RE 張承勷

HCB 6679 /2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 6679 OF 2015

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JUDGMENT

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I.  INTRODUCTION

1.  This was the hearing of the bankruptcy petition (“Petition”) presented by 北京橙天嘉禾影視製作有限公司 (“P”) against 張承勷 (also known as 張承襄 or Cheung Shing-Sheung or Carl Cheung or Carl Chang) (“D”) on 24 August 2015 pursuant to section 6A of the Bankruptcy Ordinance Cap 6 (“BO”). The Petition was opposed by D.

2.  The Petition for the sums of RMB4,725,364.05 and HK$11,045 (“Debt”)[1] was based on D’s non-compliance with a statutory demand dated 8 August 2014 (“SD”) which in turn was founded on a default judgment dated 21 January 2014 (“Judgment”) in HCA2481/2013 (“Action”).

3.  Digressing a little into the history leading up to the Judgment, the Judgment was based on a PRC civil judgment of the People’s Court of Chaoyang District, Beijing dated 10 November 2011 in P’s favour (“PRC Judgment”). When the judgment debt under the PRC Judgment was not satisfied, P sought to enforce such judgment by applying for and obtaining a Travel Restriction Order against D in/about June 2012 (“Travel Restriction Order”) which had the effect of restraining D from leaving Mainland China. On 19 December 2013, P commenced the Action to enforce the PRC Judgment against D in Hong Kong. On 21 January 2014, the default Judgment was entered against D.

4.  Under the SD, P demanded a sum of (a) RMB4,165,676.66 or its HK$ equivalent at the time of payment (liquidated sum), (b) RMB212,734.83 or its HK$ equivalent at the time of payment (interest from 19 December 2013 to 8 August 2014 at then judgment rate), and (c) HK$11,045 (fixed costs).

5.  On 8 August 2014, the SD was served to Flat 14D, Wah Fat Building, 1R Tung Choi Street, Mongkok, Kowloon, Hong Kong (“HK Address”) being D’s last known address in Hong Kong, and to his last known email address. Although personal service could not be effected, D replied by email on 21 August 2014 to confirm receipt of emails sent to him enclosing the copy SD and to assure he would revert with a proposal. Alternatively, P served the SD on D by advertising in local newspapers on 5 February 2015 and in a Beijing newspaper on 18 June 2015. There was no application to set aside the SD.

6.  On 24 August 2015, P filed the affirmation of Wong Kwan Lai in support of the Petition by inter alia verifying the outstanding Debt and confirming D’s HK Address and email address.

7.  As P was unable to effect personal service of the Petition on D,[2] so P applied for substituted service. On 24 September 2015, Master Lai granted leave for P to serve the Petition on D by way of substituted service. But on 7 October 2015, D’s solicitors filed Notice to Act in the present bankruptcy proceedings. On the following day, P’s solicitors served the Petition on D’s solicitors.[3] No issue on service was taken by D.

8.  On 22 October 2015, D filed Notice by Debtor of Intention to Oppose Petition (“Opposition Notice”). On the same day, D applied to set aside the Judgment in the Action.

9.  According to the order made by G Lam J on 16 November 2015 by consent, the hearing of the Petition was adjourned to the 1^st Monday before the Bankruptcy Judge after determination of D’s application in the Action to set aside the Judgment. According to the order made by G Lam J on 20 June 2016 by consent, the hearing of the Petition was adjourned to 25 July 2016 before the Bankruptcy Judge for further directions. According to the order made by Au Yeung J on 1 December 2016 by consent, directions were granted for filing/serving affirmation evidence and for adjourning the Petition for argument before a Bankruptcy Judge.

10.  On 26 January 2016, D filed the affirmation of his solicitor Liu Chung Yin Terry (“Liu”) (“Liu Aff”). The Liu Aff stated D was in Beijing and could not affirm his affirmation in time for filing that day. Liu claimed D had assured him the contents of D’s un-affirmed 5^th affirmation exhibited to the Liu Aff (“Draft 5^th Aff”) were true and correct, and had instructed him to exhibit the Draft 5^th Aff in draft approved form. Liu undertook to file the Draft 5^th Aff as affirmed when received by him from D. On 30 March and 3 April 2017, P filed 2 affidavits of Yuen Yeuk Sheung (legal manager of P’s affiliate company Orange Sky Golden Harvest Entertainment Company Limited, “Yuen”) in response (“Yuen 1^st and 2^nd Affs”).

11.  To date, D had not filed the Draft 5^th Aff in affirmed/ notarised form and had not applied under Order 41 rule 4 of the Rules of the High Court (“RHC”) to adduce the contents of the Draft 5^th Aff.

12.  The Debt payable at the date of the Petition remained unpaid by D within the requirements of section 6D(1) of the BO. There was no suggestion that the Debt had been secured or compounded.

II.  OPPOSITION NOTICE

13.  In the Opposition Notice, D set out 3 grounds upon which he intended to show cause against the Petition:

(a)   that the presentation of the Petition was invalid pursuant to section 4(1) of the BO as (i) D was not domiciled in Hong Kong, (ii) D was not personally present in Hong Kong on 24 August 2015 (the day when the Petition was presented), and (iii) D had not at any time in the period of 3 years ending with that day been ordinarily resident, had a place of residence or carried on business in Hong Kong (“Ground 1”);

(b)   that there was a bona fide dispute on substantial grounds as to whether the Debt or part thereof was due and payable to P as the Judgment was an irregular judgment liable to be set aside as of right (“Ground 2”);

(c)   further or alternatively, that if the Judgment was not irregular and/or was not liable to be set aside as of right, there was a bona fide dispute on substantial ground as to whether the underlying Debt was due and payable to P (“Ground 3”).

