RE HUANG GUOZHEN

HCB 2766/2023

[2026] HKCFI 867

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 2766 OF 2023

__________________________

__________________________

________________

JUDGMENT

______________

1.  Introduction

1.1  This is the substantive hearing of the Amended Petition dated 18 August 2023 issued by China Tian Yuan International Finance Limited (“Petitioner”) against Madam Huang Guozhen (“Debtor”). The Amended Petition is premised on a statutory demand (“SD”) purportedly served on the Debtor personally on 20 April 2023 at Block B, 3/F, Block 2, The Grandeur, 23 Grampian Road, Kowloon Tong, Kowloon (“Grampian Road Address”)[1]. The Petition, dated 17 May 2023, was purportedly served on the Debtor at the Grampian Road Address on 19 May 2023.

1.2  The debt set out in the SD is premised of the following allegations:

(1)  By a loan agreement and a supplemental loan agreement respectively dated 15 June and 5 July 2017 (“Loan Documents”), Hong Kong Zend Tea Industry Group Limited (“Zend Tea”) borrowed HK$30,000,000 from the Petitioner at an interest rate of 12% per annum;

(2)  By a Deed of Guarantee (“Guarantee”) dated 15 June 2017, the Debtor guaranteed the liability of Zend Tea under the Loan Documents;

(3)  Zend Tea has failed to repay to the Petitioner the indebtedness under the Loan Agreements and such default has attracted both interest and compensatory damages pursuant to the terms of the Loan Documents;

(4)  As at the date of the SD, the total amount outstanding was HK$139,247,395.74 (“Debt”).

1.3  The Debtor’s husband, Mr Han Nanbao (“Mr Han”) was at all material times the sole shareholder and director of Zend Tea. Zend Tea was wound up by the court on 30 August 2023 upon a petition presented by the Petitioner on 17 May 2023.

1.4  The Petition, premised on the Debt, is based on the non-satisfaction of the SD.

1.5  On 18 July 2023, the Debtor’s solicitors (“Ince”) filed a “Notice to Act” and a “Notice of Intention of Appear on Petition”.

1.6  The Petition was amended on 18 August 2023 pursuant to an order dated 16 August 2023 to include a plea that the Debtor was lately residing at Flat C, 15/F, Paxton, 313 Prince Edward Road West, Kowloon (“Paxton Address”).

1.7  As set out in the “Notice by Debtor of Intention to Oppose Petition” dated 13 September 2023 (“13/9/23 Notice”), the Debtor opposes the Amended Petition on the following grounds (reordered and reformulated to reflect the arguments pursued before me):

(1)  There was a lack of a demand from the Petitioner prior to the presentation of the Petition as the purported service of the SD was invalid;

(2)  The purported service of the Petition was invalid (collectively with §(1) above “Service Challenge”);

(3)  There is a bona fide and substantial dispute as to whether the Guarantee should be vitiated by undue influence (“Undue Influence Ground”)[2].

1.8  By Ng J’s order dated 6 November 2023 (“6/11/23 Order”), the Amended Petition was adjourned for substantive argument, with a direction for cross-examination on the issue of service. In particular, leave was granted to (1) the Petitioner to file and serve consolidated affirmation evidence limited to the issue of service of Mr Lam Chak Yeung (“Mr Lam”), Mr Lau Ho Tin (“Mr Lau”) and Madam Wang Jing (“Madam Wang”) and (2) the Debtor to file and serve affirmation evidence in reply. The order also provided that affirmation evidence on the issue of service could not be relied upon by the parties unless the respective deponents attended court for cross-examination. It is pertinent to note that Ms Nie Xiao Ling (“Ms Nie”), an intern formerly employed by the Petitioner’s solicitors (“YTL”), had previously filed an affirmation prior to the 6/11/23 Order but her evidence was not included as part of the consolidated affirmation evidence directed to be filed.

1.9  At the hearing, I was helpfully assisted by Mr Tommy Cheung, counsel for the Petitioner and Mr Jose Maurellet SC (leading Mr Sik Chee Ching) for the Debtor.

2.  The Service Challenge: Factual Findings

2.1  As envisaged by the 6/11/23 Order, the following witnesses gave evidence.

2.2  For the Petitioner:

(1)  Mr Lau, a clerk employed by YTL;

(2)  Mr Lam, a legal assistant employed by YTL;

(3)  Madam Wang, a representative of the Petitioner.

2.3  The Debtor herself gave evidence. In addition, the Debtor also called Madam Xu Dandan (“Madam Xu”), the Debtor’s sister-in-law.

2.4  The original principal factual disputes between the parties are concerned with whether the SD and the Petition were served personally on the Debtor at the Grampian Road Address respectively on 20 April and 19 May 2023. It is the Debtor’s case that (1) she had since April 2021 moved out of the Grampian Road Address and (2) the SD and the Petition were in fact served on Madam Xu. After the evidence was heard, the Petitioner no longer pursued its case that the Petition was served on the Debtor but maintained that the SD was. In the light of the evidence adduced, the Petitioner’s concession in respect of the service of the Petition is undoubtedly correct and sensible. In the following sections, I will set out my factual findings, including those which are germane to my analysis on the Petitioner’s alternative case that the service of the SD and the Petition was valid even were they not served personally on the Debtor, as they were brought to the Debtor’s attention.

2.5  In the court’s exercise of fact-finding and assessment of credibility, it is established that the credibility of a witness should be assessed by reference to contemporaneous documentation where it exists, as well as inherent probabilities having regard to all the facts that are known. Although the factual analysis below is carried out largely chronologically, I have considered the evidence overall in reaching my findings.

