RE PANG YUFENG

HCB 4767/2022

[2024] HKCFI 663

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4767 OF 2022

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REASONS FOR JUDGMENT

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1.  This was the hearing of the bankruptcy petition (“the Petition”) filed by Vinson Finance Limited (“the Petitioner”) on 31 August 2022 seeking a bankruptcy order against Pang Yufeng (“the Debtor”) in respect of the debt arising from four judgments granted by the Court on 9 November 2020 in HCA 457, 458, 459 and 460 of 2020 (“the Debt”). There is no appeal against any of those judgments. At the conclusion of the hearing, the Court made the bankruptcy order with costs to the Petitioner with certificate for two counsel. My reasons appear below.

The Petition

2.  Mr Richard Khaw, SC and Mr Sunny Chan counsel for the Petitioner addressed the 3 grounds raised by the Debtor in opposition to the Petition. At the hearing the Debtor abandoned the 4^th ground (offer to secure) in his notice to show cause.

A.  Service of the statutory demand

3.  Ronne Gene Johnsen, a professional process server personally served the statutory demand on the Debtor at 9:07 pm at an address in California on 25 September 2021. His affidavit of service dated 28 September 2021 described the circumstances regarding how the service was conducted. The Petitioner has produced photographs taken on the spot at the time of receipt of the statutory demand as well as a GPS tag providing a geographical the actual place of service.

4.  The Debtor initially denied[1] ever residing or visiting the Los Angeles address where the service was carried out or being the person on whom service was effected. He stated that he was in fact residing with his good friends, including a Mr Gao, at what was referred to as “the Highpoint address”. His case was that both the identification and the address were wrong.

5.  However, the Debtor went on to state (at §8) that at about the time Mr Johnsen allegedly effected personal service of the statutory demand, he was stopped by an unknown man in the street and was given a set of documents relating to HCA 458/2020 (“HCA 458”) which he exhibited. Those documents consisted of 2 orders of Master Ho for examination and did not include the statutory demand.

6.  In fact, there is another affirmation of service made by Mr Johnsen on the same day (28 September 2021) deposing to his service of 2 orders of Master Ho dated 20 May 2021 in HCA 458. Those orders were (1) for the examination of the Debtor as the sole director of the 1^st defendant in HCA 458 (1^st Judgment Debtor) returnable on 11 October 2021, and (2) for the examination of the Debtor (2^nd Judgment Debtor) in his personal capacity returnable on 11 October 2021.

7.  It is clear from the 2 affirmations of service that the statutory demand as well as the examination orders were served at the same time and place. That is indisputable.

8.  In the Debtor’s letter to the Court dated 7 October 2021 (“the 2021 letter[2]”) he admitted that at the time and on the date stated, an unknown person handed him a “bundle of documents”. It included the examination order for attendance on 11 October 2021.

9.  In those circumstances, it was impossible for the Debtor to have been served with the 2 examination orders but not the statutory demand since all those documents were served at the same time and place evidenced by the photographs.

10.  There is a draft affirmation from Mr Gao (“Gao’s affirmation”) exhibited by the Debtor’s solicitor to her affirmation dated 17 October 2023. Gao’s affirmation stated that Gao was on a business trip and that his affirmation would be affirmed as soon as possible upon his return to Hong Kong.

11.  Over 4 months have elapsed and nothing more has been heard. Gao’s affirmation remained a draft. In any event, it does not assist the Debtor and has no evidential value. While it exhibited a tenancy agreement of the Highpoint address signed by 3 tenants, the Debtor was neither a signatory nor was he named as a tenant. Moreover, the tenancy agreement prohibited anyone not named as tenant from occupying the Highpoint address without the landlord’s prior consent. It has not been suggested that such consent had been obtained.

12.  Ms Rosa Lee, counsel for the Debtor, submitted that the only issue is whether personal service did in fact happen.

13.  It is apparent from what has been set out above that the Debtor’s denial of service of the statutory demand on him cannot be true when, plainly, he did receive the examination order.

14.  There is no reason to disbelieve Mr Johnsen when the Debtor has not disputed that he was the person shown in the photographs taken.

15.  For the above reasons, I am satisfied that personal service of the statutory demand on the Debtor was effected on 25 September 2020.

B.  Service of the Petition

16.  The rationale for the strictness as to service of statutory demands has no application to the service of a petition: see Re James Henry Ting [2021] HKCFI 1704 at §§ 31-32 per Ng J.