14.  In relation to Ground 1, the Draft 5^th Aff claimed (a) D “had already intended to make Beijing [his] home permanently and for an indefinite period” even before the Travel Restriction Order was imposed in June 2012, (b) the Travel Restriction Order reinforced D’s such intention, (c) after the Travel Restriction Order was imposed D’s roots in Beijing went deeper as he (i) continued to establish his business/ties in Beijing, (ii) continued to develop his relationship with his then girlfriend and later with his fiancée and (iii) was determined to marry his fiancée, and (d) D had “already settled in Beijing, having a home and business …… in Beijing” and no longer had/has any ties with Hong Kong.

15.  B Chu J heard D’s application in the Action to set aside the Judgment on 6 April 2016, and handed down judgment on 16 June 2016 (“Chu Judgment”). The learned judge ordered inter alia that the Judgment be set aside on condition that D would pay RMB4,165,676.66 or its HK$ equivalent into court within 28 days (“Condition”). D was unable to satisfy the Condition within the prescribed time. D sought leave to appeal against the Condition and also sought stay of execution pending final determination of appeal, but on 22 September 2016 B Chu J handed down her decision dismissing these application (“Chu Decision”). D renewed his application to the Court of Appeal (“CA”) for leave to appeal, but it was dismissed by the CA on 11 November 2016 (“CA Decision”). Since D had exhausted his challenges against the Judgment, Grounds 2 and 3 fell away, leaving Ground 1 outstanding.

III.  RECENT DEVELOPMENTS

16.  On 2 May 2017, D filed Notice to Act in Person dated 26 April 2017 that gave 303, No17 South Lane, Jian Chang Hutong, Beijing (“PRC Address”) as his purported address for service. Such Notice to Act in Person was ineffective,[4] so D’s solicitors remained on the record. Indeed, on 5 May 2017 P’s solicitors wrote to inform D his Notice to Act in Person was ineffective.[5] Nevertheless, out of abundance of caution, P’s solicitors served the hearing bundle on D’s solicitors on 28 April 2017, and arranged for courier delivery of the hearing bundle, written submissions and list of authorities to the PRC Address. On 9 May 2017, the courier service informed P’s solicitors that service on D could not be effected “due to consignee is moved and no contact details”.

17.  In the meantime, D’s solicitors filed a summons on 24 April 2017 under Order 67 of the RHC for leave to cease to act for D in the present proceedings. On 10 May 2017, Master K Lo granted an order in terms of the summons. At the Hearing on the following day, D’s solicitors were still solicitors on the record for D.[6] Liu of D’s solicitors attended the Hearing, but informed the court he had no instructions to make submissions on D’s behalf.

18.  On 10 May 2017, this court received what purported to be a fax from D (“Fax”). The Fax apologised for the late submissions but claimed that “without an office it is almost impossible to find a fax machine that had international connection in Beijing”. The Fax further alleged D had “already exhausted [his] resources at the very moment and cannot afford for [his] legal professional”, and he could not attend court personally due to the Travel Restriction Order, so the court was urged to advise P to lift the Travel Restriction Order for D to attend court, failing which the hearing of the Petition should be adjourned until he could do so.

19.  Assuming the Fax was sent by D, Ms Yu, counsel for P, opposed the application for adjournment by fax. Ms Yu submitted it was far too late for D to seek such adjournment when he had been aware of the Travel Restriction Order since mid-2012. Ms Yu reminded the Travel Restriction Order would not have prevented D from presenting proper affirmation evidence to oppose the Petition. As seen in Part VI below, there was no satisfactory reason why D did not for about 4 months since January 2017 have the Draft 5^th Aff properly affirmed/notarised to present admissible evidence in support of the Opposition Notice or alternatively apply under Order 41 rule 4 of the RHC to adduce the contents of the Draft 5^th Aff (see paragraph 11 above). More importantly, the Fax did not say D had anything further to add to the un-affirmed Draft 5^th Aff. In the absence of admissible evidence to support the Opposition Notice, it was difficult to see how P’s personal attendance and/or any adjournment of the Hearing would have been useful. Further, given D’s evasiveness as noted in the Chu Judgment and as supported by the latest revelation that he had “moved” from the PRC Address (without informing P’s solicitors or the court and without any forwarding contact details) in less than a fortnight after he himself put forward such address as his purported address for service in his Notice to Act in Person, there was no assurance at all that D could be located or would appear at court even if the Hearing was adjourned. In my view, there was no satisfactory reason for adjourning the hearing of the Petition, and I proceeded with the Hearing.