(i)  Relevant background: The period prior to the service of the SD

2.6  As stated earlier, the Debtor executed the Guarantee on 15 June 2017. In addition to the loan under the Loan Documents, the Guarantee is a security also for a loan in the sum of RMB 400,000,000 advanced by 天元（深圳）投資咨洵有限公司 (“TYSZ”), a company within the Petitioner’s group to 深圳正德地严产有限公司 (“SZZD”) and 廣東正德置業集團有限公司 (“GDZD”). SZZD and GDZD were at all material times also companies controlled by Mr Han (“PRC Loan”). Although the Debtor has initially suggested in her evidence that the Loan Documents, the PRC Loan and the Guarantee were sham transactions, Mr Maurellet has not pursued the foregoing allegation before me.

2.7  Clause 2.1.2 of the Guarantee provides:

“[2.1] The [Debtor] by her execution of this Guarantee irrevocably appoints the Borrower to act on her behalf as her agent in relation to this Guarantee and irrevocably authorizes:

…

[2.1.2] the Lender to give any notice, demand or other communications to the [Debtor] pursuant to those Finance Documents to the Borrower.”

2.8  By Clause 1.7 of the Guarantee, “Finance Documents” is defined as including the Guarantee. Under the Recitals of the Guarantee, the term “Borrower” is a reference to SZZD and Zend Tea. The term “Lender” refers to the Petitioner and TYSZ.

2.9  Clause 14.2 of the Guarantee provides as follows:

“The address and fax number of each Party for any communication or document to be made or delivered under or in connection with this Guarantee is that specified below:

If to the Debtor:

Address: [The Grampian Road Address]

Tel: 852 5544xxxx

If to the Lender:

Address: [An address in Zhenzhen]

Fax: 755 2396xxxx

Attention: Siyang He” (emphasis added)

2.10  Although Clause 14.2 makes reference to the specifying of a fax number, it is clear that, in the case of the Debtor a phone number was set out, in contrast with the information provided for the Lender which set out a fax number.

2.11  On 4 March 2021, the Debtor as tenant entered into a tenancy agreement in respect of Flat A and B on 52/F of South Tower 7, Residence Bel-Air Island South, 38 Bel-Air Avenue, Hong Kong (“Old Bel-Air Address”). The lease term was for a fixed term from 1 April 2021 to 31 March 2025 but was subject to a break clause, by which either the landlord or the tenant was entitled to terminate the tenancy agreement by serving not less than 1 moth’s written notice to the other party provided that such notice would not be served before the expiration of 23 months of the tenancy term.

2.12  Proceedings were instituted in the Mainland to recover the PRC Loan. On 15 June 2021, the Shenzhen Intermediate People’s Court held, inter alia, that (1) SZZD and GDZD were liable to repay the outstanding indebtedness under the PRC Loan in the principal sum of RMB 305,000,000 plus interest and default damages (違約金) and (2) Mr Han and the Debtor were similarly liable as the guarantors of SZZD and GDZD’s liabilities (“First Instance Judgment”). It is pertinent to note that the Debtor was unrepresented and did not participate in the proceedings leading to the First Instance Judgment[3].

2.13  The subsequent appeal against the First Instance Judgment (pursued by parties other than the Debtor) was dismissed by the Guangdong Higher People’s Court by a judgment dated 8 November 2022 (together with the First Instance Judgment “PRC Judgments”). On 24 March 2023, enforcement proceedings were commenced against, inter alia, SZZD, GDZD, Mr Han and the Debtor in the Mainland.

2.14  The registered owner of the property situate at the Paxton Address was at all material times a Hong Kong company called Eden Garden Investment Limited (“Eden”). The Debtor is and was at all material times the sole director and shareholder of Eden. In Eden’s NAR1 dated 5 June 2022, the Grampian Road Address was stated to be the Debtor’s residential address.

2.15  On 7 March 2023, Mr Han as tenant entered into tenancy agreement in respect of Flats A and B on 40/F of Tower 3, Residence Bel-Air Island South, 28/38 Bel-Air Avenue, Hong Kong (“New Bel-Air Address”) for a term of 3 years commencing from 15 March 2023.

2.16  According to Madam Xu and the Debtor’s evidence (which I accept):

(1)  The Debtor and her family moved out of the Grampian Road Address in 2021 to the Old Bel-Air Address and subsequently to the New Bel-Air Address;

(2)  After they moved out of the Grampian Road Address, Mr Han and the Debtor agreed to allow the Debtor’s younger brother (ie Madam Xu’s husband) to reside at the Grampian Road Address and Madam Xu and her family moved into the Grampian Road Address in around May 2021;

(3)  In particular, at the time of the purported service of the SD and the Petition, Madam Xu and her family were residing at the Grampian Road Address;

(4)  After Madam Xu moved to the Grampian Road Address, documents addressed to Mr Han and/or the Debtor (such as promotional materials and demand letters for utilities and management fees) were still delivered to the Grampian Road Address. In the case of legal documents addressed to Mr Han and/or the Debtor, Madam Xu would take photogtaphs of the documents and send them to one Mr Wong Chun Sing (“Mr Wong”) who was responsible for the administrative and business affairs of Mr Han.

2.17  The matters stated in the preceding paragraphs are entirely consistent with the contemporaneous evidence and Mr Cheung has not seriously sought to argue a contrary case.

