RE DAN YIN PING

HCB 1310/2018

[2020] HKCFI 621

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1310 OF 2018

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HCB 1336/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1336 OF 2019

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(Heard together)

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J U D G M E N T

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Introduction

1.  This is the hearing of 2 bankruptcy Petitions (“Petitions”) presented by Mr Ng Ting Kwok (“Petitioner”) (i) on 8 March 2018 against Ms Dan Yin Ping (“Dan”) in HCB 1310/2018 (“1310”) and (ii) on 8 March 2019 against Mr Ng On Kwok (“Ng”) in HCB 1336/2019 (“1336”).

2.  The Petition in 1310 against Dan is based on her non-compliance with a statutory demand dated 28 February 2018 for the sum of over HK$2.172 million, being HK$2,094,524.95 (consisting of HK$1.74 million ie 3 outstanding Revised Instalments, HK$347,707.22 ie interest and HK$6,817.73 ie default interest[1]) together with default interest of HK$76,758.98[2] (“Judgment Debt”).  The Judgment Debt arose out of a summary judgment granted by Master Lo on 13 December 2017 (“Summary Judgment”) in HCA 1587/2017 (“1587”) against both Dan and Ng (collectively “Debtors”).  The Debtors’ appeal against the summary judgment was dismissed by DHCJ Marlene Ng (as she then was) on 31 October 2018.  This Petition is based solely on the Judgment Debt.

3.  The Judgment Debt was part of the sum due by the Debtors to the Petitioner under a Master Agreement dated 29 May 2014, subsequently revised by a Supplemental Deed dated 29 April 2016 (collectively “RMA”)entered into between the Petitioner as vendor and the Debtors as purchasers.

4.  The Petition in 1336 against Ng is based on (i) his non-compliance with a statutory demand dated 28 February 2018 for the Judgment Debt and (ii) his non-compliance with 3 other statutory demands all dated 28 February 2018 for the sums of HK$56.75 million, alternatively HK$56.6 million, alternatively HK$7.41 million allegedly owed by him to the Petitioner (collectively “Non-Judgment Debts”) under the RMA. 

5.  By way of background, Dan also allegedly owed the Non-Judgment Debts under the RMA.  These are the subject matter of another petition presented by the Petitioner on 17 April 2018 against Dan in HCB 2098/2018 (“2098”).

6.  By Order of Ng J dated 17 June 2019, 1336 was adjourned to be heard together with 1310 but the substantive hearing of the two is confined to matters concerning the Judgment Debt only. 

Material Background

7.  According to the 3^rd affidavit of the Petitioner (“P 3^rd”) in 1310, to which there is no reply from Dan, the genesis of the RMA and 1587 can be summarized as follows.

8.  The Petitioner used to be one of the 3 shareholders of the companies within the “Rabeanco Group”.  The Debtors were the only 2 other shareholders.  The “Rabeanco Group” consisted of inter alia the following 5 companies and their respective subsidiaries (“Companies”):

(1)  Steps Consulting Limited (“Steps Consulting”);

(2)  S&W Holding Limited (“S&W Holding”);

(3)  Rabeanco Singapore Pte Ltd (“Rabeanco Singapore”);

(4)  Rabeanco Europe BV (“Rabeanco Europe”); and

(5)  Brighteam Holdings Limited (“Brighteam”).

9.  On 29 May 2014, the Petitioner and the Debtors executed the Master Agreement under which the Debtors agreed to purchase the Petitioner’s shares in the Companies for the consideration of HK$68 million.  Completion of the Master Agreement took place on 29 May 2014. 

10.  Pursuant to Schedule 6 of the Master Agreement, the Debtors had to pay the balance of HK$67.8 million (a sum of HK$200,000 having been paid on completion) by 81 monthly instalments (“Instalments”) from June 2014 to February 2021 secured by 81 post-dated cheques, together with Interest at the rate of “HIBOR” plus 2% (“Interest”) and Default Interest at the rate of 5.5% (“Default Interest”).

