Re Lui Chun Kit
Read the full judgment text of HCB 5816/2024 on BabelCite. This HCB judgment was delivered on 10 December 2025.
1. This is a bankruptcy petition filed by Treasure Stars Investments Limited (“ Treasure Stars ”) against Lui Chun Kit (“ Mr Lui ”). It is based on a statutory demand issued for an outstanding debt of over HK$7 million owed by the borrower, Lu Ximao (“ Lu ”)” under a loan agreement. Mr Lui is the guarantor of the loan under a written guarantee.
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HCB 5816/2024 [2025] HKCFI 6194 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDINGS NO 5816 OF 2024 ____________
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_______________ J U D G M E N T _______________ A. INTRODUCTION 1.This is a bankruptcy petition filed by Treasure Stars Investments Limited (“Treasure Stars”) against Lui Chun Kit (“Mr Lui”). It is based on a statutory demand issued for an outstanding debt of over HK$7 million owed by the borrower, Lu Ximao (“Lu”)” under a loan agreement. Mr Lui is the guarantor of the loan under a written guarantee. 2.Mr Lui opposes the petition on grounds that: (1) there is a pending action in HCMP 771/2023 against Lu concerning the same loan; and (2) there is a bona fide dispute to the debt as Mr Lui has repaid the Loan through one Mr Lee to Treasure Stars. 3.Mr Lee denied receipt of money on behalf of Treasure Stars. Treasure Stars’ position is that Lui has failed to discharge his burden of establishing a bona fide dispute on substantial grounds and that he should be adjudged bankrupt. B. BACKGROUND LEADING UP TO ISSUE OF THE STATUTORY DEMAND 4.The facts are taken from the helpful summary of Mr Dexter Leung, counsel for Treasure Stars. 5.Treasure Stars was and is a licensed money lender. Mr Lee Chun-pong Bruce (“Mr Lee”) was a shareholder of Treasure Stars at the material time. 6.The borrower, Lu, is the cousin of Mr Lui. 7.Before the loan was granted, Mr Lee and Mr Lui already knew each other and had a cordial business and personal relationship. This personal relationship had led to Treasure Stars being willing to offer the subject loan at a lower interest rate. 8.On 7 September 2022, Treasure Stars and Lu entered into a Loan Agreement, by which Treasure Stars agreed to lend and Lu agreed to borrow $7,000,000 (“the Loan”) for a term of 12 months, with interest thereon payable at the rate of 0.5% per calendar month (effective interest rate of 6% p.a.). Interests were repayable by 12 equal monthly instalments of $35,000, with the principal to be repaid on 7 September 2023. 9.As security for the Loan, Mr Lui executed a Personal Guarantee and Lu executed a Second Legal Charge, both on 7 September 2022. 10.Under clauses 1(a) and 2(a) of the Personal Guarantee , Mr Lui agreed, as principal debtor, to forthwith pay Treasure Stars on demand the indebtedness owed by Lu to Treasure Stars under the Loan. 11.The Loan was advanced by way of a cheque issued by Treasure Stars, which was deposited into Lu’s bank account. 12.7 instalments of $30,000 each for the partial repayment of interest on the Loan had been made on 7 dates between 12 October 2022 and 11 April 2023. 13.Contending that Lu had defaulted by failing to make any further repayment of interest on the Loan and failing to repay the principal, on 19 May 2023, Treasure Stars brought a money lender’s action and mortgage action against Lu under Orders 83A and 88 by way of originating summons (“OS”) in HCMP 771/2023. Treasure Stars seeks money judgment and possession of the charged property. 14.On 17 November 2023, Treasure Stars issued a statutory demand to Mr Lui (“the SD”), contending that there was outstanding indebtedness of $7,413.470.57 under the Loan and demanding that he forthwith pay that sum in accordance with the Personal Guarantee. 15.On 7 December 2023, acting in person, Mr Lui applied to set aside the SD in HCSD 57/2023. In his homemade supporting affirmation, Mr Lui raised 3 grounds to set aside the SD:
16.DHCJ Johnathan Wong heard HCSD 57/2023 on 5 February 2024. As shown in the transcript, the following occurred.