IV.  LEGAL PRINCIPLES

20.  The BO provides as follows:

“A bankruptcy petition shall not be presented to the court under section 3(1)(a) or (b) unless the debtor –

(a) is domiciled in Hong Kong;

(b) is personally present in Hong Kong on the day on which the petition is presented; or

(c) at any time in the period of 3 years ending with that day –

(i) has been ordinarily resident, or has had a place of residence, in Hong Kong; or

(ii) has carried on business in Hong Kong.” (section 4(1))

“The court shall not make a bankruptcy order on a creditor’s petition unless it is satisfied that the debt, or one of the debts, in respect of which the petition was presented is either –

(a) a debt which, having been payable at the date of the petition or having since become payable, has been neither paid nor secured nor compounded for; or

(b) a debt which the debtor has no reasonable prospect of being able to pay when it falls due.” (section 6D(1))

“(1) A creditor’s petition shall be verified by affidavit of the creditor or some person on his behalf having knowledge of the facts, and shall be served in the prescribed manner.

(2) At the hearing the court will require proof of the debt of the petitioning creditor and of the service of the petition, and, if satisfied with the proof, may make a bankruptcy order in pursuance of the petition.” (section 9)

21.  Turning to the requirements of section 4(1) of the BO, I will consider the legal principles in relation to the concepts of “domiciled”, “ordinarily resident”, “place of residence” and “carried on business” thereunder. In any event, P only had to satisfy any one ground under section 4(1)(a), (1)(c)(i) and (1)(c)(ii) of the BO. Ms Yu informed the court P would not rely on section 4(1)(b) of the BO.

22.  Domiciled  Au J in Re Ip Pui Man Nina summarised the applicable principles stated by L Chan J in Re Ku Chu Keung (a debtor)[7] as follows:[8]

“30. …… the applicable principles of domicile …… are in gist as follows:

(1) “Domicile” is a legal concept distinct from “permanent home”. The requirements of domicile go beyond those of permanent home. A person who desires to acquire a domicile in a country must intend to reside in it permanently or indefinitely (para 24).

(2) An independent person can acquire a domicile of a place by, and only by, residing there with the intention to reside there permanently or indefinitely (para 29).

(3) In determining whether a person has the intention to reside permanently or indefinitely in a country, the court must have regard to the motive for which he has taken up residence there. To acquire a domicile in a country, a person must freely choose to reside there and must not reside there because he is prescribed or dictated by external factors such as the duties of office, the demands of creditors or the need to seek medical treatment. If a person has a special purpose for going to and staying in a country and he will leave that country once the purpose is achieved, then he lacks the intention to stay in that country as required by law and hence cannot acquire a domicile in that country (para 33).

(4) The existing domicile of a person is deemed to continue until it is proved that he has acquired a new domicile; and he who asserts a change of domicile bears the burden of proving the truth of the assertion (para 37).

(5) An abandonment or change of domicile is a very serious issue and satisfactory evidence is needed to prove an intention to change a domicile (para 40, citing the House of Lords decision in Marchioness of Huntly v Gaskell [1906] AC 56, 66-67).”

23.  Ordinarily resident  I refer to the meaning of “ordinarily resident in Hong Kong” in paragraph [4.06] in Butterworths Hong Kong Bankruptcy Law Handbook 5^th ed (2016) as follows:

“In R v Barnett London Borough Council, ex p Shah [1983] 2 AC 309 at pp 342 and 343, Lord Scarman held that the natural and ordinary meaning of the words ‘ordinarily resident’ had been authoritatively determined by the House of Lords in two tax cases in 1928, namely Levene v IRC [1928] AC 217 and IRC v Lysaght [1928] AC 234 to mean ‘that the person must be habitually and normally resident here, apart from temporary or occasional absences of long or short duration’, and the word ‘habitually’ connoted two characteristics of residence, namely that of residence adopted voluntarily and for settled purposes. Unless it can be shown that the statutory framework or the legal context in which the words are used required a different meaning, ‘ordinary residence’ refers to a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or long duration. See also Lau San Ching v Liu, Apollonia (1995) 5 HKPLR 23 at p 31, per Cheung J.

It has been held that in determining whether a person is ‘ordinary resident’ in Hong Kong, the following guidelines were helpful: (i) whether a person is ordinary resident in Hong Kong is a question of fact and degree and must be determined in all the circumstances; (ii) a person can have ordinary residence in two countries at the same time; (iii) the residence must be voluntary and cannot be forced against the person’s free will; (iv) involuntariness may negative ordinary residence; and (v) temporary or occasional absences of long or short duration do not negative ordinary residence: See Lau San Ching v Liu, Apollonia (1995) 5 HKPLR 23 at p 28, per Cheung J. See also Director of Immigration v Ng Shun Loi [1987] HKLR 798 (CA); and Re Lee Ka Ming, a minor [1991] 1 HKLR 307.

……

It is not necessary to show that the debtor was ordinarily resident in Hong Kong throughout the whole 3 years period preceding the presentation of the bankruptcy petition. The consideration is whether the debtor was ordinarily resident in Hong Kong of unspecified duration at any time during the period of three years preceding the presentation of the petition. See R v Ip Pui Man Nina [2011] HKCU 922 (unreported, HCB 309/2010, 19 May 2011) and Vallejos Evangeline Banao v Commissioner of Registration & Anor [2013] 4 HKC 239 para 31.”

24.  Based on the aforesaid, Ms Yu contended the concepts associated with domicile (ie intention and abandonment) have little or no place when dealing with ordinary residence.[9] It has been said the emphasis does not lie on intention or expectation for the future which is implicit in the idea of permanence, but on immediately past events, and in the context of past residence, intention and expectations for the future are not critical: what matters is the cause of living over the past 3 years.[10]

25.  Place of residence  Paragraph [4.07] in Butterworths Hong Kong Bankruptcy Law Handbook 5^th ed (2016) states as follows:

“A person has a place of residence in Hong Kong if he has a ‘place of residence’, such as a house or lodging to which to return to: see R v St Leonard, Shoreditch, Inhabitants (1865) LR 1QB 21; and R v Glossop Union (1866) LR 1QB 227; and he occupies or has the intention to occupy the place as a place of residence: see Re Brauch (A debtor) ex p Britanic Securities & Investment Ltd [1978] Ch 316; [1978] 1 All ER 1004. However, it has been held that the occupation of a place solely for the purpose of the occupant’s work was not a place of residence: see Commissioner of Inland Revenue v Chow Hung Kong [1978] HKLR 475.

It is not necessary that occupation of a place of residence be for the whole of the three (3) year period before presentation of a bankruptcy petition, provided that the debtor has a place of residence at some time during the 3 years: see Re Hequard [1890] 24 QBD 71 at p 74, per Lord Esher MR, followed in Re Brauch (A debtor) ex p Britanic Securities & Investment Ltd (above). A person may have more than one place of residence at the same time: see Levene v Inland Revenue Commissioner [1928] AC 217; also Herbert v Byrne [1964] 1 All ER 882; [1964] 1 WLR 519.

Whether a person is resident in a particular place and whether that residence is permanent are questions of fact and degree: see Hipperson v Electoral Registration Officer of the District of Newbury [1985] 1 QB 1060; [1985] 2 All ER 456.”

26.  Based on the aforesaid, Ms Yu reminded it is possible to find a debtor has a place of residence in the jurisdiction even though he is not in fact in occupation of it at any time during the relevant year,[11] and also “[only] where there is strong evidence to show that the debtor has, sometime previously, completely abandoned his established place of residence in [the jurisdiction] is the court likely to accept his contention that it no longer constitutes his place of residence despite the fact that he may retain title to it”.[12]

27.  Carried on business  Paragraph [4.08] in Butterworths Hong Kong Bankruptcy Law Handbook 5^th ed (2016) states as follows:

“Whether profit is actually obtained is material in considering whether what was done is, or is not a business, but it is not essential that there should be payment in order to constitute a business; nor does payment necessarily make that a business which without payment would not be a business; see Rolls v Miller (1884) 27 Ch 71 at 85; per Cotton LJ, [1881-1885] All ER Rep 915 at p 918. See also Rael-Brook Ltd v Minister of Housing and Local Government [1967] 2 QB 65; [1967] 1 All ER 262; Town Investments Ltd v Department of the Environment [1977] 1 All ER 813. The running of a charitable home has been held to constitute a ‘business’: see Rolls v Miller (above). To establish that a debtor had ‘carried on a business’ in Hong Kong, it is not sufficient to show that he had been running his company’s business, even if he was the sole beneficial shareholder and in complete control of the company, the totality of the evidence must be taken into consideration by the court: see Re Brauch (A debtor) ex p Britanic Securities & Investment Ltd [1978] Ch 316; [1978] 1 All ER 1004 and Re Kok Hui Pan, ex p Wing Lung Bank Ltd [2002] HKCFI 1067; [2002] HKCU 624. It is also not sufficient if the debtor is appointed as a director only. ……”

28.  Carrying on business is wider than carrying on of a trade,[13] but it must constitute a or the business of the debtor himself and not merely that of his company.[14] “…… However, in Brauch, Re the Court of Appeal held that an objective and realistic view must be taken of the actual business system which has been adopted in any given case. Having rejected the suggestion that proof that the debtor enjoyed complete effective control of the companies would of itself suffice for him to be “carrying on business”, the Court nevertheless went on to hold that if the totality of the evidence suggests that, by means of the companies which he does in fact control, the individual concerned is operating in such a way that at some point he may expect to profit personally as a result of the activities carried on, as a matter of law, by or on behalf of those companies, then it may be possible to draw the conclusion that the person in question is conducting a separate business of his own, albeit in close association with that being carried on by the companies”.[15]

29.  Although an isolated transaction of itself does not suffice to constitute the carrying on of a business, it is nevertheless established that even a single transaction can mark the commencement of business where it is accompanied by the intention that it shall form part of a regular means of earning a livelihood.[16]

V.  P’s CASE

30.  I find on balance P had established a clear prima facie case for presenting the Petition. In my view, D’s original place of domicile and place of ordinary residence were in Hong Kong. He was born in Hong Kong, and lived and worked here for many years. As seen in Part VII below, even on D’s own case, he rented residential premises in Hong Kong which prima facie was his place of residence and such tenancy was not terminated until towards the end of 2012, and D identified himself as a media veteran with an established reputation in broadcasting/media business in Hong Kong. In the circumstances, it was for D to establish the matters under Ground 1, eg he had changed his place of domicile and/or place of ordinary residence in the 3 years before presentation of the Petition. To do so, D would have to rely on the Draft 5^th Aff to which I now turn.

VI.  DRAFT 5^TH AFF

31.  In the absence of any application under Order 41 rule 4 of the RHC, Ms Yu invited this court to disregard the Draft 5^th Aff which was undated, un-affirmed and un-notarised. In my view, D did not offer any convincing or cogent reason for leaving the Draft 5^th Aff undated, un‑affirmed and un-notarised.