11.  From June 2014 to around March 2015, the Debtors made regular payments in accordance with the Master Agreement by way of post-dated cheques.  Since about April 2015, some of the post-dated cheques were dishonoured.  In view of the Debtors’ breach of the payment obligations under the Master Agreement, on 5 August 2015, the Petitioner commenced HCA 1772 of 2015 against them, claiming inter alia the overdue Instalments from April to July 2015.  Shortly afterwards, the Debtors settled the Petitioner’s claim together with interest in HCA 1722 of 2015 and the action was discontinued with costs.

12.  Eventually, at the request of the Debtors, the Petitioner entered into the Supplemental Deed with them in April 2016 to vary the Master Agreement so as to give them more time to pay the outstanding balance of HK$58,135,000 (“Outstanding Consideration”), but subject to the Debtors paying the Petitioner the Interest then outstanding of HK$248,491.02 (“Outstanding Interest”).  In recital (B) of the Supplemental Deed, the Debtors expressly acknowledged that they had “failed to pay the Consideration in accordance with the terms of the Master Agreement and that as at the date of this Supplemental Deed, the Outstanding Consideration is HK$58,135,000 and the interest due and payable under clause 5 of the Master Agreement is HK$248,491.02”.

13.  According to the “New Payment Schedule” at Schedule 6 of the Supplemental Deed (“New Payment Schedule”),

(1)  the Debtors were required to pay the Outstanding Consideration by 75 monthly instalments (“Revised Instalments”) from May 2016 to July 2022, instead of February 2021 as stipulated under the Master Agreement;

(2)  the amount of each Revised Instalment between May 2016 and March 2017 was substantially reduced from HK$795,000 to HK$100,000 or HK$150,000; and

(3)  the amount payable for April 2017 was also substantially reduced from HK$3,795,000 to HK$150,000.

14.  The Debtors had made several Revised Instalments from May 2016 to March 2017 totaling HK$1.35 million but stopped paying thereafter.  As at 27 March 2017, the total amount received by the Petitioner was HK$11,215,000, representing about 16% of the HK$68 million.

15.  It was in these circumstances that on 5 July 2017, the Petitioner commenced 1587 against the Debtors claiming inter alia HK$1.74 million, being 3 Revised Instalments for the months April to June 2017. 

Deliberation

16.  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.  In appropriate circumstances, the court may “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, CACV 87/2012, 8 May 2013, Cheung, Yuen & Lam JJA.

17.  In the present case, the Debtors do not dispute the Judgment Debt as such.  Instead, they oppose the Petitions on the ground that they had made 3 offers to secure or compound for inter alia the Judgment Debt which they allege have been unreasonably refused by the Petitioner.  As put by Mr Hariman in his skeleton submissions, the issue which stands to be determined by this court is whether the offers made by the Debtors meet the requirements of section 6D(3) of the Bankruptcy Ordinance, Cap 6 (“BO”) such that the Court should dismiss the petition in 1310 and those parts of the petition in 1336 concerning the Judgment Debt. 

18.  The relevant parts of section 6D(3) provide as follows:

“The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied—

(a)  that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented;

(b)  that the acceptance of that offer would have required the dismissal of the petition; and

(c)  that the offer has been unreasonably refused …”

19.  The object of the section is to empower the Court to dismiss a petition where the debtor has made a reasonable settlement offer which the creditor has unreasonably refused to accept.  The settlement offer can be an offer to settle for less than the full amount of the debt, or to settle in full generally and certainly where the agreement is for this to be done by instalments over a period of time: Cheung Wah v China State Bank Ltd [1999] 4 HKC 185, 190D-F per Ribeiro J (as he then was). 

20.  At 190I to 191C, the learned Judge set out the test to be applied in determining whether an offer has been unreasonably refused:

“ In this context, Mr Nasir has helpfully cited the decision of Timothy Lloyd QC sitting as a Deputy Judge of the English High Court in Re A Debtor (No 32 of 1993) [1995] 1 All ER 628. That was a case involving s 271(1), (3) of the Insolvency Act 1986 which is in all material respects the same as the relevant provisions of our s 6D. The learned Deputy Judge there held (i) that the reasonableness or otherwise of the refusal was to be judged at the date of the hearing and (ii) that the test was:

‘… whether a reasonable creditor, in the position of this petitioning creditor, and in the light of the actual history as disclosed to the court, would have accepted or refused the offer.’