(ii)  Service of the SD

2.18  The service of the SD was carried out by Mr Lau. At the time when his 3^rd affirmation (“Lau 3^rd”)[4] was filed on 4 December 2023, he had been employed by YTL as a process server for more than 5 years. According to Mr Lau:

(1)  For the purpose of the service of the SD, he was provided with the Grampian Road Address and the Paxton Address;

(2)  He was also provided with the Debtor’s ID number (Lau 1^st §3), and in cross-examination, he accepted that he was not provided with the Debtor’s telephone number stated at Clause 14.2 of the Guarantee;

(3)  He had never met the Debtor prior to 20 April 2023 and was not provided with her photograph for the purpose of identification;

(4)  On 20 April 2023, he attempted to serve the SD and YTL’s covering letter (collectively “SD Documents”) at around 8:40 am at the Paxton Address. He was refused access to the Paxton Address by the security guards and his request to insert the SD Documents into the letterbox was also denied;

(5)  He therefore went to the Grampian Road Address. He arrived at the Grampian Road Address at around 9:10 am. He informed the security guard that he would like to access the Grampian Road Address to deliver some documents and was shown to the lift. Mr Lau suggested in his viva voce evidence that he had asked the security guards whether the Debtor lived at the Grampian Road Address but such evidence is not set out in any of his three affirmations;

(6)  After he reached the Grampian Road Address, he rang the doorbell and was greeted by a woman. The woman was not wearing a mask and he could see her face clearly. He then asked the woman whether she was the Debtor and she affirmatively and positively said yes. He passed the SD Documents to the woman. In his viva voce evidence, he said that the process lasted for 3-4 minutes;

(7)  In these proceedings, the Debtor has filed evidence which included her graduate certificate dated 26 June 2006 (“Graduate Certificate”). At Lau 2^nd §8 (dated 1 November 2023) and Lau 3^rd §14 (dated 4 December 2023), he said that, having examined the Graduate Certificate, he verily believed that the photograph in the Graduate Certificate “very much look[ed] like the woman who admitted to be the Debtor on whom I served the SD Documents on 20 April 2023”. However, when cross-examined, he admitted that he could not be sure that the person in the Graduate Certificate was the woman he saw on 20 April 2023. In re-examination, he said that his recollection was clear when he made Lau 2^nd and Lau 3^rd;

(8)  He did not verify the ID Card number with the woman. He explained that as he was not an enforcement agent, he did not have the power to demand any person to provide him with an identity card.

2.19  According to Madam Wang:

(1)  The Grampian Address was the contractually agreed address as set out in the Guarantee and the Paxton Address was a further last known or usual address. In March 2017, Eden had obtained a loan from a company with the Petitioner group for the purpose of acquiring the Paxton Address (“Eden Loan”) and the Debtor signed on both the loan agreement and the associated guarantee (“Eden Guarantee”);

(2)  In reliance on the foregoing, on 23 March and 3 April 2023, the Petitioner issued written demands to the Debtor by posting them via SF Express to the above addresses (“Demand Letters”). In particular, according to the posting records of SF Express, the deliveries of Demand Letters sent to the Grampian Address were (purportedly) acknowledged and signed for by the Debtor;

(3)  In cross-examination, she accepted that she never called the Debtor at the telephone number stated at Clause 14.2 of the Guarantee on the basis that, if she had called, the Debtor would evade service;

(4)  She met Mr Han in Shenzhen on 20 April 2023 (ie the date of purported service to the SD Documents at the Grampian Road Address) to serve a statutory demand on him. At that meeting, Mr Han told her that the Debtor had already received the SD Documents and Mr Han’s exact words were “她已經看到了” and “你那個東西寄到香港雞飛狗跳，我老婆要和我離婚了”.

2.20  Conversely, the Debtor gave evidence as follows:

(1)  She was not at the Grampian Road Address on 20 April 2023 and had not been to the Grampian Road Address since Christmas 2021 due to COVID-19 and her pregnancy in January 2022;

(2)  She had never received the SD Documents and only learned about the present bankruptcy proceedings when her banker inquired by Whatsapp on 1 June 2023 whether or not she had applied for bankruptcy.

2.21  According to Madam Xu:

(1)  It was she who signed to acknowledge receipt of the Demand Letters[5] and she took photographs of the Demand Letters and sent them to Mr Wong by Whatsapp;

(2)  It was she who took the SD Documents on 20 April 2023. Upon receipt, she immediately took a photograph and sent it to Mr Wong by Whatsapp;

(3)  She never passed the Demand Letters or the SD Documents to the Debtor and they were still with her as at the date of Xu 1^st (dated 1 March 2024).

2.22  For the following reasons, I find as a matter of fact that the SD Documents were handed over to Madam Xu at the Grampian Road Address on 20 April 2023:

(1)  Mr Lau’s “identification evidence” is in my view entirely unreliable. As accepted by Mr Lau in cross-examination, his job entailed the service of documents to many different parties on a daily basis. The Debtor adduced the Graduation Certificate by Han 1^st dated 13 September 2023, which was almost 5 months after 20 April 2023. Lau 2^nd, in which he put forward his “identification evidence” was filed even later on 1 November 2023. The Debtor’s appearance in the photograph in the Graduation Certificate (dated 26 June 2006) is already quite different from that in the photograph marriage certificate dated 25 January 2010 which was also adduced in Han 1^st. Mr Lau has not adduced any evidence to suggest that the woman he met on 20 April 2020 resembled the person in the later photograph;

(2)  In any event, the contemporaneous documentary evidence plainly shows that Ms Xu had on 20 April 2023 at 9:13 am sent a photograph of the cover letter to Mr Wong, which was only 3 minutes after Mr Lau had arrived at the Grampian Road Address and was greeted by a security guard at around 9:10 am. Given the time required for (1) Mr Lau’s details to be registered by the security guard, (2) the time taken for Mr Lau to take the lift to access the unit and (3) the time taken by Madam Xu to open the sealed envelope containing the SD Documents and then to take a photograph, I do not accept Mr Lau’s evidence that he had observed the woman for 3-4 minutes. In my view, he was only at the Grampian Road Address for a very short time and any observation he had of the woman could only be a fleeting glance.

