepts he had passed through or transited Hong Kong on other occasions)  in order to attend the Hong Kong Rugby Sevens or meetings relating to it, as he was the chairman of the Hong Kong Rugby Union and one of the 3 manages of the “Rugby Syndicate” registered with the Hong Kong Jockey Club, staying 11 days (October to November 2022[5]), 7 days (March to April 2023), 4 days (April 2024)  and 2 days (20 to 21 January 2025).  In each of those stays he lived in named hotels.

C.  The facts – Mr Bottomley

38.Mr Bottomley was born in the United Kingdom in 1962.  He was raised there and received education there. After he left school he worked in a construction company in the United Kingdom until 1990. He holds a British passport.

39.In 1990 he moved to Hong Kong on his own to take up employment with CTL, where he met Mr Gregory.

40.In 1993 he and Mr Gregory left CTL and set up their own business, managed through CBM (see paragraphs 27 to 28 above).  Like Mr Gregory, he had to travel to places outside of Hong Kong to work on projects, for periods ranging from a few days to several months, though he “[used] Hong Kong as a hub”.

41.Mr Bottomley met his wife, a Chinese lady born and raised in Hong Kong, when he was here and they married in 2002.  They have 2 sons born in Hong Kong in 2004 and 2007.  The family lived in Hong Kong and the sons received education here in English Schools Foundation schools, until they left for university in the United Kingdom.

42.Mr Bottomley applied for and obtained a Hong Kong permanent identity card and he still holds one, which he considers to be convenient for going in and out of Hong Kong.

43.In addition to CBM, Mr Bottomley was a director to 13 other Hong Kong companies, all but 2 have already been dissolved. One such company, Jade Connects Limited (“JCL”), was highlighted by HSBC as a company wholly owned by Mr Bottomley’s wife in which Mr and Mrs Bottomley are the only directors. This company was dissolved in 2023. There is no evidence as to what, if any, the business of this company was prior to dissolution.

44.In 2003 Mr Bottomley and his wife purchased a property in Tseung Kwan O in Hong Kong, and in 2007 they sold that property and acquired a bigger one in the same development. It appears that this property had been charged to HSBC as security for CBM’s debts, and after HSBC obtained the CBM Judgment (see paragraph 12(1)  above), it took enforcement action against this property in 2018 and obtained vacant possession thereof.

45.Following that, in 2018 Mr Bottomley and his family moved into rented accommodation in the same housing estate (“TKO Flat”).

46.Like Mr Gregory, since 2018 Mr Bottomley had to travel and spend time in the United Kingdom to work on a CBM project there (see paragraph 33 above).

47.Mr Bottomley says that given the constant travelling between United Kingdom and Hong Kong and his intention to re-settle in the United Kingdom at some point, he and his wife decided that they would move to the United Kingdom as a family in the summer of 2020 (which would coincide with their eldest son completing GCSC examinations and before commencing his higher-level education).

48.To that end, in January 2020, Mr Bottomley departed Hong Kong with a view to set up home in the United Kingdom.  Thereafter he returned to Hong Kong on 3 occasions, for 2 shorter stays in January 2020, and a 8-day stay in March 2020 when he helped pack up and arrange the removal of some domestic items prior to the main move in summer 2020. He then left Hong Kong on 21 March 2020.

49.In July 2020, Mrs Bottomley gave up possession of the TKO Flat and moved with her 2 sons to a hotel, where they stayed until mid August 2020 when they departed Hong Kong for the United Kingdom.

50.After 21 March 2020 Mr Bottomley has returned to Hong Kong on 5 occasions, staying a total of 32 days in different named hotels.  Three of those 5 occasions were for attending the Hong Kong Rugby Sevens (October to November 2022, March to April 2023, April 2024).

D.  Analysis

51.For the reasons set out below, I find that:

(1)  Mr Gregory and Mr Bottomley have respectively acquired Hong Kong as a domicle of choice; and

(2)  they have both abandoned Hong Kong as a domicile of choice, in Mr Gregory’s case since January 2020, and in Mr Bottomley’s case since March 2020.

D.1  Mr Gregory

52.I find that Mr Gregory has taken up Hong Kong as his domicile of choice at least since 1993.

