Re Chan Chi Sat
Read the full judgment text of HCB 533/2025 on BabelCite. This HCB judgment was delivered on 26 March 2026.
1. By a bankruptcy petition filed on 21 January 2025 (as amended on 17 October 2025) (the “ Petition ” and the “ Amended Petition ” respectively), the Petitioner seeks a bankruptcy order against the Debtor in respect of a sum of approximately HK$8.9 million (the “ Debt ”) under a settlement agreement entered into among, inter alios , the Petitioner and the Debtor on 24 May 2024.
Cites 11 cases
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[2026] HKCFI 1766 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDINGS NO 533 OF 2025 __________________
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________________ J U D G M E N T ________________ I. INTRODUCTION 1.By a bankruptcy petition filed on 21 January 2025 (as amended on 17 October 2025) (the “Petition” and the “Amended Petition” respectively), the Petitioner seeks a bankruptcy order against the Debtor in respect of a sum of approximately HK$8.9 million (the “Debt”) under a settlement agreement entered into among, inter alios, the Petitioner and the Debtor on 24 May 2024. II. BACKGROUND 2.Valley Sports Group Limited (“Valley Sports”) is a company incorporated in the British Virgin Islands. On 28 June 2019, Valley Sports entered into a subscription agreement (the “Subscription Agreement”) for US$500,000 convertible note with the Petitioner offered by Valley Sports. On the same day, Valley Sports, the Petitioner, the Debtor, one Tiara Agriculture Holding Limited (“Tiara”) and MT Investment Group Limited (collectively, the “Parties”) entered into a supplemental agreement (the “1st Supplemental Agreement”). The Debtor was one of the guarantors of the Subscription Agreement. Subsequently, the Parties entered into a supplemental agreement dated 1 March 2021 (the “2nd Supplemental Agreement”), a supplemental agreement dated 1 June 2021 (the “3rd Supplemental Agreement”), and a supplemental agreement dated 13 June 2023 (the “4th Supplemental Agreement”) (collectively, the “Supplemental Agreements”). 3.Disputes arose from the Subscription Agreement. Eventually, the Parties entered into the Settlement Agreement on 24 May 2024 (the “Settlement Agreement”). Under the Settlement Agreement, the Debtor shall be liable to pay the Petitioner a total of HK$6,083,713.70 to the Petitioner with interest. The first instalment was due on 25 May 2024. The Debtor defaulted, and as a result of the default, the whole amount became immediately due and payable. 4.On 19 June 2024, the Petitioner issued a statutory demand (the “Statutory Demand”) in respect of the Debt. On 21 January 2025, the Petitioner presented the Petition, and on 17 October 2025, the Petitioner filed the Amended Petition. When the Petition was presented, the Debtor was not in Hong Kong. III. THE DEBTOR’S GROUNDS OF OPPOSITION 5.For the present purpose, Mr Alex Yeung, counsel for the Debtor, does not dispute the Debt. He raises the following grounds of opposition:-
6.The first three grounds are jurisdictional grounds, and to say that the Court has no jurisdiction, all the three grounds must exist. Further, all the above grounds are all set out in the Notice by Debtor of Intention to Oppose Petition filed on 21 March 2025. Thus, by rule 70 of the Bankruptcy Rules (Cap. 6A), the burden lies upon the Petitioner to prove otherwise: see Re Leung Cherng Jiunn, HCB 244/2014, 21 May 2015 at §§26-27 per Recorder Linda Chan SC (as she then was). 7.I shall analyse each of the ground below. IV. ORDINARY RESIDENCE AND PLACE OF RESIDENCE IN HONG KONG? 8.The legal principles in relation to whether a debtor is “ordinarily resident” in Hong Kong are set out in Re Kok Hiu Pan [2002] 3 HKLRD 20 at §§27-29 per Kwan J (as she then was):-
9.As regards “place of residence” in Hong Kong, the principles are summarised by DHCJ Phoebe Man at §28 of Re William Zeng [2025] 1 HKLRD 382:-
10.First, I start with the Statement of Travel Records issued by the Immigration Department on 9 April 2025 (the “Travel Records”) for the travel records of the Debtor during the period from 1 January 2020 to 1 April 2025. The relevant period of 3 years for the purpose of section 4(1)(c) of the BO is from 22 January 2022 to 21 January 2025 (the “Relevant Period”). 11.It is unnecessary for me to set out all the entries in the Travel Records. Suffice for me to say that there are several features drawn from the Travel Records for the Relevant Period:-
12.The above shows that the Debtor’s visits and stays in Hong Kong were insubstantial and sporadic, and lacked of regularity and continuity. 13.For the only two consecutive months during which the Debtor spent more than one night in Hong Kong mentioned in §(7) above, it happened that a 240-hour community service order (the “CSO”) was imposed on the Debtor on 5 December 2023. Mr Yeung suggests that it shows that the Debtor did not come to Hong Kong voluntarily. However, in his opposing affirmation, the Debtor does not say that. Therefore, I cannot accept such suggestion. 14.Ms Hannah Tang, counsel for the Petitioner, points out that the Debtor has failed to explain the purposes of his stays, and apparently asks me to draw adverse inference from the absence of explanation. However, as rightly pointed out by Mr Yeung, as a matter of facts, the stays, for whatever purposes, were insubstantial and sporadic, and lacked regularity and continuity. The inference I could draw can at best be an inference of some occupation in Hong Kong, but not anything near “residence”, let alone “ordinary residence”. For deciding whether there was ordinary residence in the circumstances, I would have to look at all the relevant evidence as a whole. 15.Second, the Debtor holds a Hong Kong Permanent Residence Identity Card. This may be taken as an indicator that the Debtor had permanent residence in Hong Kong. However, I bear in mind that permanent residence as evidenced by the Identity Card is a legal status, and this does not necessarily mean that factually, the Debtor was resident in Hong Kong: see Re Wong Lei Kwan Joanne [2009] 3 HKLRD 173 at §22 per Barma J (as he then was). In any event, permanent residence can be lost, and a permanent resident identity card is not conclusive of permanent residence: see Re Zhu Guoling [2025] HKCFI 458 at §24 per DHCJ Phoebe Man. 16.Third, the Debtor’s address in the Subscription Agreement and the companies record of the companies of which he was a director or shareholder is consistently stated to be the same address in Symphony Bay, Ma On Shan (the “Symphony Bay Address”). In this regard, the Debtor’s evidence is that it regarded the Symphony Bay Address as his correspondence address in Hong Kong only. Further, the registered owner of the property at the Symphony Bay Address is not the Debtor. As regards the Debtor’s evidence that the registered owner is his friend, there is no evidence from the Petitioner to traverse the same and no evidence from the Petitioner to suggest that the registered owner is related to the Petitioner more than a friend. Insofar as there is any suggestion that the Debtor did intend to use the Symphony Bay Address in the Subscription Agreement and the companies records to be his residential address, this may be a factor for consideration, but still, I have to look for evidence of actual residence: see Re Zhu Guoling, supra at §26. 17.Fourth, as to whether there was actual place of residence in Hong Kong, the Debtor’s evidence is that he did not reside at the Symphony Bay Address. Even assuming that the Debtor stayed there each and every time he visited and stayed in Hong Kong, his stays there were, as described above, insubstantial and sporadic, and lacked continuity. I note that there is no suggestion that the Debtor had any moral claim to reside in the property there. 18.Fifth, any reliance on Valley Sports’ business for the Petitioner’s favour would be misplaced, given that the business of Valley Sports was stated to be focused in Mainland in the presentation slides for the subscription, and the daily operation was stated by the Settlement Agreement to be in the Mainland. 19.Sixth, Ms Tang’s reliance on the CSO to say that the Debtor was ordinarily resident in Hong Kong must be based on the premise that a CSO can be imposed only upon a person ordinarily resident in Hong Kong. However, there is no such requirement at all. 20.Having considered all the above holistically, I am not satisfied that the Debtor had been ordinarily resident, or had had a place of residence, in Hong Kong at any time during the Relevant Period. V. BUSINESS CARRIED ON IN HONG KONG? 21.The legal principles in relation to whether a debtor carries on a business in Hong Kong can be summarised as follows:-
22.In the present case, first, Ms Tang submits that the Debtor had been actively involved in the management and operation of Valley Sports. She refers to the fact that the Debtor signed the Settlement Agreement, the Subscription Agreement and the Supplemental Agreements on behalf of Valley Sports. She also refers to the presentation slides made for promoting the convertible notes under the Subscription Agreement, in which slides the Debtor named himself as a director of Valley Sports and made presentation of how the business of Valley Sports would be run, developed and expanded. However, taken the highest, this evidence only suggests that all these activities carried out by the Debtor were attributable to Valley Sports, rather than to the Debtor himself separately and distinctly in his own personal capacity. For example, the presentation slides for the subscription of the convertible notes named other directors as well, showing that the business and management was not the Debtor’s own business and management. Further, in respect of the place of business, the presentation slides unequivocally show that the target of Valley Sports would be the Mainland, but not Hong Kong. 23.Second, Ms Tang also refers to the conviction of the Debtor of the offence of failure to pay wages to his footballers contrary to section 63 of the Employment Ordinance (Cap. 57). The evidence in this regard is only the newspapers reports, and the Debtor does not adduce any evidence in this regard. Mr Yeung submits that the offence catches those persons authorised by the employer as well, and thus mere evidence of the conviction of the offence cannot be taken to mean that the Debtor himself personally employed the footballers. The evidence here is not clear either way. Given that the burden lies upon the Petitioner, I am not satisfied that this evidence shows that the Debtor carried out business in Hong Kong. 24.Third, Ms Tang refers to the money transfer carried out by one Glorious Sports Group Limited in Hong Kong, of which the Debtor was a director, in 2021. Putting aside that this transfer would be attributable to the company and that this transfer could be regarded as carrying on business, this took place in 2021, outside the Relevant Period. Thus, this money transfer is simply irrelevant. Similarly, Ms Tang refers to various companies set up by the Debtor in Hong Kong, and stresses that these companies were active in Hong Kong. However, at best, these were still activities attributable to the respective companies. 25.Fourth, Ms Tang submits that filing of corporate documents with the Companies Registry may be regarded as carrying on business in Hong Kong. She refers to Re Ku Chu Keung (a debtor) [2007] 2 HKLRD 292 at §§54-62 per DHCJ Louis Chan. In my view, first, as a matter of fact, the evidence in the present case only shows that the Debtor signed the corporate documents, but not filing of the documents, and second, with respect, insofar as Re Ku Chu Keung (a debtor), supra, can be regarded as supporting a proposition that filing of corporate documents with the Companies Registry itself could be regarded as carrying on business in Hong Kong, I would respectfully differ. Such a proposition is, in my view, clearly inconsistent with Re Chen Mei Huan, supra, and Re Kok Hiu Pan, supra. In my view, Re Ku Chu Keung (a debtor), supra, did not have the benefit of the detailed analysis by G Lam J in the subsequent case Re Chen Mei Huan, supra, and apparently did not consider Re Kok Hiu Pan, supra. Rather, that case apparently only considered §4.10 of Butterworths Hong Kong Bankruptcy Law Handbook (2nd edition, 1999), and the learned judge only said that §4.10 shows that “business” was a broad term, without much analysis or exposition of the relevant legal principles. 26.Fifth, insofar as there is any suggestion that the Debtor’s charitable contributions in Hong Kong would amount to business in Hong Kong, I reject such suggestion as contrary to any ordinary understanding of “business”. 27.Having considered the above holistically, I am not satisfied that the Debtor had carried on business in Hong Kong at any time during the Relevant Period. VI. DOMICILE IN HONG KONG? 28.In relation to the legal principles determining where a debtor is domiciled, Madam Recorder Eva Sit SC has summarised the same at §19 of Re Gregory and Bottomley (Debtors) [2025] 5 HKLRD 816 as follows:-
29.First, the Debtor was born in Guangzhou on 5 December 1971. Therefore, his domicile of origin is Guangzhou. 30.Second, the Debtor moved to Hong Kong in 1994, and acquired permanent resident identity card in 2001. This 7-year period is consistent with the requirement that the person in question had to be ordinarily resident in Hong Kong for 7 years. Therefore, I am satisfied that since 1994, the Debtor acquired a domicile of choice in Hong Kong. 31.Third, in March 2017, the Debtor got married:-
32.Fourth, there is no evidence as to the household registration of the Debtor in the Mainland. Nor is there any evidence as to any renunciation of the Debtor’s permanent residence in Hong Kong. Had the Debtor really moved back to the Mainland, Ms Tang submits, the Debtor would have adduced such evidence in his favour. Ms Tang submits that this is similar to Re Deng Jiang [2024] HKCFI 2260 at §37(1) per Linda Chan J. I agree that this is a significant consideration in favour of the Petitioner. However, this is not conclusive. I am also aware that no travel record such as the Travel Records of the Debtor was considered in that case. 33.Fifth, the Debtor produces a utility bill payable to an electricity supplier in Guangzhou in an attempt to show that he has resided in Guangzhou. However, the bill shows very little information. Neither the address of the household in question, nor the amount of usage, nor the period, is stated. I pay no regard to such evidence. 34.Sixth, the search reports and the corporate materials of certain PRC companies showing that the Debtor is a legal representative can be regarded as evidence of some activities of the Debtor in the Mainland. However, clearly, such evidence in itself is not conclusive. Such evidence does not constitute any significant consideration, though still something I have to consider. 35.Seventh, the online tax returns produced by the Debtor show his insignificant income in the Mainland. However, the amount of income has no direct relationship to his domicile. The tax returns do show that the Debtor had some activities, though not generating substantial profits, in the Mainland. 36.Eighth, I accept the Debtor’s evidence, which is not traversed, that the Debtor’ family members all live in the Mainland, and thus he had shifted his home to the Mainland. 37.Ninth, any reliance on Valley Sports’ business would be misplaced, given that the business of Valley Sports was stated to be focused in Mainland in the presentation slides for the subscription, and the daily operation was stated by the Settlement Agreement to be in the Mainland. This points towards that the Debtor, running Valle Sports, lives and intends to live in the Mainland. 38.Tenth, Ms Tang also relies on the other companies of the Debtor which she says are active in Hong Kong and show that the Debtor, actively managing these companies, should be in Hong Kong. However, first, in this day and age, managing a company does not necessarily require the manager’s presence in the same place, and second and in any event, this is only one factor for consideration but not conclusive. 39.Eleventh, any reliance on the CSO to say that the Debtor was domiciled in Hong Kong must be based on the premise that a CSO can be imposed only upon a person ordinarily resident in Hong Kong. However, there is no such requirement at all. 40.Lastly, the Travel Records. As mentioned above, the stays were insubstantial and sporadic, and lacked of regularity and continuity. Further, one outstanding feature is that during the COVID-period from 2020 to 2023, the Debtor did not visit Hong Kong at all. In the circumstances, even assuming I would be prepared to draw the inference from the absence of explanation of the purposes for the Debtor’s visits and the absence of any evidence of where the Debtor lived in the Mainland, that there was some occupation in Hong Kong and/or he did not live in the Mainland, in my view, the Travel Records is still strong evidence showing that the Debtor no longer intended to live in Hong Kong permanently or indefinitely, or had abandoned any acquired domicile in Hong Kong. 41.Having considered all the above holistically, I am of the view that by the time of the presentation of the Petition, the Debtor was no longer domiciled in Hong Kong and by the rule of revival of the domicile of origin, he was domiciled in the Mainland. VII. NO JURISDICTION 42.Given my views above on the Debtor’s ordinary residence, carrying out of business and domicile, and given the common ground that the Debtor was not in Hong Kong during the presentation of the Petition, the conditions under section 4(1) of the BO are not satisfied, and therefore, the Court does not have jurisdiction over the Debtor on the Petition. There is sufficient for me to dismiss the Amended Petition. VIII. SERVICE OF THE STATUTORY DEMAND 43.For the sake of completeness, I express my view on the service of the Statutory Demand. 