17.Having heard the parties’ submissions, the Deputy Judge dismissed the set aside application and made the following ruling:
C. HCMP 771/2023 18.Shortly afterwards, on 7 February 2024, Lu filed his affirmation in opposition in HCMP 771/2023. Lu affirmed that, according to the information provided to him by Mr Lui, Mr Lui had fully repaid the Loan principal by making 15 payments to Mr Lee as set out below:
19.There was a further round of affirmations in opposition filed by Lu and Mr Lui on 20 March 2024 in HCMP 771/2023. Lu and Mr Lui gave another account of the repayment, stating that Mr Lui had fully repaid the Loan principal by making 12 payments to Mr Lee. These 12 payments are set out as follows:
20.Thereafter, Treasure Stars filed an affirmation made by Mr Lee on 7 June 2024 in HCMP 771/2023. Mr Lee denied that he had ever received any repayments of the Loan “on behalf of” Treasure Stars. Mr Lee acknowledges that he had received 2 bank transfers from Mr Lui (items 6 and 8 of Table 2, each in the sum of $100,000), but they were unrelated to the Loan and were repayments of other personal loans advanced by Mr Lee to Mr Lui. D. THE PETITION FOR BANKRUPTCY AGAINST MR LUI 21.On 21 August 2024, Treasure Stars presented the present bankruptcy petition against Mr Lui, which was amended and re-filed on 24 October 2024 (“the Petition”). 22.On 6 January 2025, the Court ordered that the hearing of the Petition be adjourned for substantive argument. Despite leave granted to the parties to file supplemental affirmations, none was filed by Mr Lui. 23.On 15 February 2025, Master Dick Ho ordered that the OS in HCMP 771/2023 be continued as if the cause had been begun by writ (“Master Dick Ho’s Order”). 24.In resisting the present Petition, Mr Lui has adopted his and Lu’s affirmations filed in HCMP 771/2023. E. THE DEBTOR’S CASE 25.There are in substance 3 grounds of opposition to the Petition:
F. APPLICABLE LEGAL PRINCIPLES 26.The principles on resisting a bankruptcy petition are trite, as stated in Re Miao Zhenguo [2022] HKCFI 1852 at §36:
27.In relation to the interplay between a summary judgment regarding the underlying indebtedness and a bankruptcy petition, and their respective evidentiary threshold, the case of Re Leung Cherng Jiunn [2016] 1 HKLRD 850 at §36 laid down the following principles:
28.The Court looks at the debtor’s evidence critically even if unconditional leave to defend has been obtained to defend a civil action. The principles have been summarized in Yip Hai Tak v Swiss Cosmeceutics (Asia) Ltd, [2024] HKCA 186, §21 , Au J, following Re Hong Kong Construction (Works) Limited (HCCW 670/2002, 7 January 2003) at [6(1)] - [6(4)], Kwan J (as she then was):
G. PENDING ACTION IN HCMP 771/2023 29.Treasure Stars only sues Lu but not Mr Lui in HCMP 771/2023. In fact, HCMP 771/2023, HCSD 57/2023, and this Petition involve the same underlying debt owed by Lu to Treasure Stars. Lu and Mr Lui’s case throughout is that, although the Loan was taken out in Lu’s name, it was Mr Lui who had obtained the proceeds of the Loan to ease his cashflow and was responsible for repayment. In HCMP 771/2023, Lu contested the proceedings. He put in issue, amongst others, full repayment of the Loan. He had to rely on Mr Lui’s account in showing that the Loan had been repaid, in whole or in part. 30.Master Dick Ho’s Order was made after considering the affirmations of Treasure Stars, Lu and Mr Lui at a hearing. This was an indication that he refused to grant summary judgment in the light of triable issues raised by Lu. 31.Any repayment in satisfaction of the debt owed by Lu would necessarily reduce or negate the liability of Mr Lui as guarantor. It is thus impossible to say that the triable issues in HCMP 771/2023 do not equally apply to Mr Lui’s defence to this Petition. 32.If this Court were to summarily reject Mr Lui’s arguments in the Petition, Lu may still raise the defence of full repayment at the trial of HCMP 771/2023, with Mr Lui as his witness. There will be a risk of inconsistent findings between 2 sets of proceedings. 33.I have asked Mr Leung during this hearing whether there have been new developments since Master Dick Ho’s Order which would cause this Court to find Lu’s defence to be moonshine. Mr Leung answered in the negative. 34.Accordingly, the issue of full repayment of the Loan ought to be tried in HCMP 771/2023 and this Petition should not continue. The bankruptcy court should not be used for the purpose of debt collection from a related party, the guarantor. H. FULL REPAYMENT OF THE LOAN 35.The latest version of Mr Lui is that he had made 12 cash repayments totalling HK$6,700,000 and 3 bank transfers totalling HK$300,000 to Mr Lee in 7 months, between 9 September 2022 and 24 April 2023. 36.Mr Leung submits that Mr Lui’s case is not credible for 3 reasons.