He added, at p 639 of the report:

‘However, I think it has to be borne in mind that there could be a range of reasonable positions on the part of the hypothetical reasonable creditors. In order to conclude that the refusal was unreasonable, it seems to me that the court has to be satisfied that no reasonable hypothetical creditor would have refused the offer, and that the refusal of the offer was therefore beyond the range of possible reasonable actions in the context.’” (emphasis added)

21.  As stated by Robert Walker J in Inland Revenue Commissioners v a Debtor [1995] BCC 971 at 974:[3]

“In considering an offer, a creditor is entitled to have regard to his own interests … The creditor is not required to balance his interests against those of the debtor, or to take a chance, or to show patience or generosity, even though some creditors might do so. As Lord Phillimore put it in Viscount Tredegar v Harwood & Others [1929] AC 72 at 82, acting reasonably is not the same as acting justly, fairly or kindly.” (emphasis added)

22.  In this regard, relevant considerations would include inter alia (i) whether a debtor’s offer for payment is for a sum which is considerably less than the sum claimed, (ii) the length of the period over which the sum offered is to be paid, (iii) the willingness or otherwise of a petitioner to take the risk in accepting payment over a long period of time, and (iv) the past repayment history of the debtor: Re Cheng Ka Lun Grand at [8]; Re Li Chi Ho unrep, HCB 10975 of 2001, 18 March 2002, Kwan J (as she then was) at [13]-[14].

23.  In the present case, the Debtors rely on the following 3 offers made to the Petitioner viz:

(1)  The offer set out in the letter from Messrs Henry Fok & Company to Messrs So Keung Yip & Sin dated 28 December 2018 (“1^st Offer”);

(2)  The offer set out in the Affirmation of Ng On Kwok dated 10 June 2019 (“2^nd Offer”); and

(3)  The offer set out in the letter from Messrs Henry Fok & Company to Messrs So Keung Yip & Sin dated 3 July 2019 (“3^rd Offer”).

24.  Each Offer will be discussed in greater detail later.  Suffice to say that none of the offers have been accepted by the Petitioner. 

The 1^st Offer

25.  On 28 December 2018, the Debtors offered HK$10 million in settlement for an extensive list of matters, including the Judgment Debt and the Non-Judgment Debts (hence the reference to 2098).

26.  The terms of the 1^st Offer were:

“1. [The Debtors] shall pay [the Petitioner] within 18 months of the date of acceptance of the offer the sum of HK$10,000,000.00 (‘the Settlement Sum’) in full and final settlement of all disputes, liabilities, indebtedness, costs and matters (including but not limited to any claims for interest and costs including outstanding or reserved costs orders ) arising between the parties from, in relation and incidental to HCB 1310/2018, HCB 2098/2018, HCA 1587/2017, the Master Agreement, the Agreement for the sale and purchase of 5,667 shares of HK$1 each in Steps Consulting Limited, the Agreement for the sale and purchase of 333,334 shares of HK$1 each in S&W Holding Limited, the Agreement for the sale and purchase of 150,000 shares in Rabeanco Singapore Pte. Ltd, the Agreement for the sale and purchase of 60 shares of €100 each in Rabeanco Europe BV, the Agreement for the sale and purchase of 150 shares of US$1 each in Brighteam Holdings Limited, the Agreement for the sale and purchase of 1,000 shares of HK$1 each in Steps Consulting Limited, the Trademark and Domain Name Assignment, the Trademark Assignment, the Payment Schedule, Shareholders Agreement in relation to Global Arena Holdings Limited, the Licence Agreement (S&W Corporation Limited), the Licence Agreement (Rabeanco Singapore Pte. Limited), the Licence Agreement (Rabeanco Europe BV), the Licence Agreement (Brighteam Holdings Limited), the Licence Agreement (S&W Handbags Limited), the Supplemental Deed, Rabaenco Limited, S&W Corporation Limited, S&W Handbags Limited, S&W Holding Limited, Gala Prosper International Holding Limited.

