Re Cheng Ka Lun Grand

HCB 17553/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPCTY PROCEEDINGS NO. 17553 OF 2002

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J U D G M E N T

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1. This petition for bankruptcy is presented by a judgment creditor Waygood Investment Ltd. The judgment debt obtained in HCA No. 2874 of 2000 is in the sum of US$1,693,135.69, with interest thereon and costs. This sum was ordered to be paid by the debtor, Mr Cheng Ka Lun Grand by a Master on 21 June 2001. The order of the Master was affirmed by Tong J on 30 November 2001.

2. On 2 March 2002, the statutory demand was published in certain newspapers by the petitioner. The petition herein was presented on 28 August 2002 and served on the debtor's solicitors on 31 October 2002. The only ground of opposition of the debtor is that he has made an offer to the petitioner to settle the judgment debt and his offer has been unreasonably refused. Hence, pursuant to section 6D(3) of the Bankruptcy Ordinance, Cap. 6, the petition should be dismissed.

3. The debtor has filed evidence on 10 December 2002 to say that in the past few months, he has entered into serious negotiations with the petitioner to settle the judgment debt. However, no agreement was reached despite his efforts. He then gave an account of his earnings and what he would be expected to earn over the next few years. According to him, he has entered into a consultancy agreement on 1 November 2002 with a company in the J B Group which is involved in jewellery retailing and manufacturing in the Mainland. By the consultancy agreement, the debtor would be paid a monthly basic salary of HK$35,000.00 and he shall be entitled to a 15% share of after tax profit in respect of the joint venture business of the J B Group in the Mainland. The J B Group has recently entered into a joint enterprise with a state owned company in the Mainland for the manufacturing, wholesaling and retailing of jewellery items. Outlets would be open for business in January 2003.

4. The debtor deposed in his affirmation that the joint venture business and a wholesale business of the J B Group will start to generate revenue in or about February 2003 and he estimated that in one year's time, he should be able to obtain an aggregate accumulated share of profits in the sum of HK$5 million under the consultancy agreement. No documentary evidence was filed by the debtor in support of his assertion that he would be able to obtain an accumulated share of profits of HK$5 million as alleged, nor has he in his affirmation deposed to his contingent and prospective liabilities which the Court is required to take into account under section 6D(3).

5. According to the best offer made by the debtor which is in his letter dated 10 December 2002, he proposed to pay US$1 million in full and final settlement of the judgment debt which is in the sum of US$1,693,135.69, not taking into account the interest payable. He proposes to pay the sum of US$1 million by instalments. A sum of HK$35,000.00 is to be paid on a monthly basis from January 2003. On or before 1 March 2004, he is to pay the petitioner a further sum of HK$4.7 million and on or before 1 March 2005, the outstanding balance of the US$1 million is to be paid.

6. The petitioner has declined to accept this offer.

7. On behalf of the debtor, it was submitted that if the petitioner is concerned as to the contingent and prospective liabilities of the debtor and how the estimate of the profit of HK$5 million is arrived at, the debtor would seek an adjournment to file a supplemental affirmation.

8. In my view, nothing is to be gained by adjourning this for further evidence to be found. The petitioner has declined to accept the offer as the amount paid being US$1 million in full and final settlement is only 58% of the judgment debt excluding interest and costs. Further, this sum is to be paid over a period of more than two years. The petitioner is not willing to accept a sum which is considerably less than the judgment debt, nor is the petitioner willing to take the risk of accepting payment by instalments over such a long period.

9. It is clearly established by the cases that the petition should only be dismissed under section 6D(3) where the Court is satisfied that no reasonable hypothetical creditor would have refused the offer and that the refusal of the offer is beyond the range of possible reasonable actions in all these circumstances.

10. I am far from satisfied that the refusal of the offer in the present situation is unreasonable. As stated by Robert Walker J in Inland Revenue Commissioners v a Debtor [1995] BCC 971 at 974:

"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."

11. In the circumstances, I make a bankruptcy order against the debtor with costs to the petitioner.