32.  The Yuen 1^st Aff pointed out the lack of notarisation before notary public in Mainland China had been a constant issue throughout D’s conduct of the proceedings in the Action. In the Action, D’s 1^st and 2^nd affirmations in support of his application to set aside the Judgment were notarised on 3 November 2015 and 25 February 2016 (“D 1^st and 2^nd Affs”), but his draft 3^rd and 4^th affirmations (“Draft 3^rd and 4^th Affs”) respectively exhibited to Liu’s 4^th affirmation filed on 30 June 2016 and Liu’s 5^th affirmation filed on 11 July 2016 in the Action in support of D’s application to stay execution of the Judgment were never notarised even up to the hearing of such application on 12 September 2016.

33.  In my view, there was no cogent explanation from D for such failure although he put forward various reasons. In the Draft 4^th Aff, D claimed he had difficulty in having the Draft 3^rd Aff notarised because notaries public in Mainland China required him to produce a Chinese translation of the Draft 3^rd Aff, so he asked D’s solicitors to translate the Draft 3^rd and 4^th Affs into Chinese so he could have them notarised as soon as he could. But if the need for a Chinese translation was a true and known hurdle, D did not explain why he still prepared the Draft 4^th Aff in English and/or, indeed, why he was still unable to have the Draft 3^rd and 4^th Affs affirmed/notarised when D’s solicitors gave the Chinese translations to him in July 2016.[17]

34.  In Liu’s 6^th affirmation filed on 9 September 2016 in the Action, Liu said D told him D still could not have the Draft 3^rd and 4^th Affs affirmed/notarised because the notaries public in Mainland China had to verify “every detail in the affirmations first” and to ask him for proof. But up to the hearing on 12 September 2016 before B Chu J for leave to appeal and the paper disposal on 11 November 2016 by the CA for renewed application leave to appeal, the Draft 3^rd and 4^th Affs were still not affirmed/notarised. The lack of notarisation was brought to the CA’s attention, and the CA merely considered D’s evidence (which they noted as not properly affirmed) on de bene esse basis.[18]

35.  In paragraph 41 of the Draft 5^th Aff, D alleged he had difficulty in notarising such affirmation as “notary public officers will have to verify every single detail in the affirmation and may ask [him] to supply proof in relation to any matters stated in the affirmation”, and “this will likely take some time”. But about 4 months had elapsed since the Draft 5^th Aff was exhibited to the Liu Aff, and still it had not been notarised. Further, the Yuen 1^st and 2^nd Affs exhibited the PRC legal opinion dated 30 March 2017 by Beijing Kangda Law Firm (“PRC Legal Opinion”), and the opinion under Question 1 therein stated that under section 31 of «中華人民共和國公証法» a notary public in Mainland China will not notarise a document under various circumstances, including inter alia (a) “當事人虛構、隱瞞事實, 或者提供虛假証明材料的”, (b) “當事人提供的証明材料不充分或者拒絕補充証明材料的”, or (c) “申請公証的事項不真實、不合法的”, and it was further opined that “如公証機構懷疑公証事項的真實性, 公証機構可要求申請人出具証明材料, 如當事人提供的証明材料不充份或者拒絕補充証明材料的, 公証機構可根據規定不予以辦理公証”.

36.  Ms Yu submitted that given the PRC Legal Opinion and D’s failure to cause the Draft 5^th Aff to be notarised after several months, there was concern whether the Draft 5^th Aff met the requirements for proper notarisation of documents in (a)-(c) above, which it was said seriously undermined the admissibility and/or weight of its contents. In my view, at the very least, there was force in Yuen’s contention that D was evasive on the real reason behind his alleged difficulties in notarising the Draft 3^rd, 4^th and 5^th Affs. In all circumstances, it would not be appropriate and I decline to admit the contents of the Draft 5^th Aff as evidence although I had heard submissions from Ms Yu at the Hearing in respect of the Draft 5^th Aff on de bene esse basis. Given my rejection of the Draft 5^th Aff, Ground 1 must be rejected on failure of proper evidence in support.

37.  But that said, for the sake of completeness, I will consider the contents of the Draft 5^th Aff on de bene esse basis in the discussion below. But even on such basis Ms Yu urged this court to view the assertions in the Draft 5^th Aff with a jaundiced eye as D’s conduct was evasive and suggestive of intention to delay/evade enforcement.

38.  I agree D’s unexplained or poorly explained failure to have the Draft 3^rd, 4^th and 5^th Affs properly affirmed/notarised spoke ill of his reliability.

39.  Next, the Chu Judgment was telling in that B Chu J found D (a) was evasive as to his actual address or physical whereabouts in Mainland China to avoid service and/or enforcement[19] and (b) adopted conflicting attitudes towards P in relation to the Judgment and/or the PRC Judgment (on which the Judgment was based). The learned judge concluded D’s overall conduct suggested an intention to delay and evade enforcement rather than a genuine intention to contest the Action.[20] Still further, D filed his defective Notice to Act on 2 May 2017 that gave the PRC Address as his purported service address, but less than a fortnight later he had “moved” from such address with no forwarding contact details. I can see the force of Yuen’s request in paragraph 47 of the Yuen 1^st Aff for this court to infer D did not wish P to ascertain his actual address to avoid service/enforcement of the Judgment.

