PONOMAROVA OLENA v. NORTHCROFT HONG KONG LTD

HCSD 56/2023

[2024] HKCFI 440

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO 56 OF 2023

________________________

BETWEEN

_________________

_______________

D E C I S I O N

_______________

Introduction

1.  This is an application made by Ms Olena Ponomarova on 7 December 2023 to set aside a statutory demand served on herself by the respondent, Northcroft Hong Kong Limited (“the Statutory Demand”).

2.  The Statutory Demand is dated 25 October 2023 and was served on the applicant on 20 November 2023.

3.  The Statutory Demand is based on a judgment debt arising from the High Court action in HCA 156/2022 (“the Judgment Debt”). It is for the sum of $30,500. A costs order was made against the applicant on 5 September 2023 and the amount was summarily assessed in that amount on 11 October 2023.

4.  The application is supported by an affidavit filed on 7 December 2023. The respondent filed an opposing affirmation on 10 January 2024. But counsel for the respondent confirms at today’s hearing that the respondent will not rely on the evidence contained in that affirmation. Hence, today’s hearing proceeds on the basis of the applicant’s evidence only.

Legal principles

5.  The legal principles on applications to set aside a statutory demand are well-established.

6.  In these applications, the applicant bears the burden of satisfying the court that there is a valid reason that the demand ought to be set aside.

7.  Generally, a limited exercise is involved when one is considering an application to set aside a statutory demand. All that the court is concerned with is whether the creditor is able to pursue bankruptcy proceedings founded on the statutory demand. These applications are akin to a filtering process to protect the debtor against a petition being presented based on a statutory demand that is demonstrably unjustified. See DCKD v JPWL [2022] HKCFI 1059 at para 23.

8.  If the application is based on rule 48(5)(b) of the Bankruptcy Rules, Cap 6A, namely the ground that “the debt is disputed on grounds which appear to the court to be substantial”, the debtor must show a bona fide dispute on substantial grounds, and establish, by sufficiently precise evidence which is believable, that he actually has a defence of substance, not just a fair probability of one. See DCKD v JPWL at para 24.

9.  Where the statutory demand is based on a judgment or order, the court will not at this stage go behind the judgment or order and inquire into the validity of the debt nor, as a general rule, will it adjourn the application to await the result of an application to set aside the judgment or order, unless the applicant is able to put forward clear and credible evidence to show that the judgment or order was obtained by fraud, collusion or an unfair hearing: see Leung Kwok Chun v Seavi Advent Asia Investment (IV) Limited HCSD 16/2016, 29 November 2016 at paras 22 to 26; 鄧錦祥 對 Source View Development Limited [2023] HKCA 276 at para 13.

Discussion

10.  In her supporting affidavit, the applicant makes two points.

11.  First, the respondent’s solicitors are “well informed” that she “never agreed” with a number of judgments in HCA 156/2022, including the above two orders which gave rise to the Judgment Debt.

12.  Second, the respondent’s solicitors are “well informed” that she has renewed her application for leave to appeal to the Court of Appeal in CAMP 314/2023 and that application is still pending.

13.  It is notable that the applicant does not explain in the affidavit why she does not agree with the judgment and that she does not set out her proposed grounds of appeal. In her oral submissions today, she makes a number of allegations concerning, among other things, her residency in Hong Kong. The court will not consider these allegations which are unsworn evidence.

14.  Applying the well-established legal principles, the court will not revisit the soundness or appropriateness of the costs orders which gave rise to the Judgment Debt. In any event, in this application, the applicant has put forward no ground or reason whatsoever to dispute or challenge the court orders.

15.  To put in a mere statement in the affidavit saying that she does not agree with the judgments does not amount to a valid reason at all for setting aside the Statutory Demand. The Statutory Demand should stand. This is so notwithstanding that an application for leave to appeal on the judgment is pending.

Conclusion

16.  For the above reasons, I dismiss the setting aside application summarily pursuant to rule 48(4) of the Bankruptcy Rules. Pursuant to rule (48)(7), I authorise the respondent to present a bankruptcy petition against the applicant on or after 14 February 2024.

(Discussion re costs)

17.  Costs should follow the event. The respondent do have costs of the application (save for the costs in respect of its opposing affirmation), including costs of today’s hearing, summarily assessed at $30,000, payable by the applicant on or before 14 February 2024.

18.  This is a straightforward application. There is some duplication of works between the solicitor and counsel. Hence, I have made deductions from the originally claimed amount of $51,525.40.