RE WONG MUI KUEN JOANNA

HCB 1631/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1631 OF 2014

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AND

HCB 1632/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1632 OF 2014

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J U D G M E N T

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Introduction

1. There are two bankruptcy Petitions both dated 5 March 2014 (“Petitions”) presented by Bank of China (Hong Kong) Limited (“Bank”) against Madam Wong Mui Kuen Joanna (“Madam Wong”) and Mr Chu Lok Ting Dicky (“Mr Chu”) who are husband and wife (collectively “Debtors”).  The Petitions were served personally on the Debtors on 20 March 2014.

2. The Petitions are based on the Debtors’ non-compliance with two Statutory Demands both dated 18 November 2013 (“Statutory Demands”) and served personally on them on 17 December 2013. The Statutory Demand on Madam Wong was in the sum of over HK$2.7 million and was founded on a default judgment obtained by the Bank on 7 December 2012 in HCA1192 of 2012 (“1^st Judgment”). The Statutory Demand on Mr Chu was in the sum of over HK$2.4 million and was founded on a default judgment obtained by the Bank on 10 September 2009 in HCA1245 of 2009 (“2^nd Judgment”).

3. It is common ground that the principal borrower is a company by the name Tung Wing Industrial International Company Limited (“Tung Wing”) whose indebtedness to the Bank under various facilities was over HK$9 million. Mr Chu and Madam Wong are two of the mortgagors who have mortgaged their property to secure Tung Wing’s indebtedness to the Bank. In addition, Mr Chu is one of the guarantors of Tung Wing’s indebtedness to the Bank. It can be seen from the attachment to the Statutory Demand on Mr Chu that he has at various times made partial repayments of his Judgment debt which was originally over HK$7.8 million. His last repayment of HK$770,000 was made in February 2013 and was applied by the Bank to reduce the indebtedness of both Debtors.

4. Neither of the Debtors has applied to set aside the Judgments or the Statutory Demands.

5. The Petitions are opposed by the Debtors.

Deliberation

6. I shall first remind myself of the applicable legal principles.

7. In order to successfully oppose the Petition, a debtor has to show a bona fide dispute on substantial grounds, by sufficiently precise evidence which is believable, and must establish that he actually has a defence of substance, not just a fair probability of one: Hong Kong Bankruptcy Law Handbook 4^th Ed. at p 47 para. 6A.10; ICS Computer Distribution Ltd. [1996] 1 HKLR 181; Re Tam Mei Kam unrep.; HCB 3777 of 2011; 25 April 2012; Barma J (as he then was); Re Yuen Mun Wa (debtor) [2012] 5 HKLRD 108.

8. Where only part of the petitioning debt is disputed on substantial grounds, the statutory demand still stands and a bankruptcy petition can properly be presented on the basis of the statutory demand, unless the undisputed or, if I may add, indisputable portion of the debt has been paid: In re a Debtor (No 1 of 1987)[1989] 1 WLR 271 applied in Re a Debtor (No 490SD-1991)[1992] 1 WLR 507.

9. Where the underlying debt is based on a judgment, the court hearing the bankruptcy petition will treat the judgment as prima facie evidence that the judgment debtor is indebted to the judgment creditor. However, it may, in appropriate circumstances, “go behind” the judgment - what is normally required is some “fraud”, “collusion” or “miscarriage of justice” which impinges on the validity of the judgment, the latter phrase being clearly capable of wide application according to the particular circumstances of the case: Dawodu v American Express Bank [2001] BPIR 983; Re Tam Mei Kam unrep.; CACV87 of 2012; 8 May 2013; Cheung, Yuen & Lam JJA.

10. Applying these principles to the present case, first and foremost, on the Debtors’ own calculation as set out in their affirmations, as at 18 November 2013, their outstanding indebtedness to the Bank was over HK$2.3 million. There is no evidence to suggest that they are able to repay this amount. Nor is this court satisfied that they have a reasonable prospect of being able to do: see section 9 Bankruptcy Ordinance, Cap. 6. According to information provided by Mr Chu and Madam Wong to this court, their combined monthly income is in the region of HK$40,000. While Mr Chu told this court he is confident he can make full repayment by instalments in three to five years, that sort of arrangement is, understandably, not acceptable to the Bank.

11. Secondly, the Debtors query (i) the timing at which the Bank has chosen to realise certain mortgaged properties in partial satisfaction of Tung Wing’s indebtedness, (ii) the interest rates used by the Bank in calculating the interest payable by Mr Chu and Madam Wong, and (iii) the way the Bank has appropriated repayments to interest accrued, costs and disbursements before principal. In gist, what the Debtors are trying to do is to dispute the Bank’s calculation of the amounts due from each of them ‑ they are not suggesting that nothing is in fact due to the Bank. The Debtors also complain about the Bank’s alleged failure to take legal action against other guarantors of Tung Wing’s indebtedness. This court has considered their affirmation evidence and oral submissions carefully but is not satisfied that these queries or complaints amount to a bona fide dispute of their judgment debts on substantial grounds.

12. The reality is that the Debtors have honestly acknowledged their indebtedness to the Bank and sincerely tried to make repayments. This court has no reason to doubt that they have done their very best. Unfortunately, their best is not enough to avert bankruptcy.

13. In these circumstances, while this court has considerable sympathy for them, I am satisfied that the Bank is entitled to a bankruptcy order against Mr Chu and Madam Wong and I shall so order.

Disposition

14. There will be the usual bankruptcy order against Mr Chu and Madam Wong and an order nisi that costs of each Petition, including all costs reserved, be to the Bank.