H1. Inconsistent defences 37.In his home-made affirmation in support of his application to set aside the SD, Mr Lui stated that “借款人沒有收到有關貸款，有關爭議還在訴訟中”. At the hearing before DHCJ Jonathan Wong, Mr Lui’s solicitor informed the Court that there had been repayment of about $6 million. There was no documentary support. The inconsistent stance of Mr Lui was picked up by the learned Deputy Judge. 38.Both Lu and Mr Lui have since set out in their affirmations that the Loan proceeds were transferred by Lu to a company of Mr Lui. Their case all along was that it was Mr Lui who had wanted a loan and thus sought the help of Lu in securing a loan from Treasure Stars. Accordingly, Mr Lui explained that in filing his homemade affirmation in HCSD 57/2023, he stated that the borrower (Lu) had not received the Loan proceeds. 39.Unfortunately in the HCSD proceedings, Mr Lui was not given a chance to file an affirmation to explain. DHCJ Jonathan Wong dismissed HCSD 57/2023, stating that Mr Lui could explain in this bankruptcy proceeding. It would not be just now to deny Mr Lui’s chance to put forward the defence of full repayment. H2. Discrepancies in Lu and Mr Lui’s accounts of repayments 40.Tables 1 and 2 contain discrepancies. Both tables arose out of information provided by Mr Lui to Lu. Table 2 purports to correct Table 1. Comparing the 2 Tables, the discrepancies were that:
41.The discrepancies did not affect the overall picture of the sequence of repayments and overall sum repaid, and hence not so significant as would, in themselves, discredit Mr Lui. H3. Lack of cogent evidence supporting any of the alleged repayments 42.Unsurprisingly, save for 2 payments by bank transfers, Mr Lee denied ever receiving monies from Mr Lui “on behalf of Treasure Stars”. The WhatsApp messages that Mr Lui produced did not state the amount paid on each occasion. It stretches anyone’s imagination for such significant sums to be paid one after another in cash on 9 occasions without a single receipt or acknowledgement from the alleged recipient. 43.I have also tabulated the specific case of each party concerning those 12 payments below:
44.One can see from Table 3 that, the evidence that Mr Lui produced to prove repayment was less than cogent. For one thing, Mr Lui had tight cash flow and the duration of the Loan was 12 months. It was strange that he started repaying the day after he first received the Loan proceeds. And, with such significant funds that came through his hands, one also queries why he only paid interest of $30,000 each month instead of the agreed $35,000? 45.7 months’ interests were paid to Treasure Stars. There was no documentary evidence of Treasure Stars or Mr Lee ever asking Mr Lui to repay the Loan in cash and why it should be so. Given that Mr Lui had allegedly once requested an acknowledgement of receipt from Mr Lee but was refused, it would be even more incredible that Mr Lui had continued to pay him in cash instead of using a traceable mode of payment, such as by cheque. 46.Apart from items 2, 3, 4, there is also no evidence as to where Mr Lee and Mr Lui met when payments were made. When confronting Mr Lee about the OS in HCMP 771/2023 in the July 2023 message, Mr Lui did not allege that he had repaid any part of the Loan. 47.Further, there is no cogent evidence to show how Mr Lui obtained $6.7 million cash to pay Mr Lee. CCPC and CCPM are not even shown on documents to be Mr Lui’s companies. In respect of e.g. items 5, 9 and 12, Mr Lui had not shown that he/his company was paid by clients in cash, so why would he have to pay Mr Lee in cash? In respect of items 11 and 12, for example, Mr Lui had received money a few days before he paid Mr Lee. There was no reason why Mr Lui could not have done a transfer or issued a cheque. 