RE WONG WAI MAN

HCB 4912/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 4912 OF 2013

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J U D G M E N T

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1.  This is a bankruptcy petition.

Background

2.  The petitioner is an insurance company in Hong Kong and the respondent was its former insurance agent.

3.  By a letter of appointment dated 22 August 2011, the petitioner appointed the respondent as its District Manager.  A number of agreements were entered into between the petitioner and the respondent:

(i)   a letter of appointment dated 22 August 2011 (“the Letter of Appointment”);

(ii)   a standard agency agreement (“the Agency Agreement”);

(iii)   a loan agreement supplied by the petitioner when the respondent accepted the appointment (“the Loan Agreement”); and

(iv)   a Deed of Guarantee dated 1 September 2011, in which the respondent personally guaranteed to the petitioner to pay on demand 50% of the clawback of goodwill sign-on fee owed by Mr Chung Kin Ho (“Mr Chung”), a down-line agent directly reported to the respondent, to the petitioner.

4.  According to Clause 10.2 of the Agency Agreement, the petitioner or the respondent may terminate the Agency Agreement at any time and without giving any reason for so doing by giving 15 days’ notice to the other in writing.

5.  In accordance with the Loan Agreement, the petitioner had advanced to the respondent a total sum of $415,900, of which $83,400 in the form of monthly instalments and $332,500 in the form of goodwill sign-on fee. 

6.  Further, Mr Chung has owed the petitioner a total sum of $125,000 being the clawback of goodwill sign-on fee.  50% of which shall be $62,500.

7.  It is the petitioner’s contention that the Agency Agreement had been terminated within 24 months of the commencement date, and hence a sum of $478,400 would become payable to the petitioner by the respondent.

8.  According to the written submission of Mr Yu, counsel for the respondent, the respondent opposes the petition on the following 2 grounds:

(1)   in breach of the provision contained in para 4.2 of Part 1 of Practice Direction 3.1, the verifying affidavit in support of the petition has not recited the fact that the petitioner does not have a corporate seal or the nature of the authority by which the officer lodges the bankruptcy petition; and

(2)   the Agency Agreement had not been effectively or lawfully terminated on the basis that no verbal or written notice had been received by the respondent.

Discussion

9.  There was indeed an Affirmation of Truth of Statement in Petition made by Mr Cheng Wing Kit filed on 10 July 2013, verifying that he had been duly authorised to present the petition and that the petitioner does not possess a corporate seal.  In such circumstances, Mr Yu is not pursuing the first ground of opposition.

10.  I then turn to the second ground of opposition. The petitioner contends that the written notice for termination of the Agency Agreement had been properly given to the respondent.

11.  The Agency Agreement contains provisions in respect of the giving of notice under the Agreement.  Clause 14.1 of the Agency Agreement states that any consent or notice required to be given or sent must be in writing and signed by the petitioner or the respondent as the case may be.

12.  Clause 14.2 of the Agency Agreement provides that:

(1)   notice shall be deemed to have been sufficiently given if sent by prepaid post to the address of the respondent as appearing in the letter of appointment or to such other address in Hong Kong as may from time to time be notified to the petitioner;

(2)   any notice so sent shall be deemed to have been served on the day following the date of posting posted in Hong Kong;

(3)   in proving service, it shall be sufficient to prove that the envelope containing the notice was properly addressed, stamped and posted; and

(4)   notice served in any other manner shall be deemed received when in the ordinary course it may have been expected to be received.

13.  By a letter dated 16 January 2012 (“the Letter”), the petitioner communicated its intention to terminate the Agency Agreement with the respondent.  Pursuant to Clause 14.1 of the Agency Agreement, the Letter was properly signed by Mr Angus Fu, the then Head of Agency Services & Sales Support of the petitioner.

14.  The Letter was sent to the respondent’s address at “Flat C, 10/F, Tower 1, Ocean Pointe, Sham Tseng” (“the Address”) on 17 January 2012 by prepaid post.  The address is identical to the address stated in the Letter of Appointment and the address stated in the respondent’s affirmation dated 28 November 2013.

15.  According to the petitioner, it has not received any response to the Letter and the Letter was not returned to the petitioner.

16.  Further, the petitioner has also not received any notification of change of address from the respondent.  The fact that the Address is still the current address of the respondent as shown in the respondent’s affirmation indicates that he has not changed his address at the material times.

17.  By virtue of Clause 14.2 of the Agency Agreement, as the Letter was posted on 17 January 2012, the Letter shall be deemed to have been served on the respondent on 18 January 2012.

18.  As stipulated in the Letter, the termination of the Agency Agreement only took effect on 6 February 2012.  Hence, more than 15 days’ notice had been given to the respondent and the Agency Agreement was effectively terminated.

19.  In my judgment, Clause 14 provides a clear mechanism for the petitioner to serve notice to the respondent under the Agency Agreement.  The petitioner has proved to the satisfaction of the court that it had sent the notice of termination of the Agency Agreement to the respondent. In such circumstances, whether the respondent has actually received the notice is not a material consideration.

20.  Mr Yu, in what I say is a half-hearted attempt to oppose the petition, submits that the petitioner has failed to discharge the burden of proving the sending of the notice, because the Certificate of Posting of Unregistered Postal Packet furnishes no proof of the nature of the contents of the alleged post.

21.  I disagree.  Mr Cheng Wing Kit has confirmed in his evidence that the Letter of termination had been posted to the respondent on 17 January 2012, and he can produce the Certificate of Posting to prove the posting of the Letter.  In my judgment, this is already sufficient for the petitioner to discharge the burden that it has sent the notice of termination to the respondent. Hence, I see merit in such argument.

22.  For the above reasons, the second ground of opposition also fails.  In light of my decision on such matter, it is quite unnecessary for me to consider whether the sending of the Letter by email was a valid notice of termination.

23.  In the affirmation in opposition, the respondent has not raised any other dispute as to the debt apart from the alleged improper termination of the Agency Agreement.

24.  Mr Yu, in the hearing, tries to put forward the following 3 additional grounds to oppose the petition:

(i)    the respondent had not received the statutory demand, and so he did not make an application to the court to set aside the statutory demand;

(ii)    the respondent has made a genuine offer to the petitioner to settle the debt; and

(iii)    as the respondent had committed no misconduct, it was unfair on the part of the petitioner in terminating the Agency Agreement shortly before the expiry of the 24 months’ period as provided for in the Agency Agreement.

25.  As the respondent has not raised these grounds of objection in the affirmation of opposition, the court is not entitled to consider these objections at this late stage.  Mr Yu, to a certain extent, concedes such point and so the court should not consider these objections at this stage.

26.  Based on the aforesaid analysis, the petitioner had given proper written notice to the respondent pursuant to the provisions in the Agency Agreement.  The Agency Agreement was thus effectively and lawfully terminated and the debt became immediately due and payable by the respondent. Since the respondent has not raised any bone fide dispute as to the debt and is unable to repay the same to the petitioner, I make the usual bankruptcy order against the respondent.