2.23  I further find that there was no attempt on the part of Mr Lau to verify the identity of the woman he met on 20 April 2023. First, I do not accept his evidence that Madam Xu would have affirmatively and positively told Mr Lau that she was the Debtor (as to which see further §2.25 below). Secondly and in any event, even accepting that he did not have the power to compel the woman to produce her ID card, it was open to Mr Lau to, for example, simply ask the woman for the last 3 digits of her ID Card number to confirm whether she was the Debtor. As accepted by Mr Lau in cross-examination, the purpose of providing the Debtor’s ID Card number to him was for him to serve the SD Document on the correct person.

(iii)  Service of the Petition

2.24  The first attempt to serve the Petition and associated documents (“Petition Documents”) at the Grampian Road Address took place on 18 May 2023. On that occasion, the attempted service was carried out by Ms Nie and Mr Lau.

2.25  According to Ms Nie:

(1)  After she rang the doorbell, an English-speaking woman (more likely than not the domestic helper) answered the door (“First Woman”);

(2)  She asked the First Woman for the Debtor and was told to wait. Later, she was greeted by another woman (“Second Woman”) and she asked the Second Woman whether she was the Debtor;

(3)  She was told by the Second Woman that she was the sister-in-law of the Debtor and that the Debtor did not reside at the Grampian Road Address. Although the Second Woman offered that she would pass the documents to the Debtor, Ms Nie took the view that given she could not locate the Debtor, she left without serving the Petition Documents.

2.26  According to Mr Lau, on 18 May 2023, he stayed in the lift and was responsible for taking a video of the process. The lift door closed suddenly. As he was not given access again, he stayed in the lobby to wait for Ms Nie. He therefore was not present throughout and did not know the full details of Ms Nie’s encounter. The video which Mr Lau took (1) therefore does not capture the whole process described by Ms Nie and (2) does not show either the First Woman or the Second Woman.

2.27  The second attempt to serve the Petition Documents took place the next day. This time, the attempted service was carried out by Ms Nie and Mr Lam. Ms Nie took a video of the whole process (“Video”).

2.28  According to Mr Lam, as the attempted service on 18 May 2023 was unsuccessful, he was instructed to attend the Grampian Road Address again on 19 May 2023 to attempt service of the Petition Documents. He was repeatedly reminded to confirm the identity of the Debtor before effecting service of the Petition Documents.

2.29  However, the Video plainly shows that, on 19 May 2023, the service of the Petition Documents lasted no more than a few seconds. All that happened was (1) a woman answered the door and she was distracted by keeping her dog from dashing out of the flat, (2) Mr Lam asked whether she was the Debtor, (3) the woman said “係” (whilst looking down at the dog) and (4) Mr Lam then handed over the Petition Documents.

2.30  As pointed out by Madam Xu, Mr Lam was speaking very quickly and I have watched the Video a number of times. I accept Madam Xu’s evidence that Mr Lam utterance of the Debtor’s name was very unclear and she did not actually hear what he was saying.

2.31  There is, in particular, no evidence from the Petitioner (in particular Ms Nie) as to whether the woman shown in the Video is the Second Woman she met on the previous day who had expressly told her that she was the Debtor’s sister-in-law. This is particularly unsatisfactory when Madam Xu had expressly stated in her evidence that Ms Nie must have known that it was she, not the Debtor, who was handed the Petition Documents.

2.32  I also find the following perplexing:

(1)  According to Mr Lau, he was told on 18 May 2023 by Ms Nie that the Debtor did not reside at the Grampian Road Address. Given that he had purportedly served the SD Documents on the Debtor less than one month earlier, in cross-examination, he said that he did not find that surprising or alarming;

(2)  Given that Mr Lau had reported to YTL the reason for the unsuccessful service on 18 May 2023 (namely that the Debtor did not reside at the Grampian Road Address), there is no explanation as to why a decision was made to serve the Petition Documents at the Grampian Road Address again the very next day;

(3)  Related to the foregoing is that there was no attempt to ascertain directly with the Debtor whether she had in fact received the SD less than one month earlier.

2.33  Given the foregoing, it is unsurprising that the Petitioner no longer pursued the case that the Petition Documents were served on the Debtor on 19 May 2023 and I so find.

3.  The Service Challenge: Analysis

3.1  I first deal with the Service Challenge in respect of the service of the SD. As a preliminary point, I note that even in the Amended Petition, the Petitioner’s case on the service of the SD was effected by serving it on the Debtor personally on a single occasion on 20 April 2023 at the Grampian Road Address. The Amended Petition does not aver an alternative case that even were the SD not served on the Debtor, what had been done by the Petitioner nevertheless complied with the requirements and the reasons therefor.

(i)  Whether service of the SD compliant with the requirements

3.2  Rule 46(2) of the Bankruptcy Rules Cap 6A (“BR”) provides:

“The creditor shall do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected.”