48.Mr Leung submits that due to the inconsistent case of Mr Lui that the Loan proceeds had not been received by Lu, even if Mr Lui has adduced sufficiently precise and credible evidence that he had repaid $7,000,000 to Mr Lee, such payments could not have been for the purpose of repaying the Loan. I am unable to accept this. There was evidence of the Loan proceeds being first paid into Lu’s account, which were then passed on to CCPC. For present purposes, Mr Lui’s evidence on repayment must be viewed as referring to the Loan. 49.That said, I do not think Mr Lui’s evidence can be rejected outright when considered against the version of Mr Lee. Apparently, Mr Lui and Mr Lee had been on good terms with money passing between their hands. Undeniably, 3 bank transfers were made. For item 8, Mr Lee was probably right. He corrected Mr Lui as to the balance of the debt being $1 million and interest as $1.23 million. The principal owed under the Loan (items 9-12, assuming 8 repayments had been made) was $4,510,000. However, there is dispute as to the purpose of item 6 and Mr Lee never explained what item 10 was for. 50.Mr Lui had produced some documents as to the source of cash that he had used to pay Mr Lee. Although CCPC was not on record a company of Mr Lui, Lu had passed on the Loan proceeds of CCPC indicating control of Mr Lui over this company. In respect of item 2, Mr Lee did not state what it was that Mr Lui gave to him. In respect of item 3, the evidence from the voice messages indicated that Mr Lee and Mr Lui had met, and Mr Lee never denied it. 51.I accept Mr Tam’s submission that there are triable issues as to (a) whether at least some repayments had been made and how much; (b) whether any repayment was related to the Loan; and (c) whether the documents produced by Mr Lui as to the source of money are credible. These questions are also relevant to the questions of liability and quantum in HCMP 771/2023. 52.I have not overlooked Lu’s challenge to the honesty of Mr Lee, in that the latter was arrested by the ICAC in around June 2023 for the offences of conspiracy to defraud and fraud (on different matters). (See Exhibit LXM-4 omitted from the trial bundle.) Lu also queried if Lee had passed on payments received from Mr Lui to Treasure Stars. 53.The defence of Mr Lui cannot be rejected summarily as being “a cloud of objections”. I decline to adjudge him bankrupt. I. PERSONAL GUARANTEE NOT ENFORCEABLE 54.Mr Lui contends that the Personal Guarantee is unenforceable as he had not been informed that it was a personal guarantee and had therefore been misled into signing it. 55.This contention has no merits as:
56.Mr Tam, rightly, did not pursue this issue in his written submission. J. WHETHER TO STAY OR DISMISS 57.Mr Leung submits that this Court may stay the Petition pending trial of HCMP 771/2023. However, I do not consider it appropriate to leave the Petition hanging over the head of Mr Lui when the trial dates of HCMP 771/2023 are not even in sight. I also take the view that Treasure Stars is using the Petition to speed up the debt recovery from Mr Lui when the civil court has effectively given leave to Lu to defend the OS including the issue of repayment and Treasure Stars could have sued Mr Lui there as well. Accordingly, I hold that a dismissal of the Petition is more appropriate than a stay pending trial of HCMP 771/2023. K. CONCLUSION AND COSTS 58.I dismiss the Petition, there being a bona fide dispute on the issue of repayment of the Loan. 59.Costs should follow the event. On a nisi basis, I order Treasure Stars to bear the costs of Mr Lui, summarily assessed at $250,000. 60.I thank counsel for their assistance.
Mr Dexter Leung, instructed by Tang & So, for the Petitioner Mr Oscar Tam, instructed by T C Wong & Co, for the Debtor Official Receiver’s attendance was exempted | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment