Re Sim Tze Jye
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HCB 5997/2024 and HCB 5998/2024 [2026] HKCFI 5268 HCB 5997/2024 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDINGS NO. 5997 OF 2024 ____________
____________ AND HCB 5998/2024 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE BANKRUPTCY PROCEEDINGS NO. 5998 OF 2024 ____________
____________ (Heard together)
________________ J U D G M E N T ________________ Introduction 1.Dragon Silver Holdings Limited (“P1”) and Tak Fung International (HK) Limited (“P2”) jointly presented a petition dated 28 August 2024 against Sim Tsz Jye (“D1”) under HCB 5997/2024 and another petition of the same date against Sim Tze Shiong (“D2”) under HCB 5998/2024 (both as amended on 7 May 2025). 2.Each of P1 and P2 (collectively “Ps”) issued their respective statutory demands both dated 18 June 2024 (“D1’s SD”) and served the same personally on D1 on 19 June 2024 whereby D1 was demanded to pay P1 a debt in the amount of US$10,603,857.41 (“P1 Sum”) and to pay P2 another debt in the amount of US$9,442,815.62 (“P2 Sum”). 3.On the other hand, each of Ps issued their respectively statutory demands both dated 3 July 2024 (“D2’s SD”) and served the same personally on D2 on 4 July 2024 whereby D2 was demanded to pay P1 P1 Sum and to pay P2 P2 Sum. 4.The two Amended Petitions are based on the failure of D1 and D2 (collectively “Ds”) to comply with the D1’s SD and D2’s SD (collectively “the SDs”). 5.Both Ds oppose the Amended Petitions. Neither of them denies their non-compliance with the SDs. As stated in their respective Notices by Debtor of Intention to Oppose Petition both dated 29 August 2025, their common position is that the Amended Petitions are defective and there is bona fide dispute about the alleged debts. They further allege that the amounts demanded in the SDs represent unliquidated damages. 6.The substantive hearing of the Amended Petitions has been fixed to be heard together before this court. Mr Hui appeared for Ps and Mr Lau appeared for Ds. 7.Ps took out a summons dated 4 March 2026 for their application for retrospective leave to file and serve on Ds two additional affirmations of the same date. Having heard the parties, this court allowed the application on the main ground that the evidence contained therein is not controversial and Mr Lau accepted that there was no prejudice caused to Ds and no evidence in reply was necessary. Ps’ case against Ds 8.Ps’ case against Ds is mainly based on four guarantees. In his written submissions, Mr Hui gives an account of how the four guarantees came into being. His account is summarised as follows. 9.D1 and D2 are brothers. Both of them were at all material times directors and shareholders of Perfect Hexagon Limited (“Perfect Hexagon”), a company incorporated in Hong Kong. Perfect Hexagon has been wound up already. 10.Ps traded in gold with Perfect Hexagon since late 2023. Through the introduction of D2, P2 traded in gold with Persada Syabas (Singapore) Pte. Ltd (“Persada”) using cryptocurrency, namely, USDT. Persada is a company incorporated in Singapore, which was allegedly controlled by D2. 11.The trade of gold in the form of gold bars among the parties was conducted on a daily basis based on the daily gold price issued by the London Bullion Market Association. Perfect Hexagon and/or Persada would issue a final invoice confirming the final gold price upon Ps’ locking in a gold price for each trade and the daily gold price matched the lock-in price. Since Ps made payment prior to the issuance of the final invoice, the discrepancy between the amount paid and the amount stated in the final invoice would be carried forward to the next transaction. 12.In early December 2023, Perfect Hexagon and Persada started defaulting in their delivery of gold bars to Ps in accordance with the invoices despite their payments. The amount of undelivered gold bars accumulated. 13.Eventually, Ps reached an agreement with Perfect Hexagon and Persada (“the Buyback Agreement”) whereby the latter would buy back the gold bars duly paid for by Ps and yet delivered based on the gold price on 15 December 2023. 14.Against this background, each of Ds executed one guarantee to each of Ps on 18 December 2023. In addition, each of Ds executed one written confirmation to each of Ps. 15.The figures in both written confirmations were calculated arithmetically based on the amount of the gold bars which Perfect Hexagon and Persada failed to deliver despite payments on the gold price on 15 December 2023. 16.The details of the four guarantees are as follows. 17.D1 executed:
18.D2 executed:
19.D1’s Written Confirmation for P1 and D2’s Written Confirmation for P1 (collectively “Ds’ Written Confirmations for P1”) have the same content and they provide that:
20.Further, D1’s Written Confirmation for P2 and D2’s Written Confirmation for P2 (collectively “Ds’ Written Confirmations for P2”) have largely the same content and they provide that:
21.On the other hand, D1’s Guarantee for P1, D1’s Guarantee for P2, D2’s Guarantee for P1, and D2’s Guarantee for P2 (collectively “Ds’ Guarantees”) have the same content except for the parties involved and each of them provides inter alia that:
22.On or about 10 January 2024, P1 received a post-dated cheque drawn by Perfect Hexagon in its favour for the amount of HK$82,900,000.00 and P2 received another cheque drawn by Perfect Hexagon in its favour for the amount of HK$73,800,000.00 (collectively “the Cheques”). 23.The total amount of the Cheques represents the total indebtedness of Perfect Hexagon and Persada to Ps. 24.In the premises, Ps say that the debts in the D1’s SD and D2’s SD are P1 Sum and P2 Sum, which Ds have confirmed to be outstanding in Ds’ Written Confirmations for P1 and Ds’ Written Confirmations for P2 (collectively “the Written Confirmations”) and they are liable to pay the same under Ds’ Guarantees. Ds’ case 25.Mr Lau essentially takes two points. First, he argues that there are bona fide disputes to the debts. He submits that P1 Sum and P2 Sum were calculated on the erroneous basis that there was no delivery of gold bars on 6 and 7 December 2023 and that the Buyback Agreement existed. In any event, Mr Lau submits that Ps fail to provide sufficient particulars of the Buyback Agreement. 26.Second, Mr Lau submits that on a proper construction of the terms of Ds’ Guarantees, all the obligations undertaken by Ds are in the nature of payment of unliquidated damages and hence neither of SDs is for a liquidated sum. Applicable legal principles 27.Both Mr Hui and Mr Lau have helpfully referred to a number of relevant authorities explaining the well-established legal principles relating to bankruptcy petitions. The following would be sufficient for present purposes. 28.Rule 68 of the Bankruptcy Rules, Cap. 6A provides that the debtor shall file a notice “specifying the grounds on which he intends to show cause”. The Court may not allow a debtor to raise an objection for which notice has not been given: Re Choy Chi Fung Orpheus [2024] HKCFI 956 per DHCJ Le Pichon at §26, referring to Re Maydwell ex p WFM Motors Pty Limited (a creditor) [1999] 3 HKLRD 325 at 345E-I and Hong Kong Civil Procedure 2024, Vol 2, at §I1/62. 29.In opposing a petition, the debtor has to show a bona fide dispute on substantial grounds by sufficiently precise evidence which is believable, and must establish that he has a defence of substance, not just a fair probability of one: Re Leader, John Roger also known as Roger Leader [2022] HKCFI 11 at §8, per Ng J. 30.Section 6(2)(b) of the Bankruptcy Ordinance, Cap.6 requires that a creditor’s petition must be based on a debt for a liquidated sum payable to the petitioning creditor. 31.Mr Lau places reliance on Southwest Securities (HK) Brokerage Limited v Nieumarkt Investments Ltd and Anor. [2021] 5 HKCA 740 where Cheung JA said the following:
32.It is worthy of note that Cheung JA (as he then was) in Bright Islands Corp v Chao [2002] 2 HKLRD 97 said this at §81:
Discussion Bona fide disputes to the Debts? 33.Mr Lau has done his utmost to persuade this court that the admitted indebtedness in the Written Confirmations (“Admitted Indebtedness”) is erroneous. He tries to show that there were gold bars delivered to Ps on 6 and 7 December 2023. Thus, the alleged debts (P1 Sum and P2 Sum) have been grossly inflated. 34.Mr Lau further argues that the Buyback Agreement did not exist. 35.On the other hand, Ds, for the first time, allege that they were coerced and threatened to sign the Guarantee Documents. Such allegations were not made in their Notices of Intention to Oppose Petition. 36.In all fairness to Mr Lau, he makes little submission on this serious allegation, which I find no merit in any event as will be explained below. 37.The primary objection of Mr Hui is that Ds must be debarred from disputing the Admitted Indebtedness by reason of estoppel by deed and/or estoppel by convention. 38.Alternatively, Mr Hui submits that the text messages -exchanged between D2 and Ps confirm Ds’ acceptance of the Admitted Indebtedness. He further points to the Cheques which inexplicably covered the Admitted Indebtedness and submits that the belated dispute raised by Ds is not bona fide. 39.In China Citic Bank International Limited v Tus-Holdings Co., Ltd. [2025] HKCFI 5264, cited by Mr Hui, DHCJ Le Pichon had this to say about estoppel by deed at §36,
40.The deputy judge went further to explain the following at §39,
41.In the present case, in all of Ds’ Guarantees, it is expressly stipulated that in consideration of Ps’ exercise of their discretion to allow further time for Perfect Hexagon and Persada to repay their indebtedness and in view of the contents of Ds’ Written Confirmations, Ds irrevocably and unconditionally made the assurances and promises in Ds’ Guarantees. 42.There is no dispute that Ds’ Guarantees are deeds. Ds’ Written Confirmations were clearly referred to in Ds’ Guarantees and the parties placed reliance on them. In my view, there is no reason why Ds are not caught by estoppel by deed. I agree with Mr Hui that Ds should be estopped from disputing the Admitted Indebtedness. 43.On the other hand, regarding the doctrine of estoppel by convention, Mr Hui refers to the following passage in Chitty on Contract (36th Ed) at §7-016:
44.Ribeiro PJ in Siegfried Adalbert Unruh v Hans-Joerg Seeberger and Anor. (2007) 10 HKCFAR 31 gave an instructive explanation of the doctrine of estoppel by convention. 45.First, at §131, the following passage of the speech of Lord Steyn in The “Indian Endurance” (No 2) [1998] AC 818 (at p.913) was quoted:
46.Ribeiro PJ then proceeded to set out the elements of estoppel by convention. At §133, Ribeiro PJ stated the parties must enter into some legal relationship on the basis of an assumption that is shared by or common to them both. The distinctive feature of this doctrine is the commonality of the assumption. 47.Ribeiro PJ pointed out that it must be shown that the assumption was communicated between the parties and acted upon. There must be some “mutually manifest conduct of the parties”: §135. 48.Ribeiro PJ explained that there is no necessity for the parties or either of them to believe that the assumed state of affairs is true or to have been mistaken about the matters assumed: §136. The belief in the correctness of the facts or state of affairs assumed is not always necessary. What is important is for them to act in the belief, manifested by words or conduct, that they are both proceeding with the transaction on the basis of the same shared assumption: §137. 49.Further, the content of the shared assumption must be sufficiently certain to enable the court to give effect to it: §138. The word “transaction” is to be understood in the broad sense of the parties engaging in acts or omissions affecting their mutual legal relationship: §142. 50.In the present case, Ds’ Written Confirmations show the shared or common assumption. They were issued by Ds to Ps to evidence their acceptance of the Admitted Indebtedness. Their acceptance was clear and unequivocal. The Admitted Indebtedness was a shared and common assumption. As shown in the references to the Written Confirmations in Ds’ Guarantees, the parties did act on it and they proceeded with the execution of Ds’ Guarantees on the basis of the shared and common assumption shown in the Admitted Indebtedness. The execution of Ds’ Guarantees in favour of Ps must be a transaction. 51.What Ds then thought, and now think, about the correctness of the Admitted Indebtedness is not material in the circumstances. 52.I, thus, come to the conclusion that the doctrine of estoppel by convention is applicable as well. Ds are estopped from denying the Admitted Indebtedness stated in their Written Confirmations. 