3.3  Insofar as a petitioner seeks to effect personal service, Re Frank Dominick [2020] HKCFI 406 has laid down guidance on how this should be done:

“[22] As a matter of law to effect personal service:

(1) The server should first satisfy himself that he has found the correct person. He should then hand to or leave with the person to be served the document. If the person will not take the copy, he should tell him what it contains and leave it as nearly in his possession or control as he can: Hong Kong Civil Procedure 2019, [65/2/3].

(2) It must be brought to the attention of the person to be served that he was being served with a legal document which required his attention: Dynasty Line Ltd v Sukamto Sia.”

3.4  In the light of my factual findings set out at §§2.22-2.23 above, it is plain that the personal service at the Grampian Road Address on 20 April 2023 was non-compliant. The SD Documents were served on the wrong person (Madam Xu instead of the Debtor) and Mr Lau failed to take reasonable steps to satisfy himself that the woman he met on 20 April 2023 was the Debtor.

3.5  Counsel for the Petitioner submits that Rule 46(2) of the BR was complied with even were the Debtor not personally served since the evidence supports that the SD was brought to the Debtor’s notice. Mr Cheung’s arguments run as follows.

3.6  First, as a matter of factual evidence:

(1)  According to the NAR1 of Eden, the Grampian Road Address was the Debtor’s correspondence address;

(2)  The Grampian Road Address is also the address of the Debtor stated in the Guarantee;

(3)  On the Debtor’s own case, she had not severed her connection with the Grampian Road Address;

(4)  The arrangement was that Madam Xu would receive correspondence addressed to the Debtor at the Grampian Road Address;

(5)  On the Debtor’s own case, the SD was received by Madam Xu who then took a photograph and forwarded the same to Mr Wong;

(6)  The SD was served at the time shortly after the Debtor and Mr Han were held liable for the PRC Loan and the commencement of the enforcement proceedings in the Mainland and it would be likely that Mr Wong’s role or task at the material time also included updating Mr Han and the Debtor with the progress of legal proceedings;

(7)  Likewise, it is more likely than not that Madam Xu had also notified the Debtor of the service of the SD;

(8)  In either case, Mr Wong and Madam Xu were agents of the Debtor.

3.7  Secondly, as a matter of legal proposition:

(1)  By reference to cases such as Re Cao Zhong [2021] HKCFI 3143 and Re Wiliam Zeng [2024] HKCFI 2856, the requirement of Rule 46(2) of the BR is for a creditor to all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention;

(2)  Personal service of the SD, whilst the more fail-safe method of service, is not a mandatory requirement (Wiliam Zeng §22);

(3)  If the Petitioner has done all that are practically reasonable, whether or not the debtor had in fact received the SD Documents is besides the point (Cao Zhong §63);

(4)  Mr Cheung places emphasis on DHCJ Phoebe Man’s observation at Wiliam Zeng §22(3), namely the authorities do not stand for the proposition that despite there being notice, if there is no personal service where practicable, Rule 46(2) is still not complied with.

3.8  With the greatest respect to Mr Cheung, I am unable to accept his submissions that the requirements of Rule 46(2) of the BR have been complied with in the present case for the following reasons.

3.9  First, in relation to Mr Cheung’s submission set out at §3.7(4) above, if it is suggested that if there is notice, Rule 46(2) is nevertheless complied with even if a petitioner has not done all that is reasonable, I am unable to agree. As has been pointed out by Mr Maurellet, the facts of Wiliam Zeng are miles apart from the present case since, in the former, there were multiple attempts of personal service by sending appointment letters and service by electronic means, whereas here there was only one singled failed attempt.

3.10  Secondly and relatedly, in my view, the requirement laid down by Rule 46(2) of the BR is that the court needs to be satisfied that the creditor has done all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention.

3.11  In Re Pang Mei Lan May [2005] 1 HKC 319, Barma J (as he then was) observed as follows:

“[25] Rule 46(2) specifies the steps which must be taken by a creditor in relation to service of a statutory demand on a debtor. The creditor is required to do “all that is reasonable” for the purpose of bringing the statutory demand to the debtor’s attention. Where personal service is practicable, this is required. But the steps to be taken by the creditor must, I think, also include doing all that is reasonable to effect personal service, such as the taking of reasonable steps to obtain an address at which personal service might be effected. This seems to me to follow from the general requirement of doing all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention. If a creditor has not been able to serve the debtor at the address or addresses which he has in his records but has other information or other means available which might enable him to obtain an address for service, it seems to me that he should make use of them, where it is reasonable to expect him to do so, with a view to bringing the statutory demand to the attention of the debtor.”

3.12  Once Rule 46(2) of the BR is not complied with, the mere fact that the SD has come to the notice of the Debtor does not cure the defective service. In Re Cheung Hoi Chu, HCB 865/1998, 24 December 1998, Le Pichon J (as she then was) observed as follows:

“The Petitioner’s case comes to this: so long as the statutory demand does come to the notice of the Debtors (and it matters not how this came about), that is sufficient.

If this submission is correct, one wonders why the rules go to such elaborate lengths specifying requirements as to service as well as to what is required by way of proof of service. I do not agree that rules as to service can be flouted with impunity so long as by some lucky happenstance the statutory demand at some point falls into the hands of the debtor. In my judgment, requirements as to and proof of service must be strictly adhered to because of the importance of establishing with certainty the period within which a debtor has to comply with the statutory demand. Non-compliance gives rise to consequences which go far beyond those that would flow from any ordinary action…”

3.13  Thirdly and relatedly, all of the factual matters relied on by Mr Cheung in support of the Petitioner’s case that the SD was brought to the notice of the Debtor were not causatively linked to the steps taken by the Petitioner. It has not been suggested that, at the time of the purported service of the SD, the Petitioner was aware of or relied on (1) the relationship between the Debtor and Madam Xu, (2) the role played by Mr Wong or (3) the now asserted case that Madam Xu and Mr Wong were allegedly the agents of the Debtor as matters which would bring the SD to the Debtor’s attention. Viewed thus, the factual matters relied on by Mr Cheung, even if established, were precisely the “happenstance” referred to in Cheung Hoi Chu.

