RE FAN VIRGINIA

HCB 4195/2020

[2021] HKCFI 550

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4195 OF 2020

_______________

_______________

__________________________________

R E A S O N S   F O R   J U D G M E N T

__________________________________

1.  At the hearing of the petition presented by FTLife Insurance Company Limited (formerly known as AGEAS Insurance Company (Asia) Limited) (“petitioner”) on 17 June 2020, I made the usual bankruptcy order against Ms Fan Virginia (“debtor”). These are the reasons for my judgment.

2.  The petition is based on the debtor’s failure to satisfy a statutory demand served upon her by way of substituted service on 22 January 2020 whereby the petitioner demanded the debtor to pay $417,249.94 (“SD”), which comprised of the following amounts due as at 2 January 2020:

(1)  $325,996.77, being the balance of the Monthly Financing Advance payable by the debtor pursuant to clause 4.1(vi) of the Agreement dated 20 March 2012 made between the debtor and the petitioner (“MFA”);

(2)  $10,164 and $15,244.64, being 66% of the conditional retention bonuses (“CRB”) paid to her in 2015 ($15,400) and 2016 ($23,097.94) respectively, which the debtor was liable to repay to the petitioner if the Agent’s Contract is terminated on or before 31 December 2018 for whatever reason;   

(3)  less $29,009.13 in respect of the “ADIS Cheque” payable to the debtor;

(4)  the net balance under §§(1) - (3) above was $322,396.28 (“Balance”);

(5)  interest on the MFA at 6.5% p.a. from 1 February 2016 to 29 July 2017 in the amount of $31,637.25;

(6)  interest on the Balance from 30 July 2017 to 2 January 2010 in the aggregate amount of $63,118.31[1]; and

(7)  $98.10, being the commission clawback pursuant to clause 6.3 of the Agent’s Contract.

(together “Debts”)

3.  It is the petitioner’s case that it was entitled to and did terminate the Agent’s Contract in accordance with clause 10.1 thereof with effect from 29 June 2017 and, following such termination, the debtor was liable to repay the Debts. 

4.  By letter dated 28 July 2017, the petitioner demanded the debtor to repay the MFA, the CRB 2015 and CRB 2016 together with interest accrued thereon but the debtor failed to do so. 

5.  By another letter dated 18 December 2019 Messrs Kennedys, on behalf of the petitioner, demanded the debtor to repay the Balance plus interest and the Commission Clawback to the petitioner.  This was followed by the service of the SD on 22 January 2020. 

6.  The debtor did not make any payment to the petitioner, whether pursuant to the demand letters or the SD. 

7.  At the hearing on 16 November 2020, the debtor appeared in person.  She handed up a 2-page letter dated 14 November 2020 to the Court and submitted that she should not be liable for the full amounts stated in the SD on the grounds that (1) there was something wrong in the calculation of the amount due; (2) she wanted to apply for legal aid; (3) she needed a lawyer to advise her as she believed that she had been deceived by a Mr Paul Ng and she wanted to prepare her “defence” or settlement offer to the petitioner; and (4) she had not filed any affirmation in response to the petition.  The debtor asked for an adjournment of the petition which was not objected to by the petitioner.  Ng J explained to the debtor that it was incumbent upon her to set out which amounts she disputed and which amounts were owed to the petitioner and she had to expedite her application for legal aid.  Directions were given for the parties to file further affirmations in respect of the petition and the petition was adjourned to 22 February 2021.  The debtor was required to file her affirmation within 42 days, that is, by 28 December 2020. 

8.  At the hearing on 22 February 2021, the debtor continued to appear in person.  The petitioner sought a usual bankruptcy order against the debtor on the basis that she had not paid the amount due nor filed any affirmation in opposition to the petition.  The debtor claimed that she had already filed her affirmation in January 2021 and sought to hand up a letter to the Court.  Upon checking the court file, it was confirmed that no affirmation had been filed by the debtor.  This notwithstanding, Ng J gave the debtor another opportunity to file her affirmation in opposition within that day and adjourned the petition to 1 March 2021. 