44.Rule 46 of the Bankruptcy Rules (Cap. 6A) requires the Petitioner to “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” (emphasis added). The requirements have to be strictly complied with. Therefore, when not all reasonable steps have bene taken and no personal service has been effected, the rule is still not complied with even if the debtor has acknowledged the existence of the statutory demand. This is not being technical, but concerns the certainty of when the calculation of days should commence for complying with the statutory demand in question: see Re Li Xiaoming [2020] HKCFI 361 at §§8-12 per Mimmie Chan J. 45.In the present case, the Petitioner’s solicitors made two attempts to serve the Statutory Demand at the Symphony Bay Address. After the first attempt failed, on 21 June 2024, the Petitioner’s solicitors sent by post an appointment letter to the Symphony Bay Address calling for an appointment on 3 July 2024 for service of the Statutory Demand a copy of which was enclosed. On 3 July 2024, Petitioner’s solicitors, however, were denied access to the Symphony Bay Address. Then, without any substituted service order, the Petitioner purported to serve the Statutory Demand by way of advertisements in one Chinese and one English newspaper on 16 July 2024. 46.However, the Petitioner never tried to serve the Statutory Demand through the means of text message, the availability of such means being evidenced by the Petitioner’s own evidence of a text message from the Debtor which he attempts to rely on to show that the Debtor had notice of the Statutory Demand, and there is no explanation why he did not do so. 47.The appointment letter with the Statutory Demand enclosed cannot be taken as service of the Statutory Demand, for the simple reason that the letter was for the purpose of calling an appointment for service. Therefore, even the Petitioner himself did not regard this as service. Assuming that the Debtor did receive this appointment letter and the enclosure, one would not take this as commencement of the calculation of days for complying with the Statutory Demand. 48.For the advertisements, if the advertisements would bring the Statutory Demand to the Debtor’s notice, this would be strong evidence that reasonable steps had been taken. In this regard, Ms Tang relies on the text message sent on 29 July 2024 by the Debtor to the Petitioner’s solicitors seeking for indulgence from the Petitioner for complying with the Settlement Agreement. Although the text message did not mention the Statutory Demand, Ms Tang submits that the timing is telling – the message was sent about two weeks after the advertisement on 16 July 2024, and the message was sent to the Petitioner’s solicitors named in the Statutory Demand. Ms Tang also points out that the Debtor did not adduce any evidence in respect of the service. Nor is there any evidence to explain the message, even though the Debtor had filed an affirmation to reply to the Petitioner’s affirmation exhibiting the message. 49.Mr Yeung points out that when on the date of the advertisements on 16 July 2024, the Debtor was not in Hong Kong. In my view, that he was not in Hong Kong does not necessarily mean that he would not be able to read newspapers or that someone else would bring to his attention the advertisements in the newspapers. 50.Mr Yeung also points out that the Petitioner’s solicitors were the solicitors named in the Settlement Agreement, and therefore, it would not be surprising that the Debtor would contact the solicitors. However, the Settlement Agreement does not mention anything like contact of the solicitors for the Petitioner. The solicitors were named only on the execution page apparently as witnesses to the execution. 51.Further, the difficulty for Mr Yeung is that there is no evidence from the Debtor to explain how he would know whom to contact, and there is no reason why he has not done so. 52.Having considered the above, I am of the view that the advertisements did successfully bring the Statutory Demand to the Debtor’s notice. The advertisements in the circumstances were reasonable steps for the purpose of rule 46. Therefore, I am satisfied that service of the Statutory Demand was duly effected on the Debtor on 16 July 2024 by way of the advertisements. IX. CONCLUSION 53.In the circumstances, I dismiss the Amended Petition. I order that the Petitioner shall pay the Debtor costs summarily assessed at HK$200,000. I also order that the Official Receiver’s costs in the sum of HK$4,100 shall be deducted from the Petitioner’s deposit. 54.It remains for me to thank Ms Tang and Mr Yeung for their assistance.
Ms Hannah Tang, instructed by Cedric & Co., for the Petitioner Mr Alex Yeung, instructed by Grandall Zimmern Law Firm, for the Debtor Attendance of the Official Receiver was excused |