RE LI WAI CHUNG

HCB 3464/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 3464 OF 2016

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J U D G M E N T

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1.  This Petition is based on a Statutory Demand served on the Debtor, with which he did not comply by making payment within the period of 21 days.

2.  Under s 6A(1) of Bankruptcy Ordinance, this raises a statutory presumption of inability to pay. In disputing the debt, the Debtor has to show a bona fide dispute on substantial grounds, by sufficiently precise evidence which is believable, and must establish that he actually has a defence of substance, not just a fair probability of one.  It is incumbent on the Debtor to put forward such factual evidence to substantiate his allegations, and the burden is on the Debtor to show not only that his case is believable but also that there is precise factual evidence in support of his case, and not just mere assertions (Re Ip Pui Man Nina [2011] 3 HKLRD 299).

3.  I am not satisfied that the Debtor has discharged this burden. 

4.  The only grounds relied upon by the Debtor in dispute of the Debt are that he had already paid a sum of $239,030.95 to the Petitioner in settlement of the Debt now sought; and that there is a genuine dispute as to the amount claimed by the Petitioner against the Manager, as evidenced by the setting aside of the Petitioner’s Statutory Demand against the Manager. 

5.  On the evidence, it is clear that the payment which the Debtor had made to the Petitioner was in respect of the sums due from him upon the termination of his own EHP Manager’s Financing Agreement dated 15 June 2009 with the Petitioner.  They do not relate to the Debt claimed by the Petitioner in these proceedings. 

6.  The Debt upon which the Petition against the Debtor is based is due from the Debtor to the Petitioner, under the Agency Manager’s Contract dated 15 June 2009 between the Debtor and the Petitioner, and the EHP Manager’s Financing Agreement dated 25 June 2009 made between the Petitioner, the Debtor and Madam Koo, the Manager (“25/6 EHP Agreement”).  The Debt is clearly provided under the 25/6 EHP Agreement to be due from the Debtor to the Petitioner as a principal debtor, in the event of the termination of the Manager’s contract with the Petitioner.  It is also expressly provided to be due from the Debtor under clause 3 of his own Agency Manager’s Contract with the Petitioner.

7.  There is no credible evidence or ground to support the assertion that the 25/6 EHP Agreement was not supported by consideration.  The Debtor expressly agreed, under clause 3 of his own Agency Manager’s Contract and as a condition of his own appointment as an agency manager of the Petitioner, to pay a portion of any balance due from an agent under the agent’s financing agreement with the Petitioner.  There is no evidence to dispute the fact that advances were made by the Petitioner to the Manager under the 25/6 EHP Agreement.  The fact that the Debtor was no longer the Agent Leader at the time of the termination of the Manager’s Contract is not relevant to whether there was valid consideration at the time when the Debtor’s own agreements with the Petitioner were made, and when the 25/6 EHP Agreement was made between the Petitioner and Manager. 

8.  Res Judicata as raised by Counsel for the Debtor does not even apply, when the setting aside of the Statutory Demand relates to the Statutory Demand against the Manager, and not the Debtor.  There is no identity of parties in those setting aside proceedings involving the Manager, and these bankruptcy proceedings against the Debtor.

9.  Judgment was entered against the Manager in respect of the amount claimed by the Petitioner to be due from the Manager under the 25/6 EHP Agreement.  The application to set aside the judgment was withdrawn by the Manager.  There is no credible basis to assert that there is a bona fide dispute as to the amount sought from the Manager under the 25/6 EHP Agreement.

10.  The Petitioner is entitled to pursue its remedies against the Debtor and the Manager separately under the relevant EHP agreements.  The issue of double recovery does not arise in these bankruptcy proceedings against the Debtor, particularly when the Petitioner has not been paid by the Manager.

11.  I am not satisfied that the Debtor has established that there is a bona fide dispute to the Debt, nor that there is any genuine cross claim.

12.  Nor is there any sufficient evidence from the Debtor that he is able to pay the Debt. 

13.  The Statutory Demand was issued and served on the Debtor.  The Debtor did not pay the Debt nor applied to set the Statutory Demand aside.  There is no evidence of his means, assets, or debts for the Court to consider his mere assertion of ability to pay his debts.

14.  For all these reasons, I conclude there is no merit in any of the grounds advanced by the Debtor in opposing the Petition, and I make a bankruptcy order on the Petition with an order that the Petitioner is to have the costs of the Petition.