(1)  Although he first came to Hong Kong with his family for the specific purpose of employment and he was employed here for 11 years with 2 successive employers, by 1993 he decided to set up his own business with Mr Bottomley in Hong Kong. Even though the projects the “Can Build” business took up were not confined to Hong Kong but were all over the globe, he chose to set up CBM in Hong Kong as the main operating entity, and carried out the key functions of the business (other than actual project management, which has to be done on site), including financing and employment, here. In his own words, he was “based in Hong Kong” even though he had to travel frequently for work purpose.

(2)  At the same time, his family was in Hong Kong and he grew his family here. His then wife was in Hong Kong at all times.  His 2 older children lived and were educated here until they were old enough to be sent to boarding school. While they were in boarding school or university in the United Kingdom the family was still living in Hong Kong. His youngest son was born in Hong Kong long after his siblings have left for school in the United Kingdom, and he was also educated here until he was 15 (in 2015), when he and mother went to live in the United Kingdom.

(3)  Further, he has obtained a Hong Kong permanent identity card. In so doing he would have satisfied the Immigration Department that he has taken Hong Kong as his place of permanent residence, this being one of the 3 requirements that must be satisfied under Article 24(2)(4)  of the Basic Law, being the only route which persons not of Chinese nationality (like Mr Gregory)  could acquire permanent residence in the Hong Kong Special Administrative Region. Although this requirement is not synonymous with the intention to reside permanently or indefinitely, it reinforces the notion that the quality of Mr Gregory’s residence here was imbued with a decree of permanence or indefiniteness.

(4)  As to Mr Gregory’s role in the Hong Kong Rugby Union or his representation of Hong Kong in the Asia Rugby league, which HSBC lays emphasis on, I do not consider that to be a significant factor. While that may show he had built some connections in the community, that of itself does not show that he intended to reside here permanently – many expatriates who are in Hong Kong for a limited duration (for example for secondment in his employment for a fixed period of time)  may take up positions in local committees or organizations that they have association with while here, which roles they may give up or continue with after they leave.

(5)  I consider that the above demonstrate that Mr Gregory has at least since 1993 been residing in Hong Kong with the intention of residing here permanently or indefinitely.

(6)  In this regard, I do not consider my finding of intention is negated or undermined by Mr Gregory’s assertions in affidavit that he considers he has always been domiciled in the United Kingdom (his domicile of origin)  while he was in Hong Kong.

(a)  The relevant intention is a question of fact to be found, based on all the contemporaneous factual circumstances known; Mr Gregory’s statement of his then intention is part of the factual matrix to be taken into account, but would by no means be decisive.

(b)  In the present case, the objective and contemporaneous evidence of how Mr Gregory organized his life, his family and his business up to 2018 clearly indicate that at that time he was residing in Hong Kong without the intention of leaving it, which would suffice to show the necessary intention for a domicile of choice.

(c)  In any event, his statement of intention is that he intended to return to the United Kingdom “at am appropriate time, at the very latest upon [his] retirement” and “when the time is ripe”. Such vague statements of a possibility of returning to the United Kingdom one day is insufficient to negate his state of mind above for acquiring a domicile of choice: Dicey, Morris & Collins §6-043.

53.I also find that Mr Gregory has abandoned his domicile of choice since January 2020.

(1)  The fact that he had been residing in the United Kingdom and Dubai between 2018 and 2020, that he gave up the Baybridge Apartment and removed all his personal belongings from Hong Kong in January 2020, and his statement that he would not be returning to Hong Kong and would make Dubai his home going forward clearly indicate his intention to abandon Hong Kong as his domicile.

(2)  His occasional visits thereafter, each of short duration and for specific purpose, are insufficient to undermine the clear inference to be drawn from the aforesaid facts.

54.In the premises, since January 2020 Mr Gregory ceased to be domicile in Hong Kong. HSBC accordingly fails to establish the “domicile” limb as he was not domiciled in Hong Kong when the Petition was presented on 9 May 2024.

D2.  Mr Bottomley

55.As to Mr Bottomley, I find that he has taken up Hong Kong as his domicile of choice since 1993.