40.  Also, D did not provide essential documents/particulars to support his assertions, and alleged they were locked up in a warehouse,[21] the documents were no longer accessible due to Google shutting down service for his gmail account in Mainland China,[22] or he had forgotten or lost them.[23] But in all the circumstances and in light of the analysis below, I find it hard even on de bene esse basis to place any substantial weight on D’s bare assertions in the Draft 5^th Aff.

VII. PLACE OF RESIDENCE IN HONG KONG FOR PAST 3 YEARS (SECTION 4(1)(c)(i) OF BO)

41.  Ms Yu submitted that in the past 3 years before presentation of the Petition D had a place of residence in Hong Kong, ie the HK Address. Paragraphs 3-4 of the D 1^st Aff stated D rented the HK Address and lived there before he moved to Guangzhou, Mainland China in 2007. The HK Address was also given as D’s residential address in the annual return of 10 March 2012 in respect of Meter Creation Limited (“MCL”). In my view, D clearly acknowledged the HK Address was his residential address in Hong Kong in 2012.

42.  Paragraph 4 of the D 1^st Aff stated the rental agreement for the HK Address (which was not produced) was terminated towards the end of 2012 (without stating any particular date). But in paragraph 15 of the Draft 5^th Aff, D asserted he rented the HK Address in 2011 as there was a film project in Hong Kong, but he ceased going there since late June/July 2012 (which was the last time he visited Hong Kong as the Travel Restriction Order prevented him from leaving Mainland China).

43.  I agree with Ms Yu that for this ground there was no need to show D was in actual occupation of the HK Address for the past 3 years. If the HK Address was shown to be D’s place of residence in Hong Kong some time during the past 3 years, the fact he did not physically occupy it due to the Travel Restriction Order would not avail him. After all, even on his own affirmation evidence, D had the HK Address as his residential address in Hong Kong until the rental agreement was terminated towards the end of 2012 (ie within the past 3 years). So, as of August 2012 D had a place of residence in Hong Kong. In my view, this would have been sufficient to enable P to present the Petition to the court.

VIII. CARRIED ON BUSINESS IN HONG KONG IN PAST 3 YEARS (SECTION 4(1)(c)(ii) OF BO)

44.  D claimed he carried on business in Hong Kong until imposition of the Travel Restriction Order in/about June 2012, and thereafter he did not carry on business in Hong Kong.

45.  In paragraph 14 of the Draft 5^th Aff, D claimed he established a Hong Kong company MCL on 10 March 2011 (which was wholly owned by him and of which he was the sole director/shareholder) to produce a film called “Floating City” in Hong Kong, and to distribute that film in Mainland China. Taking all circumstances into account including D’s alleged personal work experience and reputation as inter alia film producer/promoter and the alleged purpose/circumstances in setting up MCL, I agree with Yuen that MCL appeared to be D’s corporate vehicle for producing/promoting his film.[24] D further claimed that upon MCL having achieved its purpose of producing “Floating City” in Hong Kong it ceased all activities/transactions latest by May 2012. I find myself unable to place weight on such bare assertion in the absence of particulars/ documents showing that production of such film ended before 24 August 2012 or (even more conveniently) just before imposition of the Travel Restriction Order in June 2012. D also did not condescend to explain how he could have produced/promoted a film from start to finish all in a year. I bear in mind even after his last departure from Hong Kong on 3 July 2012, he again attempted to return to Hong Kong very shortly thereafter in July 2012. Further, D claimed he returned to Hong Kong in about 2011/2012 to undertake a film project as producer, but no particulars were given about this project including when it ended.[25]

46.  In the Draft 5^th Aff, D also claimed to have forgotten the name of “the accounting firm that [MCL] engaged for filing tax return for that year” (ie assessment year 2011/2012),[26] but there was no evidence of any attempt made by or on behalf of D (who since October 2015 had the benefit of legal representation) to (a) retrieve MCL’s books/records that should have been kept at its registered office which was same as the address of its company secretary Think Consultants Limited,[27] and (b) retrieve copies of MCL’s tax records from the Inland Revenue Department.[28] After all, as Yuen pointed out, MCL was not struck out by the Registrar of Companies until October 2015.[29]

47.  In all circumstances, I am unable to accept D’s bare assertion that he ceased to engage in business in Hong Kong by 24 August 2012. There was no sufficiently reliable evidence to persuade this court to accept such assertion.

IX. DOMICILED OR ORDINARILY RESIDENT IN HONG KONG IN PAST 3 YEARS (SECTIONS 4(1)(a) AND 4(1)(c)(i) OF BO)

48.  D claimed/acknowledged (a) he was born in Hong Kong and lived here for many years, (b) he had a Hong Kong identity card, (c) his family including his wife (whom he allegedly divorced in 2013), mother and sister are in Hong Kong, and (d) he had an established reputation in broadcasting/media business in Hong Kong for many years and identified himself as a media veteran.[30] Indeed, in the Draft 4^th Aff, D claimed that if he was adjudged bankrupt in Hong Kong “the effect on [his] reputation, finances and personal life would be serious, deleterious and even disastrous”.[31]

49.  I agree with Ms Yu Hong Kong was D’s original place of domicile and original place of ordinary residence. It was D who claimed he had changed his place of domicile and his place of ordinary residence to Beijing in that he (a) moved in Beijing in/about 2008 and resided there till at least the Draft 5^th Aff, (b) gradually developed the intention to reside in Beijing and to make it his home permanently and indefinitely, and (c) cut ties with Hong Kong.[32]

50.  Given such assertion by D, as pointed out in paragraph 22 above, D carried the burden of proving the alleged change of domicile, which is a serious issue requiring satisfactory evidence of a clear intention to do so. Ms Yu submitted D failed to discharge such burden of proving he had changed his domicile or showing Hong Kong was no longer a place which he was ordinarily resident either by August 2012 or even by August 2015.