9.  Instead of filing her affirmation, the debtor insisted on giving a copy of her affirmation to the clerk to Ng J.  After taking a copy of her affirmation, the clerk reminded the debtor that she had to file her affirmation within that day. 

10.  Despite repeated indulgence given to the debtor, she did not file her affirmation in opposition to the petition, whether on 22 February 2021 or at all. 

11.  The debtor does not appear at the hearing.  Nevertheless, this Court has considered the contents of the debtor’s affirmation to see if she has raised any valid ground in opposition to the petition. 

12.  It is well established that in opposing a bankruptcy 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 Leung Cherng Jiunn [2016] 1 HKLRD 850, at §27, per Kwan JA (as she then was); Re Soetrisno Farida [2019] HKCFI 2756, at §11, per Ng J).  In this regard, it is not sufficient for the debtor to merely raise “a cloud of objections on affidavits” (Artech Development Ltd v Posismo Ltd [2018] HKCFI 344, at §10(4), per Ng J).

13.  In her affirmation, the debtor raises the following grounds in opposition to the petition:

(1)  When she signed the “paperwork”, she was not aware that it was “a loan contract”.

(2)  Mr Paul Ng, the person who recruited her to join the petitioner, assured her that “whatever money is being paid to [her] will not be recovered by [the petitioner]”. 

(3)  She does not have any assets or cash which she can sell to pay back the petitioner or to retain a lawyer. 

(4)  She has approached the petitioner with a view to reach an agreement to settle the Debts, but the settlement plan proposed by the petitioner is one which she cannot fulfil.

(5)  She needs a lawyer to advise her and has applied for legal aid.  She has applied for mediation service and wishes to settle the matter so as to avoid a bankruptcy order.     

14.  I do not think the matters raised by the debtor constitute a valid ground in opposition to the petition.

15.  First, the debtor admits that she signed the agreements relied on by the petitioner in the SD.  A person of full age and understanding is bound by the documents he signed unless he can establish a recognised legal basis to disown such documents.  The principles were stated by Ribeiro PJ in Ming Shiu Chung & ors v Ming Shiu Sum & ors (2006) 9 HKCFAR 334 at §§84-87:

“84. … It is in law highly material to ask how or why the father nevertheless signed the documents. Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.

85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:

‘We find in many of the authorities statements that a man’s deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the man had taken no precautions at all, and there was no ground for his belief that he was signing something different from that which in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.’

86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan (2002) 5 HKCFAR 515 at 533, Litton NPJ acknowledged:

‘… the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.’

87. The vitiating factors at common law include fraud, mistake, misrepresentation, non est factum, duress, undue influence and lack of mental capacity: see, for instance, Blay v Pollard and Another [1930] 1 KB 628; and Gillman v Gillman (1946) 174 LT 272. To disown a signed legal document, facts constituting the particular vitiating factor relied on must be pleaded and established by the evidence. …” (underline added)

16.  The debtor has not raised, let alone established, a recognised legal basis to disown the agreements signed by her.  That being the position, it is not open to the debtor to disown the agreements or to suggest that she is not liable to repay the amounts payable pursuant to such agreements. 

17.  Second, the allegation that Mr Paul Ng has made the alleged assurance is incredible as it is contradicted by the express terms of the agreements signed by the debtor and is not corroborated by any documents.

18.  Third, the debtor’s confirmation that she has no means to pay the Debts, far from being a ground in opposition to the petition, reinforces the petitioner’s contention that the debtor is unable to pay the Debts.

19.  Fourth, the petitioner, as an unpaid creditor, is entitled to seek a bankruptcy order against the debtor if and for so long as the Debts remain unpaid.  The petitioner is fully entitled to insist on its right and is not obliged to accept the debtor’s attempt to negotiate or to resolve the matter by way of mediation. 

20.  Lastly, the debtor has already been given ample time and opportunity to repay the Debts, given that the SD was served on her over a year ago, and the petition was twice adjourned by Ng J.