RE PUN CHI CHIU

HCB 2861/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 2861 OF 2013

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REASONS FOR DECISION

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1.  AXA China Region Insurance Company Limited petitioned for the bankruptcy of the debtor Mr Pun Chi Chiu. The petition debt was the sum of $225,422.87 as at the date of the statutory demand dated 8 January 2013. The debt was not disputed by Mr Pun. The only dispute was whether the court ought to refuse to make a bankruptcy order on the ground that Mr Pun had offered to compound the debt and the offer had been unreasonably rejected.

2.  Mr Pun was an insurance agent engaged by the petitioner between September 2010 and December 2012.  In December 2012, he resigned for personal reasons and joined another insurance company, for which he is still working.  The debt arose under certain agreements relating to the agency relationship between the petitioner and Mr Pun. 

3.  In March 2013, Mr Pun offered to repay the debt to the petitioner by 12 monthly instalments with interest.  That offer was not accepted.

4.  The bankruptcy petition was presented on 25 April 2013.

5.  On 26 June 2013, Mr Pun offered to repay $216,000 by 36 monthly instalments of $6,000 in full and final settlement of the debt.  That offer was again not accepted. 

6.  On 3 July 2013, Mr Pun offered to pay the petitioner $228,000 by 12 monthly instalments of $19,000 each.

7.  At the hearing of the petition on 15 July 2013, the petitioner informed the court that, the offer from Mr Pun not being acceptable, it would seek a bankruptcy order.  Mr Pun then offered to repay the debt to the petitioner by seven equal monthly instalments.  At the request of the petitioner’s representative, I adjourned the petition to the following Monday, on the ground that time was needed to consider the offer and take instructions.

8.  At the hearing of the petition on 22 July 2013, the petitioner stated that Mr Pun’s proposal was not acceptable, and that its counter-offer, namely, that Mr Pun pay $112,000 as a first instalment and the remainder of the debt and expenses by six additional monthly instalments had not been accepted by Mr Pun. 

9.  Having heard the parties, I made a bankruptcy order, taking the view that this is not a case where one can say that the debtor had made a proposal which no reasonable creditor, in light of all the circumstances, would have refused.

10.  It is well established that a petitioner is entitled to have regard to his own interests and is not required to balance his interests against those of the debtor, or to take a chance, or to show patience or generosity, even though some creditors might do so.  Acting reasonably is not the same as acting justly, fairly or kindly: IRC v a Debtor [1995] BCC 971, 974B-F.

11.  Mr Pun’s stated income is about $46,000 per month.  In addition to the debt to the petitioner, he also has debts payable to other creditors including a credit card debt of over $35,000, a bank revolving loan with an outstanding balance of over $73,000 and tax payable to the Inland Revenue Department of over $61,000.  He also borrowed the sum of $50,000 from a finance company in March 2013 for which he has to repay $8,250 per month for eight months starting from 18 April 2013.  Given his financial condition, and the fact that in late June 2013 Mr Pun only offered to repay $6,000 per month for 36 months, I think that the petitioner might not surprisingly have doubts about Mr Pun’s ability to repay in full within seven consecutive monthly instalments.  I cannot say that the petitioner was acting unreasonably, still less that it was acting so unreasonably that no reasonable creditor would have done likewise, when demanding a sizeable first instalment as a condition for accepting payment by instalments extended over seven months.