53.Regarding Ds’ serious allegations of threat and coercion, they are not supported by any cogent and credible evidence with adequate particulars. I am unable to accept such allegations. 54.It is remarkable that D2 actually indicated his acceptance of the Admitted Indebtedness in the WhatsApp messages by an icon showing a gesture of OK on 15 December 2023. There is no explanation given for his affirmative responses after the alleged coercion and threats. 55.Moreover, the delivery of the Cheques to Ps can only be indicative of Ds’ voluntary acceptance of the Admitted Indebtedness. Ds could not have delivered the Cheques to Ps about three weeks after the execution of the Guarantee Documents if they had been coerced and threatened. 56.There is nothing to suggest that the Guarantee Documents can be vitiated. Ds must be bound by the terms of their Written Confirmations and Ds’ Guarantees. 57.This being the conclusion, I do not think that it is necessary to consider Ds’ challenge to the correctness of the Admitted Indebtedness. A liquidated demand or a demand for unliquidated damages? 58.I now turn to the other challenge to the SDs raised by Mr Lau concerning the nature of the demands for P1 Sum and P2 Sum in SDs. It is trite that unliquidated damages cannot be a debt forming the basis of a bankruptcy petition. 59.Mr Lau accepts that a conditional payment obligation under a guarantee creates a liability in debt and clause 1.1(c) apparently creates such a conditional payment obligation. However, he submits that clause 1.1(c) has a broader coverage and it covers the payment obligation of all sums owed by Perfect Hexagon and Persada at any point of time and not just P1 Sum and P2 Sum in the Written Confirmations. 60.Mr Lau further highlights Clause 1.2 which provides that the Guarantees covered the final outstanding amount owed by Perfect Hexagon Limited and Persada to Ps. Therefore, he submits that clause 1.1(c) when read in conjunction with clause 1.2 actually has a catch-all operation and is not confined to P1 Sum and P2 Sum. 61.Thus, Mr Lau argues that Ps are actually relying on clauses 1.1(a) and (b), which impose a “see to it” obligation on Ds. Any breach of such an obligation can only give rise to unliquidated damages, on which a bankruptcy petition cannot be based: McGuinness v Norwich and Peterborough Building Society [2012] 2 BCLC 233 at §§7-8 cited by H Au Yeung J in Joyful Delight Limited v Active Access Holdings Limited and Ors. [2022] HKCFI 2623 at §32. 62.I see no merit in this submission. 63.On a proper construction of clause 1.1(c), Ds undertake a conditional payment obligation and they undertake to pay all the indebtedness owed by Perfect Hexagon and Persada and not just the Admitted Indebtedness when Perfect Hexagon and Persada fail to make such payments. This is a distinct and separate obligation undertaken by Ds in addition to their “see to it” obligations in clauses 1.1(a) and (b). Whether the scope of clause 1.1(c) is broader than clauses 1.1(a) and (b) is irrelevant. 64.Further, I am of the view that this conditional payment obligation is not in any way altered, removed or curtailed by clause 1.2. 65.In the premises, I conclude that Ds’ liabilities arising from Ds’ Guarantee Documents are sound in debt and the petitioning debts are for liquidated sums. Conclusion and order 66.For the reasons given, Ds are unable to show any bona fide disputes to the debts on substantial grounds. Ds are clearly liable to pay the Admitted Indebtedness pursuant to Ds’ Guarantees. 67.To conclude, Ps are entitled to a bankruptcy order against each of Ds and I grant the usual bankruptcy order against each of Ds accordingly. 68.I further make a costs order nisi that each of Ds should pay costs of Ps and the Official Receiver relating to the Amended Petitions including all costs previously reserved (if any), to be taxed if not agreed. 69.Lastly, I thank Mr Hui and Mr Lau for their helpful assistance.
Mr Hui Ho Ming, instructed by Messrs C F Lee & Co, for the 1st and 2nd petitioning creditors in HCB 5997/2024 and HCB 5998/2024 Mr Victor Lau, instructed by Messrs. Stephenson Harwood, for the respective debtors in HCB 5997/2024 and HCB 5998/2024 Attendance of the Official Receiver’s Office was excused |
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Cases cited in this judgment
Further hearings and rulings under HCB 5997/2024