2. There shall be a stay of proceedings in HCB 1310/2018, HCB 2098/2018 and HCA 1587/2017 pending the full payment of the Settlement Sum by [the Debtors] to [the Petitioner].

3. Upon due and complete performance by the parties of the terms of paragraph 1 above, HCB 1310/2018, HCB 2098/2018 and HCA 1587/2017 be wholly discontinued and [the Debtors and the Petitioner] shall by consent be mutually discharged from all present and further liability in and arising from HCB 1310/2018, HCB 2098/2018 and HCA 1587/2017, and the parties shall be barred from taking out any fresh proceedings under the same causes of action and from taking out any further actions or issuing any further claims against the other arising out of or in connection with the Master Agreement, the Agreement for the sale and purchase of 5,667 shares of HK$1 each in Steps Consulting Limited, the Agreement for the sale and purchase of 333,334 shares of HK$1 each in S&W Holding Limited, the Agreement for the sale and purchase of 150,000 shares in Rabeanco Singapore Pte. Ltd, the Agreement for the sale and purchase of 60 shares of €100 each in Rabeanco Europe B.V., the Agreement for the sale and purchase of 150 shares of US$1 each in Brighteam Holdings Limited, the Agreement for the sale and purchase of 1,000 shares of HK$1 each in Steps Consulting Limited, the Trademark and Domain Name Assignment, the Trademark Assignment, the Payment Schedule, Shareholders Agreement in relation to Global Arena Holdings Limited, the Licence Agreement (S&W Corporation Limited), the Licence Agreement (Rabeanco Singapore Pte. Limited), the Licence Agreement (Rabeanco Europe B.V.), the Licence Agreement (Brighteam Holdings Limited), the Licence Agreement (S&W Handbags Limited), the Supplemental Deed, Rabaenco Limited, S&W Corporation Limited, S&W Handbags Limited, S&W Holding Limited, Gala Prosper International Holding Limited and any and all other dealings between the parties and any of their respective subsidiaries or related companies.

4. [The Petitioner] shall cause a notice of discontinuance (to be signed by the legal representatives of all parties) in respect of HCB 1310/2018, HCB 2098/2018 and HCA 1587/2017 to be filed into the Court within 14 days of the full payment of the Settlement Sum to which each party shall bear its own costs.” (emphasis added)

27.  In his skeleton submissions, Mr Hariman submits that this court should be concerned only with whether the 1^st Offer of HK$10 million has been unreasonably refused in the context of 1310 and those parts of 1336 concerning the Judgment Debt as well as the interests and costs in relation thereto.  He submits that such is certainly the case, given the amount of the Judgment Debt and the interest and costs in relation thereto cannot possibly exceed HK$10 million. 

28.  This court cannot disagree more with Mr Hariman’s aforesaid submissions.  It can be seen from the above that the offer of HK$10 million was made with a view to settling not only the Judgment Debt of HK$2.172 million but also the Non-Judgment Debts ranging from HK$7.41 million to HK$56.75 million, hence the reference to 2098.  Settling the Non-Judgment Debts would necessarily affect those parts of 1336 relating to Non-Judgment Debts, albeit 1336 has not yet been presented at the time of the 1^st Offer.  The important point to note is that it is not an offer to settle the Judgment Debt for HK$10 million.  Naturally, the 1^st Offer has to be considered as a whole—legally it is not feasible for the Petitioner to choose to accept HK$10 million as settlement of the Judgment Debt only as that would amount to a counter offer. 

29.  Apart from what is stated in paragraph 27 above, Mr Hariman has made no serious attempt to explain why the Petitioner’s refusal of the 1^st Offer was unreasonable. 