3.14  Fourthly, there was only one attempted service of the SD and I have found that the SD Documents were served on the wrong person and Mr Lau had failed to take reasonable steps to satisfy himself that the woman he met on 20 April 2023 was the Debtor. The foregoing is compounded by fact that prior to the service of the Petition, on 18 May 2023, Mr Lau was already aware that the Debtor did not reside at the Grampian Road Address. Nothing was done after that discovery to ascertain whether the SD Documents in fact came to the attention of the Debtor.

3.15  Fifthly, I do not accept the Petitioner’s case of agency belatedly raised. If there was any agency, under the Guarantee, the agent to receive documents for the Debtor was Zend Tea and Zend Tea was only wound up in August 2023, after the alleged service of the SD Documents. In any event, there is no evidence to suggest that any representation was made by the Debtor herself to the Petitioner at the time of or prior to the purported service of the SD Documents that either Madam Xu or Mr Wong had such authority: Bowstead & Reynolds on Agency, 23^rd Ed, §3-001.

3.16  Sixthly, I accept Mr Maurellet’s submissions that no reliance can be placed on what Mr Han purportedly told Madam Wang in the morning of 20 April 2023 since (1) it is a bare assertion which is not supported by any contemporaneous records, (2) I accept the Debtor’s evidence that she only found out about the bankruptcy proceedings on 1 June 2023 when her bank made enquiries with her, (3) in any event, even if the SD did come to the Debtor’s attention (either through Madam Xu or Mr Wong), such eventuality was a “happenstance” and (4) it was unreasonable for Madam Wang to rely on what was said by Mr Han instead of calling the Debtor directly.

3.17  Drawing the above threads together, I am of the clear view that service of the SD Documents did not comply with Rule 46(2) of the BR, as the creditor did not do all that was reasonable for the purpose of bringing the SD Documents to the Debtor’s attention. Like Cheung Hoi Chu, I am of the view that the purported service of the SD Documents can only be described as “sloppy” and the irregularity should neither be tolerated or encouraged.

3.18  I have also considered Rule 203 of the BR which provides:

“Non-compliance with any of these rules, or with any rule of practice for the time being in force, shall not render any proceeding void unless the court so directs, but such proceeding may be set aside, either wholly or in part, as irregular, or amended or otherwise dealt with in such manner and upon such terms as the court may think fit.”

3.19  As has been stated in Re Lam Chik Sing [2009] 2 HKLRD 107 §17:

“Failure to serve the statutory demand properly is an extremely serious matter. That the petitioning debt is apparently not in dispute is wholly immaterial. Failure to serve the demand is not just a formal defect or irregularity, it renders defective the petition founded on the demand. It does not appear to me it would be at all appropriate to exercise the discretion not to annul the bankruptcy order where service of the statutory demand was defective.”

3.20  In my view, the Service Challenge in respect of the purported service of the SD Documents succeeds. On this basis alone, I would dismiss the Amended Petition.

(ii)  Whether service of the Petition complies with the rules

3.21  Rule 59(1) of the BR provides that service of a petition shall be effected by delivering a sealed copy of the petition to the debtor. Rule 59(2) provides that if the court is satisfied that the debtor is evading service, it may order substituted service to be effected in such matter as it thinks fit.

3.22  Practice Direction 3.1 has laid down guidance on the service of a petition:

“[3.1] For the guidance of practitioners, the steps set out in the paragraph below are considered reasonable steps should be taken by a creditor in order to satisfy the Court that an order for substituted service of a petition should be made.

[3.2] If, in any case, practitioners are of the view that some of the steps are not applicable or need not be followed having regard to the circumstances of the case, they should set out their reason(s) for such view in either written submissions or a supporting affidavit as is appropriate given the nature of the reason(s).

(a) at least 2 personal calls should be made to all the debtor's addresses known to the petitioning creditor;

(b) the calls should be made on weekdays and at reasonable hours. If the service is attempted at the residential address, it should be at such time of the day when the debtor is expected to be found there (usually before 7:30 a.m. or after 7:30 p.m.). If the service is attempted at the business address, it should be at such time of the day when the debtor is expected to be found there (usually between 9 a.m. and 6 p.m.);

(c) each call should be made on a separate day. The calls should not be made in close succession and an appropriate interval should be allowed between them;

(d) the second (or subsequent) call(s) should be made by appointment by letter ("the appointment letter") sent to the debtor by ordinary prepaid letter post, giving not less than 2 business days' notice, enclosing a copy of the statutory demand or petition to be served, and offering an opportunity of making a different appointment;

(e) where the appointment is for service of a statutory demand (as described in §2.1(c) above, the appointment letter should state that if the debtor fails to keep the appointment, the creditor proposes to serve the debtor by post and by advertisement, and that in the event of a bankruptcy petition being presented, the Court will be asked to treat such service as service of the statutory demand on the debtor. Where the appointment is for service of a petition, the appointment letter should state that if the debtor fails to keep the appointment, the creditor will apply to the Court for an order for substituted service either by advertisement, or in such other manner as the Court may think fit;