17.  The service of the Petition on the Debtor was effected on 11 January 2023 by ordinary post to what has been referred to as “the Wanchai address”. On 26 April 2023, the Petitioner further applied for an order for substituted service.

18.  The Debtor submitted that the means of service was inappropriate and ineffective. §20 of his affirmation in pertinent part read as follows:

“20.1 The Petitioner had actual knowledge that I was no longer residing in Hong Kong at least by 25 September 2021 when the purported service of the SD was effected in the United States.

20.2 The Wanchai Address is a serviced apartment which I had only briefly stayed during my visits to Hong Kong in the period from September 2017 to March 2019. Since I moved out from the Wanchai address in March 2019, I had substantial difficulty receiving documents thereat as an ex-occupier and have permanently left Hong Kong since December 2020.”

19.  As to 20.1, the Debtor gave no particulars to show actual knowledge as alleged on the part of the Petitioner. The fact that service of the statutory demand was effected in the United States has no bearing on where the Debtor was resident at the time of service.

20.  As to 20.2, it shows that up until March 2019, the Wanchai address was his residential address. The Debtor gave no information as to where he was residing in Hong Kong after March 2019 until he left permanently in December 2020.

21.  In any event, it is the Debtor’s evidence[3] that the Petition was brought to his attention on or around 30 March 2023:

22.  Moreover, despite his assertion of having left Hong Kong permanently in December 2020, the 2021 letter gave the Wanchai address as the Debtor’s “current Hong Kong correspondence address”. His assertions that after March 2019 he had substantial difficulty receiving documents sent to the Wanchai address are blatantly untrue. In addition to the 2021 letter, his further letters to the Court (sent between August 2022 and July 2023) showed that he had been able to receive and was aware of the Court’s letters sent to him (between February 2022 to October 2023) at his Wanchai address.

23.  The Debtor also sought to rely on the fact that the Petitioner intended to apply for substituted service by advertisement of the Petition[4] to show that the Petitioner did not believe that service at the Wanchai address would be an effective mode service.

24.  While the Petitioner made such an application on 26 April 2023, before the Court made any order, the Debtor already surfaced. His solicitors filed a notice to act on 14 July 2023 and the Petitioner’s solicitors served the Petition on the Debtor’s solicitors on 19 July 2023.

25.  The authorities show that where a debtor has instructed a firm of solicitors to accept service of the Petition, the Court will not insist on personal service on the Debtor: see Re Li Shu Chung [2019] HKCFI 2500 at §§95-98, and Re James Henry Ting at §§27-29.

26.  In short, none of the reasons relied on has any substance.

C.  Jurisdictional gateway

27.  The court will have jurisdiction over a bankruptcy petition if:

(a) at any time in the period of 3 years ending with the day of presentation of the petition (“the 3 Years”), the debtor

(i) has had a place of residence in Hong Kong; or

(ii) has been ordinarily resident in Hong Kong; or

(b) the debtor is domiciled in Hong Kong.

See Li Shu Chung at §26; and section 4(1)(a) and (c) of the Bankruptcy Ordinance, Cap 6 (“BO”).

28.  A summary of the principles on place of residence in Hong Kong can be found in Re Ku Chu Keung (a debtor) [2007] 2 HKLRD 292 at §52 (set out in Li Shu Chung at §§29-30):

“29. A person has a place of residence in Hong Kong if he has a place of residence such as a house or lodging to which to return and which he occupies or has the intention to occupy as a place of residence;

i. It is not necessary that the occupation of a place of residence be for the whole of the 3 Years, provided that the debtor had a place of residence at some time during the 3 Years;

ii. A person may have more than one place of residence at the same time; and

iii. Whether a person is resident in a particular place and whether that residence is permanent are questions of fact and degree.

30. In Re Ku Chu Keung, the debtor could stay at his young brother’s home when he returned to Hong Kong. It was held that this may not be the debtor’s home but it was still his place of residence in Hong Kong to trigger the court’s bankruptcy jurisdiction.”

29.  The relevant three-year period is between 1 September 2019 and 31 August 2022. According to his travel records obtained from the Immigration Department, during the 4 months from 1 September 2019 to 31 December 2019, he spent 72/122 days or 59% of his time in Hong Kong.