30.  In this court’s view, the Petitioner had not been unreasonable in refusing the 1^st Offer.

31.  First, the total amount owed by the Debtors under the RMA is in the sum of HK$56,785,000 (Outstanding Consideration of HK$58.135 million - HK$1.35 million of Revised Instalments).  HK$10 million thus represents less than 18% of the sum admittedly due to the Petitioner, as acknowledged by the Debtors in the Supplemental Deed.  If one adds to the sum of HK$56,785,000 the legal costs of 1587 (with hearings before Master Lo and DHCJ Marlene Ng) as well as 1310, to which the Petitioner would be legally entitled, the percentage of recovery by the Petitioner would be even smaller. 

32.  Second, as per the table dated 19 July 2019 prepared by the Petitioner pursuant to this court’s direction, the amount of the Judgment Debt outstanding as at the 1^st Offer was HK$2,266,603.50.  This is not disputed by the Debtors in their comments dated 26 July 2019.  Further, the Debtors have indisputably failed to pay Revised Instalments No. 15 (due date 31 July 2017) to No. 31 (due date 29 November 2018) under the RMA, the total amount of which was HK$15.915 million.  This sum, like the Judgment Debt, was due and payable by the time of the 1^st Offer.  The 2 sums add up to over HK$18 million, which also far exceeds the HK$10 million offered.

33.  Third, the 1^st Offer required the dismissal of not just 1310 but also 2098 against Dan in respect of the Non-Judgment Debts the amount of which ranged between HK$56.75 million, HK$56.6 million and HK$7.41 million as at 28 February 2018.  While it is true that 2098 has not been adjudicated upon, the Petitioner is entitled to take the view that 2098 are meritorious and the Non-Judgment Debts are due and payable.  If so, he is justified to take the view that the 1^st Offer is manifestly inadequate.

34.  Lastly, the proposed time-frame for payment of the HK$10 million was 18 months and it is not unreasonable for the Petitioner to take the view that this time-frame is far too long.  This is especially so given the history of default by the Debtors as revealed in the evidence.

35.  All in all, this court is not satisfied that the 1^st Offer had been unreasonably refused by the Petitioner.

The 2^nd Offer

36.  In Ng’s affirmation in opposition dated 10 June 2019 filed in 1336, Ng offered to pay HK$2.9 million in full and final settlement of the Judgment Debt in 1587, 1310 and paragraphs 3 to 7 of the petition in 1336 in relation to the Judgment Debt inclusive of costs.

37.  The terms of the 2^nd Offer were:

“9. I hereby make the following offer:

(1) [The Debtors] shall pay [the Petitioner] shall (sic) within 4 weeks of the date of acceptance of the offer the sum of HK$2,900,000.00 (‘the Settlement Sum’) in full and final settlement of all disputes, liabilities, indebtedness, costs and matters (including but not limited to any claims for interests and costs including outstanding or reserved costs orders) arising between the parties from, in relation and incidental to HCA 1587/2017, HCB 1310/2018 and paragraphs 3 to 7 of the bankruptcy petition in HCB 1336/2019.

(2) Upon any acceptance of the offer, there shall be a stay of proceedings in HCB 1336/2019, HCB 1310/2018 and HCA 1587/2017 pending the full payment of the Settlement Sum by [the Debtors] to [the Petitioner] under paragraph (1) above.

(3) Upon due and complete performance by the parties of the terms of paragraph (1) above, [the Debtors and the Petitioner] shall by consent be mutually discharged from all present and further liability in relation to and arising from, HCA 1587/2017, HCB 1310/2018 and paragraphs 3 to 7 of the bankruptcy petition in HCB 1336/2019.

(4) [The Petitioner] shall cause a notice of discontinuance in respect of HCA 1587/2017 and HCB 1310/2018 and a notice of withdrawal in respect of paragraphs 3 to 7 of the bankruptcy petition in HCB 1336/2019 to be filed into Court within 7 days of full payment of the Settlement Sum.” (emphasis added)

38.  As per the table dated 19 July 2019 prepared by the Petitioner pursuant to this court’s direction, the amount of the Judgment Debt outstanding as at the 2^nd Offer was HK$2,318,195.61.  This is not disputed by the Debtors in their comments dated 26 July 2019.  Hence, what remains of the HK$2.9 million, after deducting HK$2,318,195.61, would be slightly over HK$580,000 (“remaining sum”). 