51.  Turning first to deal with the position up to June 2012 before imposition of the Travel Restriction Order, I find although D allegedly moved to Beijing in 2008, the available materials showed he was still settled in Hong Kong as his place of domicile and/or place of ordinary residence. Indeed, in 2012 D still had close connections with Hong Kong.

52.  First, as explained in Part VII above, D still had a place of residence at the HK Address until towards the end of 2012. In paragraph 15 of the Draft 5^th Aff, D claimed he ceased to have any bank accounts in Hong Kong since 2010, but (even though he was legally represented) he failed to produce any documentary support or confirmation from his alleged former bankers. In paragraph 24 of the Draft 5^th Aff, D claimed he maintained bank accounts with China Minsheng Bank and Industrial and Commercial Bank of China in Mainland China, but he did not produce any documents or give particulars about the status of such bank accounts before August 2016.

53.  Thirdly, according to paragraph 10 of the D 1^st Aff, D claimed he moved to Mainland China to promote and expand his established business in Hong Kong nation-wide. If that were the case, such move did not originate from an intention to settle in Mainland China or to give up his life in Hong Kong. Fourthly, there was no evidence D stayed in Mainland China for significant periods rather than stay in Hong Kong, especially when he had family members here. Interestingly, D provided a statement of travel records issued by the Immigration Department showing sole entry into Hong Kong on 20 June 2012 and sole departure from Hong Kong on 3 July 2012 during the period from 1 June 2012 to 21 January 2016 (which was not surprising since the Travel Restriction Order was imposed in June 2012) (“Travel Records”), but his travel records from 2008 to 2012 (ie the period when he claimed he resided in Beijing) were conspicuously absent.

54.  Ms Yu submitted it was P’s belief that prior to the Travel Restriction Order, D had been in Hong Kong for significant periods of time and treated Hong Kong as his home, and he only sporadically travelled to Beijing for business,[33] which was why D did not produce his travel records from 2008 to 2012. Ms Yu reminded (a) the Travel Records revealed D left Hong Kong on 3 July 2012, and (b) D claimed he only learnt about the Travel Restriction Order in July 2012 when he was stopped at the border when he tried to return to Hong Kong,[34] which reinforced the impression that D often travelled to/from Hong Kong. In my view, the fact D failed to produce his travel records from 2008 to 2012 (when he should be able to do so as evident from his production of the Travel Records) detracted from the reliability of his assertion that he had moved to reside in Beijing since 2008.

55.  Fifthly, in paragraph 13 of the Draft 5^th Aff D admitted he stopped physically visiting his mother and sister allegedly since 2011[35] and had not been in contact with them allegedly since 2013. D also admitted he had a wife in Hong Kong (with whom he allegedly separated in 2009 and divorced in 2013 even though there was no documentary proof).[36] But even on D’s own case, he remained in contact with his family in Hong Kong well after his alleged move to Beijing in 2008.

56.  Sixthly, D also admitted he continued to develop his business interests in Hong Kong (eg producing films) and he also served as part‑time lecturer at a local university. Up until 2012 he was still promoting his business as a film producer by active engagement in Hong Kong affairs, eg he was an active member of Hong Kong New Action and shared his views about the Hong Kong film industry as a “Hong Kong New Action Producer” in a bulletin published by Hong Kong Film Development Council for Project 2011-2012.[37]

57.  On the other hand, as at the time when the Travel Restriction Order was imposed in/about June 2012, it did not appear D had any significant interests in Mainland China.

58.  First, D did not have a stable residential home in Mainland China. In paragraph 21 of the Draft 5^th Aff, D mentioned that in 2011 he cohabited with his then Beijinger girlfriend but did not mention any address. In paragraph 22 of the Draft 5^th Aff, D claimed he moved around and lived in a number of districts in Beijing, but again did not provide any address. It did not appear D had a stable home for himself in Beijing.

59.  Secondly, D did not appear to have any significant business interests in Mainland China, and he admitted as much in paragraph 34 of the Draft 5^th Aff by saying he sought opportunities to produce films in Beijing for the first few years but was not successful, and he did not set up companies in Beijing (as he could only set up joint venture company with a local partner) and found it unnecessary to do so. The examples of films D produced were all after 2012.[38]

60.  Thirdly, D did not have a long-term relationship or a new family in Beijing in 2012. Although D said he had a girlfriend in Beijing in 2011,[39] he was still married to his wife in Hong Kong.[40] Moreover, D did not give any particulars about such girlfriend except to say they separated in/about 2013 when she left for the United States.[41]

61.  Thus, even by the time of the Travel Restriction Order, D still maintained ties with Hong Kong and it was not clear D had an intention to live in Beijing indefinitely. I find on balance there was insufficient evidence to suggest D had given up Hong Kong as his place of ordinary residence or he had changed his domicile despite being occasionally absent from Hong Kong.

