RE SHIU CHING YIM STELLA

HCB 4324/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 4324 OF 2008

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J U D G M E N T

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1.  This is a bankruptcy petition presented by Chun Kam Sang Jason against Shiu Ching Yim Stella on 28 May 2008.  The statutory demand was issued against the debtor on 2 November 2007 and served by advertisement in a newspaper on 14 November 2007.  The petition was served pursuant to an order for substituted service made on 22 July 2008.  No issue was taken on the service of the statutory demand or the petition.

2.  In the statutory demand the petitioner sought payment of 2 judgment debts:

(1)  $255,200 and RMB 70,000 with interest and ⅔ of the costs of the application, being sums awarded to the petitioner against the debtor on 11 May 2004 in a judgment on the petitioner’s application for summary judgment in DCCJ No. 926 of 2003; and

(2)  $144,800 with interest and fixed costs of $1,380 pursuant to a default judgment obtained by the petitioner against the debtor on 17 July 2006 in the same action.

3.  By a letter dated 28 August 2008 from the petitioner’s solicitors to the solicitors then acting for the debtor, the petitioner informed the debtor that in the bankruptcy proceedings, the petitioner would not rely on the judgment debt in (2), and in respect of the judgment debt in (1), the petitioner would only seek to recover $255,200, not the sum of RMB 70,000.

4.  A statutory demand which merely overstates the amount of the debt is not by itself and without more, a ground for setting aside the statutory demand provided no injustice is caused to the debtor (In re A Debtor (No.1 of 1987) [1989] 1 WLR 271 at 276 and 279; Re Kwok Chok Yee [2000] 2 HKC 543, para 11; Winterthur Life Insurance Company v. Au Oi Fong Susana, HCB No. 1178 of 1999, 28 November 2000, Chu J, paras 12 and 13).  It has to be demonstrated that injustice would be caused to the debtor by allowing the statutory demand to stand.  There has never been any suggestion by the debtor that she is in a position or is prepared to pay the debt in the statutory demand or any part of it.  Her case is that her obligation to pay all the sums demanded has been fully discharged.  That being the case, there can be no injustice occasioned to her as a result of the over-statement.  Injustice considerations do not therefore arise.

5.  The debtor has filed one affirmation in opposition, prepared by the solicitors who ceased to act for her a few days before the hearing.

6.  The debtor has not appeared today.  She has notice of the hearing and I have decided to proceed in her absence.

7.  I will first state the background matters not in dispute.

8.  The petitioner’s claim against the debtor in DCCJ No. 926 of 2003 was for repayment of 3 loans to her in these amounts:

(1)  the first loan of $300,000 advanced to the debtor on 14 March 2000 and guaranteed by her then boyfriend Chung Hao Ping (“Chung”);

(2)  the second loan of RMB 100,000 advanced to the debtor and Chung on 10 August 2000;

(3)  the third loan of $100,000 advanced to the debtor and Chung at the end of 1999.

9.  The petitioner applied for summary judgment and the debtor filed evidence in opposition.  Shortly before the hearing on 5 May 2004, the debtor filed a Notice to act in person.  After hearing submissions from the petitioner’s solicitor, HH Judge Ng handed down judgment on 11 May 2004.  Judgment was entered for the petitioner for these sums:

(1)  regarding the first loan, $155,200 with unconditional leave to defend for the balance of $144,800;

(2)  regarding the second loan, RMB 70,000 taking into account there had been partial payment of RMB 30,000;

(3)  for the third loan, $100,000 as claimed.

10.  The petitioner served a sealed copy of the judgment on the debtor by post on 17 May 2004, sent to her address for service in Luard Road, Wanchai in the Notice to act in person.

11.  The debtor did not appeal the judgment of Judge Ng.  Nor did she satisfy the judgment debt in that judgment.

12.  As the debtor did not file a defence for the balance of the claim for the first loan pursuant to the judge’s directions, the petitioner entered default judgment against her on 12 July 2006 for $144,800.  This is not relevant for present purpose as the petitioner had indicated through his solicitors on 28 August 2008 that he would not rely on the default judgment in the bankruptcy petition.

13.  On 27 June 2006, the petitioner issued the writ against Chung in DCCJ No. 3154 of 2006 claiming:

(1)  part of the first loan being $151,700;

(2)  balance of the second loan of RMB 70,000;

(3)  RMB 39,210 being the balance of a loan of RMB 133,000 (“the fourth loan”) advanced to Chung in February 2004.

14.  The petitioner did not make any claim against Chung for the third loan, as by 2006 it was already time-barred.

15.  The petitioner applied for summary judgment against Chung and an order was made by consent on 20 October 2006 by which:

(1)  Chung was given leave to defend part of the first loan of $151,700;

(2)  he was to pay the balance of the second loan being RMB 70,000 and interest within 14 days; and

(4)  he was to pay the balance of the fourth loan being RMB 38,140 and interest within 14 days.

16.  On 3 November 2006, Chung paid the sums of RMB 70,000 and RMB 38,140 and interest and agreed costs of $15,000.

17.  Chung filed a defence and counterclaim on 27 November 2006 and the petitioner filed a reply and defence to counterclaim on 21 December 2006.  Later Chung and the petitioner agreed to settle the remaining disputes in DCCJ No. 3154 of 2006.  By a letter dated 17 April 2007 from the petitioner’s solicitors to Chung’s solicitors, it was stated that the parties had agreed that the action and the counterclaim be withdrawn with no order as to costs.

18.  Chung’s solicitors replied on 8 May 2007 stating it was agreed by the parties to have the action and the counterclaim discontinued instead of withdrawn, with no order as to costs.  The petitioner’s solicitors confirmed by letter on the same day that that was the agreement and to save costs, no further document would be filed in court since the parties had the settlement agreement confirmed in solicitors’ correspondence.

19.  As mentioned earlier, the petitioner’s stance in this petition is that he is seeking payment of $255,200 from the debtor being part of the amount of the first loan and the entire amount of the third loan, as awarded to him in the summary judgment.

20.  The debtor alleged these amounts had been fully repaid and/or settled and/or discharged.  It is not in dispute that no payment was made by the debtor for these sums after the summary judgment was handed down in May 2004.  Her allegation that these amounts had been fully repaid, settled or discharged was premised solely on her bare assertion that Chung had informed her he and the petitioner had reached an agreement for settlement in that both should discontinue their claims against each other in DCCJ No. 3154 of 2006 and the petitioner should not claim against the debtor for all the previous loans.

21.  This allegation is not borne out by the letters between the petitioner’s solicitors and Chung’s solicitors referred to earlier.  It is quite clear from the letters that the settlement was reached as between the petitioner and Chung only.  No mention was made of the debtor in any of the solicitors’ letters.  Furthermore, Chung has not made any affirmation to support the debtor.

22.  I agree with the petitioner’s counsel that the debtor has not discharged the burden on her to avoid a bankruptcy order being made on the basis of a judgment debt.

23.  I therefore make a bankruptcy order against the debtor.  The petitioner’s costs are to be paid out of the bankrupt’s estate.