39.  The question is therefore whether there is a risk that the remaining sum was insufficient to cover the Petitioner’s costs of 1587, 1310 and that part of 1336 in relation to the Judgment Debt, and if so, whether the Petitioner was unreasonable in refusing to accept that risk and therefore refusing to accept the 2^nd Offer. 

40.  As far as 1587 is concerned, Master Lo had ordered the Debtors to pay the Petitioner the costs of the action (including the summary judgment application) with certificate for one Senior Counsel, while DHCJ Marlene Ng dismissed both the Debtor’s Leave Summons to adduce fresh evidence and Appeal with costs to the Petitioner, certificate for 1 counsel.  There is therefore no doubt that the Petitioner is entitled to the aforesaid legal costs of 1587. 

41.  According to counsel’s fee notes exhibited to the Petitioner’s 2^nd Affidavit in 1336 (“P 2^nd”), Counsel’s fees alone (Victor Dawes SC and Jonathan Chang) in 1587 amounted to almost HK$470,000.  According to paragraph 9 of P 2^nd, the Petitioner estimated his total legal costs in 1587 would exceed HK$2 million.  While the Petitioner’s costs have yet to be taxed, it seems to this court reasonably likely, or at the very least possible, that the remaining sum would not be sufficient to cover the Petitioner’s taxed costs in 1587.

42.  Further, the Petitioner has also incurred legal costs in 1310.  Given the 2^nd Offer was made relatively late ie on 10 June 2019 (the Petition having been presented on 8 March 2018 while the substantive hearing scheduled to be heard on 16 July 2019), it is not unreasonable for the Petitioner to expect the Debtors to bear a substantial part of his legal costs in 1310 up to 10 June 2019.  Yet, given that the remaining sum is unlikely to be sufficient to cover the Petitioner’s taxed costs in 1587, accepting the 2^nd Offer would also mean the Petitioner had to forego the entirety of his legal costs in 1310.

43.  At paragraph 25 of Mr Hariman’s skeleton submissions, he submits that:

“Without even having started the taxation process, it is speculative and no substantive basis for the Petitioner to contend that it is surely possible to recover legal costs in the sum above and beyond HK$600,000.”

44.  With respect, it is not for the Petitioner to satisfy this court that his recoverable legal costs must surely exceed the remaining sum in order to justify his refusal of the 2^nd Offer.  Paraphrasing Robert Walker J in Inland Revenue Commissioners v a Debtor, in considering the 2^nd Offer, the Petitioner is entitled to have regard to his own interests and is not required to balance his interests against those of the Debtors, or to take a chance.  Having regard to his own interests, the Petitioner is entitled not to take the chance that he would lose out a substantial amount of his legal costs by accepting the 2^nd Offer.

45.  For these reasons, this court is not satisfied that the 2^nd Offer had been unreasonably refused by the Petitioner. 

The 3^rd Offer

46.  On 3 July 2019, the Debtors made an offer similar to the 2^nd Offer but added a deadline of 12 noon on 10 July 2019.

47.  The terms of the 3^rd Offer were:

“1. [The Debtors] shall pay [the Petitioner] within 2 weeks of the date of acceptance of the offer the sum of HK$2,900,000.00 (‘the Settlement Sum’) in full and final settlement of all disputes, liabilities, indebtedness, costs and matters (including but not limited to any claims for interests and costs including outstanding or reserved costs orders) arising between the parties from, in relation and incidental to HCA 1587/2017, HCB 1310/2018 and paragraphs 3 to 7 of the bankruptcy petition in HCB 1336/2019.

2. Upon due and complete performance by the parties of the terms of paragraph (1) above:

(a) [The Debtors and the Petitioner] shall by consent be mutually discharged from all present and further liability in relation to and arising from, HCA 1587/2017, HCB 1310/2018 and paragraphs 3 to 7 of the bankruptcy petition in HCB 1336/2019.

