RE KWAN SHUN KEUNG TIMMY

HCB 2146/2022

[2022] HKCFI 2693

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 2146 OF 2022

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R E A S O N S  F O R  J U D G M E N T

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1.  At the hearing of the petition presented by the petitioner, Mr Lau Kim Hung Jack (“Petitioner”) on 29 April 2022, I made the usual bankruptcy order against the debtor, Mr Kwan Shun Keung Timmy (“Debtor”). These are the reasons for my judgment.

2.  By a statutory demand dated 18 March 2022 (“1^st SD”) served on the Debtor on 22 March 2022, the Debtor was required to pay the sum of HK$14,567,216 (of which HK$13,985,652 was outstanding principal and HK$581,564 was interest) (“Debt”) within 21 days of the demand.

3.  The Debt arose out of the following loan agreements:

(1)  A loan agreement dated 29 August 2019 (“1^st Agreement”) whereby the Petitioner lent a sum of HK$4,860,000 (“1^st Loan”)to the Debtor;

(2)  A loan agreement dated 22 January 2020 (“2^nd Agreement”) whereby the Petitioner lent a sum of HK$5,000,000 (“2^nd Loan”) to the Debtor;and

(3)  A loan agreement dated 29 October 2021 (“3^rd Agreement”) whereby the Petitioner lent a sum of HK$5,040,000 (“3^rd Loan”)to the Debtor.

4.  By another statutory demand dated 18 March 2022 (“2^nd SD”) served on the Debtor on 22 March 2022, the Debtor was required to pay the HK$5,000,000 and HK$5,040,000, being the amounts due and payable under 2 cheques issued by the Debtor as repayment of the 2^nd Loan and 3^rd Loan but were dishonoured upon presentment.

5.  Apart from paying HK$50,000 to the Petitioner on 23 March 2022, the Debtor did not comply with the 1^st or 2^nd SD. Taking into account this payment and the further interest accrued on the Debt up to 29 April 2022, as at the date of the petition, the debt owed by the Debtor was HK$14,840,245.

6.  In the petition, the Petitioner relies on the Debtor’s failure to comply with the 1^st SD and 2^nd SD as the basis for contending that the Debtor is unable to pay his debts. Although the Petitioner holds (1) a first legal mortgage executed by Rainbow Gold Holdings Ltd over 992 shares in Ba Chun Sing Group Limited (now known as BCS Media Network Group Limited) (“BCSG”) as security for the amounts owed under the 1^st to 3^rd Agreements; and (2) a first legal mortgage over 990 shares in BCSG executed by the Debtor as security for the amounts owed under the 1^st and 2^nd Agreements, the Petitioner estimates that the value of both security to be nil.

7.  On the same day the petition was presented, the Debtor paid HK$40,000 to the Petitioner.

8.  The petition was served on the Debtor personally on 27 May 2022.

9.  As at the date of the hearing, the amount of debt owed by the Debtor is HK$14,800,245 (exclusive of interest accrued from 30 April 2022).

10.  As the Debtor has failed to comply with the 1^st SD and the 2^nd SD and has not repaid any part of the Debt, by virtue of s.6A(1)(a) of the Bankruptcy Ordinance (Cap. 6), the Petitioner has discharged the onus of showing that the Debtor is unable to pay his debt, as required by s.6(2)(c) of the same Ordinance. 

11.  The burden is on the Debtor to show that there is a bona fide dispute on substantial grounds in respect of the Debt by sufficiently precise evidence which is believable, and must establish that he has a defence of substance, not just a fair probability of one (Re Leung Cherng Jiunn [2016] 1 HKLRD 850, at §27, per Kwan JA (as she then was); Re Soetrisno Farida [2019] HKCFI 2756, at §11, per Ng J).

12.  In the Notice of Intention to Oppose Petition filed on 11 July 2022, the Debtor stated that he intends to show cause against the petition by contending that:

(1)  He has repaid HK$40,000 on 29 April 2022;

(2)  The 3^rd Loan is not “genuine debts” [sic] as he did not receive “the so-called borrowed sum of HK$5,040,000” from the Petitioner;and

(3)  The Debtor denies the allegations in §§6 to 13 of the petition.

13.  The fact that the Debtor has repaid HK$40,000 to the Petitioner is not in dispute. However, the Debtor has not filed any affirmation to substantiate his assertion that the 3^rd Loan is not a genuine debt or the basis for denying §§6-13 of the petition, which deal with the 2 mortgages held by the Petitioner (§§6-8, 13), the 2 dishonoured cheques and the 2^nd SD served on the Debtor (§§9-12).

14.  As there is no evidence in support of the Debtor’s 2^nd and 3^rd assertions, I do not consider that he has discharged the burden of showing that there is a bona fide dispute on substantial grounds in respect of the Debt. Indeed, the Debtor’s assertion that the 3^rd Loan is not a genuine debt is contradicted by his act in issuing a cheque for repaying the amount due to the Petitioner under the 3^rd Loan. 

15.  For the above reasons, it is just and appropriate for the Court to make a bankruptcy order against the Debtor.