(f) upon keeping the appointment made by letter, and if the debtor to be served cannot be found, the process server should inquire whether the debtor has received the appointment letter and the debtor's whereabouts;

(g) if the process server is informed that the debtor is away, inquiry should be made as to when he will return and whether letters are being or have been forwarded to another address;

(h) the affidavit for the purposes of Rule 49(1) of the Bankruptcy Rules or in support of an application for leave for substituted service of the petition should also deal with the following matters:

(i) all relevant facts as to the debtor's whereabouts;

(ii) whether the appointment letter has been returned;

(iii) whether the debtor was within the jurisdiction or believed to be so at the time when the attempts to effect service were made, giving the facts upon which the inference is founded for such belief;

(iv) in the case of an application for leave for substituted service of the petition, whether the debtor to be served is within the jurisdiction or whether he is believed to be so at the time when the application is made, giving the facts upon which the inference is founded for such belief; and

(v) in respect of a statutory demand, specify a date by which, to the best of the knowledge, information and belief of the deponent, the demand will have come to the debtor's attention; in respect of a petition, whether the substituted service proposed will probably come to the knowledge of the debtor;

(i) if an application for the purpose of Rule 49(1) of the Bankruptcy Rules or for substituted service of the petition is based on an evasion of service of the statutory demand or the petition, the grounds for the statement that the debtor to be served is evading service must be given. In such a case, the efforts which have been made to find the debtor must also be stated.”

3.23  It is plain that the purported service of the Petition Documents did not comply with Rule 59 of the BR. As pointed out by Mr Maurellet, contrary to Practice Direction §3.2(c) and (d), there is no justification to seek to serve the Petition Documents on successive days. If YTL had followed Practice Direction §3.2, the ensuing circumstances might have justified the application for an order for substituted service (§3.2(f)). It bears emphasis that there was no application for an order for substituted service of the Petition and Mr Lam just treated the service of the Petition Documents lackadaisically and hastily - despite having been repeatedly reminded to confirm the identity of the Debtor, the manner in which he served the Petition Documents can only be characterized as “sloppy”.

3.24  Mr Cheung makes the following two points:

(1)  The Petition has been brought to the Debtor’s attention; and

(2)  The Amended Petition has been duly and properly served on the Debtor via Ince.

3.25  Mr Cheung’s first argument can be disposed of shortly. No authority has been cited for the proposition that a breach of Rule 59(1) of the BR can be cured by the fact that the Petition has come to the Debtor’s attention. As pointed out by Mr Maurellet, it does not matter that the Debtor eventually got notice of the Petition. In every case where the issues are taken on service, the debtor would have had notice after all as he cannot otherwise contest the petition.

3.26  As regards Mr Cheung’s second argument, I invited the parties to provide further submissions on Re Liu Wing Ting Stephen [2025] 2 HKLRD 744. In Liu Wing Ting Stephen, it was accepted that the petition had not been validly served. Harris J observed as follows:

“[12] The debtor’s solicitors filed and served a notice to oppose the petition dated 11 September 2024. Amongst the grounds of opposition was an objection that the petition had not been served in compliance with Rule 59. The debtor also expressly refers to this in [23] of his affirmation in opposition also made on 11 September 2024.

[13] On 12 September 2024 a clerk from the creditor’s solicitors left at the debtor’s solicitors’ office a copy of the petition, purportedly by way of, to quote his affirmation, “personal service”. At that time, the creditor’s solicitors had no reason to believe that the debtor’s solicitors had authority to accept service of the petition; indeed the clerk’s affirmation was made after the creditor’s solicitors would have received the notice of opposition and the debtor’s affirmation.

[14] Ms Leung for the creditor invited me to infer from the fact that the debtor’s solicitors did not write disputing service that they had authority to accept service, and that service was effected. This proposition only has to be stated, to be seen to be unsustainable.

[15] The importance of a bankruptcy petition being served in compliance with Rule 59 is well-established and known. As the Court of Appeal explained in Ma Wing, Michael v Fong Sze-ming[4], the Bankruptcy Ordinance (Cap. 6) makes it plain that the court can only make a bankruptcy order if satisfied of proof of service (Section 9(2)), and although the court can regulate its own proceedings (see: Rule 203), that power should not be used to override the clear legislative intent that the court must first be satisfied before making a bankruptcy order, that personal service has been effected on the debtor.

[16] I am not so satisfied. It seems to me clear in the circumstances that the creditor’s solicitors should have written to the debtor’s solicitors asking them to confirm that they had the authority to accept service and unless they received written confirmation of this they should have taken additional steps to ensure that Rule 59 had been complied with.”

3.27  The question is whether Liu Wing Ting Stephen stands for the proposition that the proper service of the Amended Petition on Ince can cure the irregularity in the service of the original Petition. On the facts of the present case, the 13/9/23 Notice, which was filed after the service of the Amended Petition, only challenges the service of the Petition, not the Amended Petition.

3.28  As I am of the view that the Amended Petition is liable to be dismissed on the basis of the Service Challenge in respect of the SD Documents, it is strictly unnecessary for me to deal with Mr Cheung’s second argument. For completeness, I will deal with it briefly.

3.29  Subject to the observations below, I would have held that proper service of the Amended Petition would have cured the defective service of the original Petition. But in the present case, even the service of the Amended Petition is problematic.