(b) [The Petitioner] shall cause a notice of discontinuance in respect of HCA 1587/2017 and HCB 1310/2018 and a notice of withdrawal in respect of paragraphs 3 to 7 of the bankruptcy petition in HCB 1336/2019 to be filed into Court and served on [the Debtors] within 3 days of full payment of the Settlement Sum.

(c) [The Petitioner] be at liberty to pursue the matters in relation to HCB 2098/2018 against [Dan] and the matters in paragraphs 1 to 2, 8 to 18 of the bankruptcy petition in HCB 1336/2019 against [Ng] by way of writ action in the Courts of Hong Kong.

(d) [The Petitioner] shall cause a notice of discontinuance in respect of HCB 2098/2018 and a notice of withdrawal in respect of paragraphs 1 to 2, 8 to 18 of the bankruptcy petition in HCB 1336/2019 to be filed into Court and served on [the Debtors] within 3 days of full payment of the Settlement Sum.” (emphasis added)

48.  For reasons already stated in the section “The 2^nd Offer”, the Petitioner is entitled not to take the chance that he would lose out a substantial amount of his legal costs by accepting the 3^rd Offer.  On this ground alone, the Debtors have failed to satisfy this court that the 3^rd Offer had been unreasonably refused by the Petitioner. 

49.  Further, Ms Wong, in paragraph 77 of her skeleton submissions, submits that the timing of the 3^rd Offer is problematic.  The reason is that it was made on 3 July 2019 and allowed the Debtors to pay the HK$2.9 million within 14 days of acceptance of it.  Even if the 3^rd Offer had been accepted by the Petitioner on the very same day, under the terms of the offer, the Debtors would have 14 days to make payment ie 17 July 2019—one day after the 16 July 2019 hearing.  While there was no express requirement in the 3^rd Offer to vacate the 16 July 2019 hearing, in reality, if the Petitioner had accepted the 3^rd Offer, the parties would in all likelihood have vacated that hearing as well.

50.  Ms Wong submits that this is highly undesirable as it requires the Petitioner to take the wholly unnecessary risk of default by the Debtors while losing the 16 July 2019 hearing.  Given the past history of (non-)payments by the Debtors under the RMA, this risk cannot be disregarded as fanciful.  And if the Petitioner had to re-fix the hearing, it would certainly generate further delay to the resolution of 1310 and paragraphs 3 to 7 of the Petition in 1336.

51.  Thirdly, Ms Wong submits that had the 3^rd Offer been a bona fide proposal to settle the matter, there was no reason why the HK$2.9 million could not be paid before 16 July 2019.  After all, in making the 2^nd Offer, the Debtors should have been prepared to pay the Petitioner HK$2.9 million within 4 weeks of 10 June 2019 had that offer been accepted right away.  It is not necessary for this court to determine whether the 3^rd Offer was or was not bona fide.  Suffice it to say that, in this court’s view, the Petitioner was entitled to be skeptical and decided not to accept it on or before the deadline imposed by the Debtors.

52.  Lastly, the 3^rd Offer required the Petitioner to discontinue the proceedings in 2098 and the Non-Judgment Debts parts of 1336 and to pursue them by commencing a fresh Writ action.  Given that the 3^rd Offer was made to settle 1587, 1310 and paragraphs 3 to 7 of the Petition in 1336, the inclusion of this requirement is inexplicable and wholly unjustified. 

53.  For the above reasons, this court is not satisfied that the 3^rd Offer had been unreasonably refused by the Petitioner. 

Disposition and costs order nisi

54.  In the premises, since the Debtors’ only defence under section 6D(3) fails, there shall be a usual bankruptcy order against Ms Dan Yin Ping and against Mr Ng On Kwok. 

55.  There shall also be an order nisi that costs of HCB 1310/2018 and such costs of HCB 1336/2019 in relation to the Judgment Debt be to the Petitioner, to be taxed if not agreed, and paid by the Debtors forthwith, certificate for counsel.