NAN FUNG FINANCE LTD v. MIAO YIN HING, MICHAEL

HCB7032/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY NO. 7032 OF 2006

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D E C I S I O N

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1. This is a petition for the bankruptcy of the Debtor, Mr Michael Miao Yin-hing.  The petition is based on a judgment debt in the sum of about $1,300,000 which was entered in May 2003. 

2. I am told by Miss Ngo, whoappears for the Petitioner, that the debt was based on a judgment entered by way of settlement of previous proceedings between the Petitioner and the Debtor, but despite this, the Debtor had left the substantial part of the judgment debt unpaid, having only made three or four small payments in reduction of the amount of the judgment debt.  It appears from the attachment to the statutory demand that there were only three payments of $8,000 each, plus a relatively small sum of $1,800 by way of refund of costs that was recovered so as to reduce the judgment debt by just slightly over $25,000.  The payments were made between May 2003 and April 2004, and in the two and a half years since then, no further payments have been received on account of the judgment debt from the Debtor.  In these circumstances, the Petitioner seeks the usual bankruptcy order. 

3. Mr Miao appeared before me today and indicated that he wished to try to settle the debt.  His proposal was that he would make a payment of $550,000 in one lump sum in six months’ time, apparently in full and final settlement.  The Petitioner has refused this offer and is only prepared to negotiate further with Mr Miao if he pays the Petitioner the sum of $100,000 up front.  Mr Miao has indicated that he considers this to be unsatisfactory because if the negotiations come to nothing, he will have paid the $100,000 for nothing.

4. Unfortunately from Mr Miao’s point of view, the fact is that he has a judgment against him.  There is no suggestion that the judgment is otherwise than a valid one and, in those circumstances, the Petitioner is entitled to enforce its judgment.  The fact that Mr Miao has been unable to pay anything beyond $25,000 in the year since the judgment was entered and nothing for the two and a half years thereafter does, in my view, give the Petitioner real grounds for concern as to Mr Miao’s ability or willingness to settle the judgment debt. 

5. In those circumstances, the fact that the one-off payment of $550,000 represents a very substantial discount to the amount actually due, the fact that it would not be paid for six months, with no security whatsoever or guarantee that it would be repaid at the end of that time, means that it is impossible to suggest that the Petitioner is being in any way unreasonable in refusing this offer.  On the contrary, it seems to me entirely understandable that the Petitioner would not be prepared to entertain such a proposal.

6. That being the case, there being no other offer available, and it not being in any way the Petitioner’s responsibility to negotiate in respect of this matter, it follows that the appropriate course is to make the usual bankruptcy order with costs against Mr Miao.

7. I would just add that, according to Mr Miao, he has other debts to two other major debtors which total close to HK$10 million, together with a variety of smaller debts with the details of which he has not troubled the Court.  Given those further debts, it seems to me that there is little doubt but that this is the appropriate course to take.