62.  After the Travel Restriction Order was imposed against D, D’s stay in Mainland China was no longer a matter of voluntary choice, so it could not be said he acquired Mainland China as his new domicile or he was ordinarily resident there. In any event, it remained unclear whether D had established an intention to stay permanently in Beijing despite his assertions otherwise in paragraph 22 of the Draft 5^th Aff.

63.  First, it was still not apparent D had a stable place of residence. D claimed he rented and lived at the PRC Address with his fiancée[42] without signing any tenancy agreement (because the landlord was his friend), but paying minimal rent (in view of his financial condition) with no record kept. Yuen contended (and I agree) this was at best temporary lodging at the indulgence of a friend.[43] Anyway, even though D claimed to have settled at the PRC Address for 2 years, recent attempt by P’s solicitors to deliver documents to the PRC Address via courier service revealed D had moved from such address with no forward contact details.

64.  Secondly, D did not appear to have reasonable savings in his 2 bank accounts in Mainland China.[44] Yuen suggested that with such minimal assets D could hardly claim he had found a permanent home in Beijing and/or he would treat Beijing as his permanent home.[45] Thirdly, for the whole period from 2008 till the Draft 5^th Aff, D produced only 3 utility / mobile telephone bills (1 of which was quite illegible), and I have to agree such evidence was very thin pointer to show D intended to establish Beijing as his residential home.[46]

65.  Fourthly, whilst D claimed he was able to find work in recent years and was engaged by Chinese companies to act as producer for 2 films in 2013, both such films were aborted.[47] He was eventually able to produce 1 film in 2015.[48] But P was unconvinced by D’s assertion that he could establish any business in Mainland China. According to the legal opinion under Question 4 of the PRC Legal Opinion on “香港居民在內地從事電台廣播和電影製作, 是否需要國家批准和有什麼限制”, “(一)香港居民需先向勞動部門申請辦理就業証” and “(二)香港居民及其合作電影製片單位要取得«中外合作攝製電影片許可証». The PRC Opinion set out the applicable statutes/regulations, and opined as follows:

“根據以上規定, [D]作為香港居民在大陸參與中外合作攝製電影片, 其電影製作單位需向有關部門提交合作意向書或協議書, 得到有關部門的批准後, [D]才可在大陸進行電影攝製作活動。國務院廣播影視行政部門會根據實際情況審查中外合作攝製方的材料(包括中外合作攝製電影在原則上有利於中國的經濟建設、文化建設、有利於中外電影交流、境內任何單位或個人取得«中外合作攝製電影片許可証»或批准文件、需提交與電影有關的文件等), 決定是否向中方製片單位發出«中外合作攝製電影片許可証»或其他批准文件。”

D had not produced any of the aforesaid requisite licences/approvals from the relevant PRC authorities. I find D’s assertions in the Draft 5^th Aff about carrying on business of producing films quite suspect. I also note that in the Fax he claimed he was “without an office” (see paragraph 18 above).

66.  Fifthly, although D claimed he was to be engaged to his Beijinger fiancée (with whom he had cohabited since February 2016) and they would be married in March 2017 (but D only produced 3 photographs in support), this is now May 2017 and there was no shred of evidence D and his fiancée had married (which begged the question whether D’s initial assertion was serious). Further, according to legal opinion under Question 2 of the PRC Legal Opinion (ie “與內地居民在內地結婚的香港居民需要出具什麼証明文件”),

“ 根據«婚姻登記條例»第四條的規定,香港居民與內地居民在內地結婚,男女雙方應當共同到內地居民常住戶口所在地的婚姻登記機關辦理結婚登記。

根據«北京市民政局關於印發<北京市婚姻登記工作規範>的通知»第三十四條的規定,香港居民與北京居民辦理結婚登記應當提交下列証件和証明材料(具體材料可能會因婚姻登記機構所屬地區不同有所區別):

1、港澳居民來往內地通行証或者港澳同胞回鄉証;

2、香港居民身份証;

3、經香港委托公証人公証的本人無配偶以及與當事人沒有直系血親和三代以內旁系血親關係聲明。

就上述第2點,若申請人未能提供香港居民身份証,北京的登記機構有權不予登記。”

But D failed to produce any documents, including his divorce papers in 2013[49] or his application papers to the PRC authorities to be re-married,[50] which raised doubt as to his assertions as to marital ties to Beijing. Further, D claimed he had lost his Hong Kong identity card since 2013 and he had no plans to apply for replacement.[51] In light of the PRC Legal Opinion, this raised further doubt as to whether he would be married in Beijing as alleged.

67.  I am not satisfied on all the evidence (including the Draft 3^rd, 4^th and 5^th Affs on de bene esse basis) that D had changed his domicile from Hong Kong to Beijing and/or given up Hong Kong as his place of ordinary residence or that he regarded Beijing as his permanent home in the 3 years before presentation of the Petition.

X.  CONCLUSION

68.  For all of the above reasons, Ground 1 had no merit and D’s opposition to the Petition failed. I am satisfied the requirements under section 4(1) of the BO had been met, and P was entitled to a bankruptcy order.

69.  I therefore grant a bankruptcy order against D and adjudge him a bankrupt. I further make a costs order nisi that costs of the Petition, including all costs reserved if any, be to P to be taxed and paid out of the assets of the bankrupt.