30.  As earlier noted[5], the Debtor gave no information as to where he resided during the 72 days he spent in Hong Kong during that four-month period. There is no evidence that he only stayed at a hotel or any other accommodation.

31.  Nevertheless, when the Debtor commenced HCA 1769/2020 on 19 October 2020, he used the Wanchai address as his address in the writ. There is also the fact that letters the Court sent to him at the Wanchai address between February 2022 and October 2023 reached him[6].

32.  Based on those matters, it is open to the Court to infer that the Wanchai address continued to be the Debtor’s address: see Re Cao Zhong [2021] HKCFI 3143 (at §§43-44 and 46-48) and Re Miao Zhenguo [2022] HKCFI 1852 (§§26 and 34) where the court took into account similar factors in assessing the respective debtors’ place of residence.

33.  In the present case, I agree with the Petitioner that the irresistible inference is that the Debtor continued to stay at the Wanchai address as his place of residence when he was in Hong Kong. Accordingly, I find that the Debtor had a place of residence in Hong Kong at some time during the relevant period and falls within the jurisdictional gateway of section 4 (1) (c) (i) of the BO.

Domicile

34.  The Debtor stated in his affirmation that he “was no longer domiciled in Hong Kong since around the 2020” and that “since around April 2021, [he] was domiciled in the US”: at §§21.1, and 24.

35.  It suffices to highlight the following matters arising from the evidence:

(1)  although his travel records show that the debtor has not been in Hong Kong since the end of 2020, a long period residence outside of Hong Kong is not sufficient to show a change of domicile: see Re Fang Sau Mei Angel [2023] HKCFI 1595 at §§11-13;

(2)  the Debtor who is a Hong Kong permanent resident repeatedly represented[7] to the Court that his correspondence address is at the Wanchai address where he was able to access correspondence sent by the Court in 2022 and 2023;

(3)  in the 2021 letter the Debtor described his presence in the US was for “dealing with personal affairs” and in his affirmation (at §22) “search[ing] for jobs and/or other business opportunities”;

(4)  he could not have “migrated to the [US] since 2021” when he does not have any permanent residence status[8].

36.  The existing domicile of person is deemed to continue until it is proved that he has acquired a new domicile. He who asserts the change of domicile bears the burden of proving the truth of the assertion: per Au J (as he then was) in Re Ip Pui Man Nina [2011] 3 HKLRD 299 cited in Re Cao Zhong at §52 (6).

37.  For those reasons, the Debtor failed to show that he has acquired a new domicile US.

Ordinary residence

38.  The applicable test is set out in Re Wong Lei Kwan Joanne [2009] 3 HKLRD 173 at §16:

“ (1) Ordinary residen[ce] is not a term of art in English law.

(2) In their natural and ordinary meaning the word “ordinarily resident” mean “that the person must be habitually and normally resident here, apart from temporary or occasional absences of long or short duration”. The significance of the adverb “habitually” is that it recalls 2 necessary features mentioned by Viscount Sumner in Lysaght, namely residence adopted voluntarily and for settled purpose.

(3) The decision in each of the decided cases depended upon its own particular facts …

(4) A person could be ordinarily resident in two countries at the same time… ”

39.  Further, it is clear from Re Cao Zhong (at §35) that

(1)  the question whether a debtor is ordinarily resident in Hong Kong with the relevant period is one of fact and degree[9];

(2)  the petitioner need not show that the debtor was ordinarily resident throughout the three-year period. The relevant consideration is whether the debtor was ordinarily resident in Hong Kong of unspecified duration at any time during the 3 years[10];

(3)  there is no requirement to show that the debtor had any intention to remain in Hong Kong indefinitely or permanently: ordinary residence means simply where the debtor normally lives, albeit for a temporary period[11]; and

(4)  a person can have ordinary residence in more than one country at the same time[12].

40.  Having regard to the above matters, I concluded that Debtor was also ordinarily resident in Hong Kong during the relevant period.

Conclusion

41.  In my view, the Petitioner has shown that all 3 jurisdictional gateways may be invoked, triggering the bankruptcy jurisdiction over the debtor under both section 4 (1) (a) and (c) of the BO.

42.  Accordingly, I made a bankruptcy order against the Debtor.

43.  I also made an order that the costs of and occasioned by the Petition, including all costs reserved, be to the Petitioner with certificate for two Counsel, to be taxed if not agreed.