(1)  I repeat the matters in paragraphs 52(1)  and (3)  above, which apply to Mr Bottomley mutatis mutandis.

(2)  As to Mr Bottomley’s family situation, he met and married his wife in Hong Kong, they raised their family here, and their 2 sons were born and educated here until the whole family moved to the United Kingdom in 2020.

(3)  Meanwhile, Mr Bottomley and his wife purchased a home for the family in Hong Kong, which they would have continued to keep and live in but for the fact that HSBC had enforced against it and obtained possession thereof. Even after they had to vacate their acquired property, they continued to live in Hong Kong, in the same housing estate in rented accommodation.

(4)  The above strongly indicate that Mr Bottomley was not only residing in Hong Kong but he was intending to reside here indefinitely with no intention to leave.

(5)  I also do not consider that Mr Bottomley statements of intention to be inconsistent with the aforesaid intention I found. Those statements are vague (“My intention was always to return to the UK at an appropriate time, at the very latest upon my retirement”, “resettle in the UK at some stage”)  and cannot negate the intention for acquiring a domicile of choice.

56.In addition, I find that Mr Bottomley has abandoned his domicile of choice since March 2020.

(1)  There is sufficiently cogent evidence of abandonment given (a)  he had gone to the United Kingdom in January 2020 with a view to setting up home for the family there; (b)  he returned to Hong Kong in March 2020 to help pack and clear out the TKO Flat; (c)  his wife and children surrendered the TKO Flat in July 2020 and moved to the United Kingdom in August 2020; and (d)  his statement (corroborated by his wife and consistent with the facts above)  that he and his wife decided that they would move to the United Kingdom as a family in the summer of 2020.

(2)  His occasional visits thereafter, each of short duration and for specific purpose, are insufficient to undermine the clear inference to be drawn from the aforesaid facts.

(3)  I do not consider that HSBC’s reliance on JCL (paragraph 43 above)  advanced its case. HSBC sought to rely on the fact that JCL was only deregistered in 2023 to argue that Mr Bottomley (as its director)  continued to be domicile in Hong Kong. As mentioned above, there is no evidence as to what business (if any)  JCL had, and it was a company wholly owned by Mr Bottomley’s wife, not Mr Bottomley himself. The fact that Mr Bottomley’s wife decided to deregister her company in 2023 is unable to override the clear evidence on abandonment of domicile by Mr Bottomley as set out above.

57.As such, Mr Bottomley has since March 2020 ceased to be domicile in Hong Kong. HSBC accordingly fails to establish the “domicile” limb as he was not domiciled in Hong Kong when the Petition was presented on 9 May 2024.

ISSUE 2 – ORDINARY RESIDENCE

58.Again, there is no dispute as to the applicable principles, which are summarized as follows:

(1)  The term “ordinarily resident” construed according to its natural and ordinary meaning refers to a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of long or short duration.

(2)  In other words, the person must be habitually and normally resident in that particular place, apart from temporary or occasional absences or long or short duration.

(3)  The word “habitually” refers to 2 necessary features, namely (i)  residence adopted voluntarily and (ii)  for settled purposes.

(4)  In relation to (ii), there must be a degree of settled purpose; all that is necessary is that the purpose of living where one does has sufficient degree of continuity to be properly described as settled.

(5)  The question of whether a debtor is ordinary resident in Hong Kong within the relevant period is one of fact and degree. It is not necessary for the petitioner to show that the debtor was ordinarily resident in Hong Kong throughout the period of 3 years. The consideration is whether the debtor was ordinarily resident in Hong Kong of unspecified duration at any time during the period of 3 years.

See Re Wong Lei Kwan Joanne [2009] 3 HKLRD 173, [16]; Re Cao Zhong §§34-35.  

59.This limb can be disposed of quickly in light of my findings above.

60.HSBC’s only contention in relation to both Mr Gregory and Mr Bottomley is that they have not exhibited documentary evidence to show that they have respectively given up the Baybridge Apartment in January 2020 and the TKO Flat in July 2020.