3.30  First, short of (1) an order for substituted service or (2) Ince expressly confirming that they had authority to accept service on behalf of the Debtor, service of the Amended Petition on Ince did not comply with Rule 59(1) of the BR. The rule only provides that service of a petition may be effected by the creditor or his solicitor but does not provide that the petition may be served on the debtor’s solicitors.

3.31  In my view, Rule 59(1) can encompass personal service being effected by service on the debtor’s solicitors if express authority has been conferred (Liu Wing Ting Stephen §16). Even were I incorrect on the foregoing, it seems to me that if service of a petition to a debtor’s solicitors who have been authorized by the debtor to accept service is an irregularity, such irregularity would not invalidate the proceedings as no substantial injustice would have been caused by the defect: section 124 of the Bankruptcy Ordinance Cap 6 (“BO”).

3.32  However, in this case, the Petitioner has never sought confirmation from Ince that they had authority to accept service of the Amended Petition.

3.33  Secondly, as pointed out by Mr Maurellet, the Petitioner has in fact not filed any proof of service of the Amended Petition. Section 9(2) of the BO provides:

“At the hearing the court shall 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.”

3.34  I am therefore of the view that, on the facts of the present case, the service of the Amended Petition on Ince does not have the effect of regularizing the defective service of the Petition.

3.35  Had it been necessary, I would also have dismissed the Amended Petition on the basis that the Service Challenge in respect of the Petition stands.

4.  The Undue Influence Ground

4.1  In so far as necessary, I would also have dismissed the Amended Petition on the basis that the Undue Influence Ground raises a bona fide dispute on substantial ground.

4.2  As has been pointed out at Bank of China v Wong King Sing [2002] 1 HKLRD 358:

“[34] I should preface the discussion of this defence [of undue influence] with the observation that, as with all aspects of the law, one has to apply a large degree of common sense to the matter. … it is to be borne in mind that the defence of undue influence is ultimately a simple concept. It has all to do with informed consent. Once a court forms the view that consent was freely given with full knowledge of the consequences of entering into the relevant transaction, that is the end of the matter, however improvident the transaction may objectively appear. The rationale for the defence of undue influence is to prevent the victimization of the complainant. It is there to protect people from being forced, tricked or misled in any way by others into entering into a disadvantageous transaction … As Lord Nicholls of Birkenhead said in Royal Bank of Scotland v. Etridge (No 2) [2001] 3 WLR 1021 at 1029 paragraph 8, the unacceptable conduct lies in ‘a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage.’

[35] The burden is of course on the person seeking to set aside or avoid liability under the relevant transaction. It is not for the other party to prove that the transaction was entered into with full understanding of the nature and consequences of the transaction. This reversal of the burden of proof is commonly referred to as the ‘Romilly heresy’: see Barclays Bank Plc v. O’Brien [1994] 1 AC 180, at 193A–B.”

4.3  As pointed out at Re Soetrisno Farida [2019] HKCFI 2756:

“The real issue is thus whether or not the evidence as a whole justifies a conclusion that the Debtor’s execution of the 2000 Legal Charge had been procured by SW’s undue influence or, looking at it from another angle, whether the Debtor consented to the execution of the 2000 Legal Charge with full knowledge of the consequences of doing so.”

4.4  The Debtor’s evidence in respect of her execution of the Guarantee is as follows: (1) Mr Han produced a one-page document (the signature sheet) to her and urged her to sign the same urgently, (2) as the document was in English, she asked Mr Han where she should put her signature, (3) Mr Han lost his temper and shouted at her saying that she must sign that document and that the same was for record keeping only and not intended to be enforced.

4.5  Although the Debtor was educated in law, she has been a housewife since graduation. Madam Wang countered the foregoing by pointing to the facts that the Debtor had previously been involved in the Eden Loan and that the Undue Influence Ground was not raised in the Mainland proceedings.

4.6  In my view, the Debtor’s evidence on the Undue Influence Ground is believable for the following reasons:

(1)  As a matter of record, each signature page of the Guarantee is on a separate sheet. The Debtor in fact signed at the wrong location (in the witness section) and the process was not witnessed by anyone;

(2)  The court cannot dismiss summarily the Debtor’s evidence that she was only given the signature page at the time of signature and was forced by Mr Han to sign without being given any opportunity to learn about the transaction;

(3)  As pointed out above, under the terms of the Guarantee, any notice in respect of the Finance Documents (as defined therein) to her could be sent to the agents;

(4)  The Debtor did not even participate in the Mainland proceedings leading to substantial liability on her part;

(5)  The liability guaranteed was more than RMB 400 million;

(6)  In contrast, the Eden Guarantee was in respect of funds used to acquire the Paxton Address and it was signed before a solicitor.

4.7  Once there is a believable case that the Guarantee was affected by the undue influence of Mr Han, the court then looks at (1) whether the Petitioner was put on inquiry and (2) if so did the Petitioner take reasonable steps to satisfy itself that there was no undue influence. In this regard, Madam Wang admitted that she had never met the Debtor and she puts forward a bare allegation that the Petitioner “has in fact thoroughly checked and confirmed that at no point in time did the Petitioner acquire any actual knowledge or notice that the Debtor was unduly influenced by her husband or indeed anyone else”. There is in particular no evidence from the Petitioner as to under what circumstances was the Guarantee executed by the Debtor.

4.8  In my view, the Undue Influence Ground cannot be determined on a summary basis.

5.  Conclusion

5.1  For the above reasons, I dismiss the Amended Petition. I also make a costs order nisi that the costs of the Amended Petition (including any costs reserved) be paid by the Petitioner to the Debtor, such costs are to be taxed if not agreed with a certificate for two counsel.