RE YUAN YIQIANG

HCB 7480/2018

[2019] HKCFI 3168

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7480 OF 2018

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J U D G M E N T

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1.  This is the hearing of the bankruptcy petition presented on 28 December 2018 against the debtor, Mr Yuan.

2.  The petition has been amended on 20 November 2019.  The amended petition was based on the debtor’s non-compliance with a statutory demand dated 14 September 2018.  That statutory demand in itself was in turn based on a final and interlocutory judgment dated 7 September 2018 against, amongst others, Mr Yuan, who was a guarantor of debts due under a tenancy agreement.

3.  After setting off the deposit paid by the tenants to the petitioner in the amount of $8.5 million, the outstanding indebtedness as of today is $966,336.88.  It is the same amount outstanding as at the time of the presentment of the petition.

4.  There have been 6 hearings before the master.  The debtor has not filed any evidence, but, according to the debtor’s notice of intention to show cause, it was stated that the amount of debt stated in the statutory demand was incorrect and the debtor had an intended claim against the petitioner.

5.  The petitioner seeks an order for bankruptcy against Mr Yuan today.  I have considered the evidence before me and also the purported cause shown by the defendant.

6.  First of all, the application for a bankruptcy order was based on a judgment debt.  There is an impending appeal out of time against the judgment but that does not operate as an automatic stay.  See the case of Pak Win Investment Ltd v Chung Yuet Sheung, Lorrain, [2012] HKEC 187, DHCJ Au-Yeung (as she then was), at §10.

7.  In respect of the first cause shown, namely a difference in amount between the debt claimed in the statutory demand and the amended petition is concerned, that difference is irrelevant.  If there is a debt which is in part above the statutory minimum is indisputable, a petition can still validly be presented even if the debt as claimed in the petition is for a larger sum, part of which is bona fide disputed: Re Tsoi Lai Ha Sandra, [2014] HKEC 535, Lok J, at §7.

8.  In the present case, by the amended petition, the petitioner has taken into account the part-payments and the deposit made since the statutory demand was issued.  The amount still due and owing is above the statutory minimum for presentation of a petition.  The amended petition is, therefore, still valid.  Any dispute over the outstanding amount can then be dealt with in the course of administration of the estate after a bankruptcy order is issued.

9.  The second cause shown by the debtor is that he intends to take out a writ action based on repudiatory breach.  The debtor’s solicitor seeks a stay until adjudication of that writ action. 

10.  In my view, that is not a sufficient cause to seek an adjournment of the petition.  As of today, the court has not even seen a draft writ and the cause of action has not been properly framed.  Such a suggestion that there may be a writ issued against the petitioner is not a reason for adjourning the petition.  Accordingly, no merit has been shown on the causes shown by the debtor. 

11.  Mr Lok and Ms Ng acting on behalf of the petitioner have drawn to the court’s attention that there is a pending bankruptcy petition in HCB 6077/2018 against another guarantor relating to the same underlying tenancy agreement.  The petition was based on the same underlying judgment.  That petition has been adjourned for substantive argument on 7 January 2020.

12.  The Official Receiver has drawn to the court’s attention some so-called “technical points” in relation to the petition in HCB 6077/2018.  Those points are not raised in the present case. 

13.  Although the Official Receiver seeks consolidation of the two bankruptcy petitions, I fail to see the common issue of fact or law which would justify the hearing of both petitions together. 

14.  The Official Receiver has expressed concern as to whether or not the petitioner as landlord will have double recovery of the same underlying debt. 

15.  However, I do not consider this to be a sufficient reason to adjourn the present petition for argument.  It would be a fraud on the part of the petitioning landlord to seek double recovery of the same debt from two different potential bankrupt persons and without disclosing the true position to the Official Receiver.

16.  In the premises, I am of the view that no reasonable cause has been shown before the court today which would justify adjournment of the petition.  I therefore grant a bankruptcy order against Mr Yuan.