61.I do not accept that to be a valid criticism.  Mr Gregory and Mr Bottomley have given fairly detailed evidence as to the circumstances in which they gave up those premises, and in Mr Bottomley’s case that was also corroborated by the affidavit of his wife. Their evidence is consistent with the documentary evidence available, which shows that after the respective dates on which they say they gave up those premises, the addresses of those premises were no longer used or cited in their correspondence or public documents as locations at which they could be reached.  I repeat paragraph 24 above, and see no reason not to place weight on their sworn testimony on those matters.

62.In the premises, I find that HSBC has failed to demonstrate the “place of residence” limb, as neither Mr Gregory nor Mr Bottomley had a place of residence in Hong Kong between 9 May 2021 and 9 May 2024.

ISSUE 3 – CARRY ON BUSINESS

63.There is, again, no real dispute between the parties on the applicable law:

(1)  The “carry on business” limb is not satisfied by showing merely that a person is running his company’s business even though he is the sole beneficial shareholder and is in complete control. A person is not regarded as carrying on business in Hong Kong simply because he is organizing or managing or takes charge of the business of a company in this jurisdiction, whether as a director or otherwise. This follows from the fundamental doctrine of the separate legal personality of a company.

(2)  However, it is still possible, on the totality of the evidence, that the aforesaid person is also conducting a separate business of his own. It is a factual question that depends on the circumstances of each case. But there must be some evidence of activities on the part of the person over and above those attributable to the company to show that he has carried on business on his own.

See Re Kok Hiu Pan [2002] 3 HKLRD 20, §37; Re Chen Mei Huan [2020] 1 HKLRD 409, §§4-5, 8.

64.In this case, HSBC advances its argument on a narrow compass – while it accepts that Mr Gregory’s and Mr Bottomley’s shareholding and control of CBM per se would not be sufficient to meet the “carry on business” requirement, it argues that by virtue of article 137 of the Table A in the First Schedule to the former Companies Ordinance prevailing in 1993 which CBM adopted as part of its articles of association, which provided that:

“[e]very director, managing director, agent, auditor, secretary and other officer for the time being of the company shall be indemnified out of the assets of the company against any liability incurred by him in relation to the company in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connexion with any application under 358 of the Ordinance in which relief is granted to him by the court”

they would be expecting to profit personally as a result of the activities carried on, as a matter of law, by or on behalf of CBM, relying on their conviction qua directors of CBM for the latter’s failure to pay its employees (see paragraph 12(2)  above).

65.I reject this argument.

(1)  First and foremost, it is factually incorrect to suggest that Mr Gregory and Mr Bottomley were able to avail themselves of article 137 with respect to their convictions in 2018 such that they had obtained a “profit”, for article 137 only applies if the director in question is acquitted or judgment is given in his favour, which was not the case there.

(2)  In any event, the more fundamental objections are that:

(a)  Article 137 simply cannot be regarded as conferring a “profit” on the director, for it is an indemnity and it is to make good what the director would otherwise be out of pocket. It is a complete misnomer to call it a “profit”.

(b)  Further, it is clear that the indemnity concerns liability incurred by the director “in relation to the company”. In other words, it is premised on the director acting for or in relation to the company and its business; if the director has incurred liability on his own account which has nothing to do with the company, he would not be able to invoke this article.

(c)  HSBC’s attempt to extrapolate this to say the director has, by reason of this indemnity, engaged in a “side business” for profit is thus wholly unsubstantiated and wrong.

66.In light of that, I find that HSBC has failed to demonstrate that Mr Gregory and Mr Bottomley had carried on business in Hong Kong between 9 May 2021 and 9 May 2024.

CONCLUSION

67.In light of the foregoing, I find that HSBC has failed to satisfy any of the requirements in section 4 of the BO that it relies on, and the Petitions against Mr Gregory and Mr Bottomley must be dismissed.

68.I make an order nisi that HSBC is to pay the costs of Mr Gregory and Mr Bottomley and the Official Receiver’s costs of these proceedings, and that the Official Receiver’s costs be paid out of HSBC’s deposits.

Mr Tom Ng, instructed by Eversheds Sutherland, for the petitioner in HCB  3171/2024 & HCB 3172/2024   

Mr Mark Pierrepont of Hart Giles, for the respondent in HCB 3171 /2024 and the respondent in HCB 3172/2024