RE: CHAN WAI KEUNG and EX PARTE: RISING ENGINEERING CO. (a firm)

HCB 2180/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY NO. 2180 OF 1999

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J U D G M E N T

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1. This petition is a creditor's petition based on an unpaid judgment debt obtained in January of this year. The action was defended by the Debtor. Although the Debtor did not appeal against the judgment obtained against him, he did apply to set it aside. That application was dismissed on 6 May 1999.

2. The Debtor opposed the petition on the ground that it was presented in order to exert pressure on him in relation to another action, HCA No.12695 of 1998, brought by Wo Hing Engineering Limited against the Debtor. The Debtor has filed a counterclaim in HCA No.12695 and if successful, stands to recover a significant amount of money which would far exceed what is owing to the Petitioner. An order was made on 26 February 1999 for the parties to exchange witness statements in the other action by 9 April. It would appear that there was delay in complying with that order and on 27 July, the solicitors for the Debtor in the other action wrote to the Plaintiff's solicitors, who happened also to be the solicitors for the Petitioner in this bankruptcy petition, that unless witness statements were exchanged within the following five days, an application for an unless order would be made. It was suggested that the petition was filed in order to stifle the counterclaim.

3. It would appear that having succeeded in obtaining the dismissal of the Debtor's summons to set aside the summary judgment, the Petitioner served a statutory demand on 20 May. When that period expired and no payment had been made, it did not take immediate steps to file this bankruptcy petition. In fact, the bankruptcy petition was not filed until 10 August. There is an explanation for this delay contained in the latest affirmation of Mr Wong filed on behalf of the Petitioner. It is also relevant to say that the Petitioner had applied for oral examination of the Debtor and that was scheduled to take place on 11 May. Although the examination did not go ahead, the Debtor filed an affidavit which disclosed that he had virtually no assets and was unable to meet the judgment debt. As noted above, the petition was filed on 10 August and coincidentally, that was also the date on which the Debtor's solicitors filed a summons for an unless order against the plaintiff in the other action.

4. The Debtor relied on a conversation that allegedly took place between his solicitors in the other action and the Petitioner's solicitors. It was suggested that there was an intimation that if the counterclaim were discontinued, the Petitioner would not sue for the Debtor's bankruptcy. The plaintiff in the other action is the main contractor. The Petitioner is a sub-sub-contractor introduced to the Debtor by the main contractor but the Petitioner and the main contractor are not associated or related persons. The Debtor nevertheless seeks to infer a relationship between the parties based on those facts.

5. It is relevant to note that there is no evidence from the Debtor's solicitors in the other action relating to the alleged conversation. In the absence of that evidence, what is being relied on is pure assertion on the part of the Debtor and it is an assertion to which very little weight can be attached.

6. The position comes to this : although the Debtor's stands to recover a substantial amount of money from a third party if he were successful in his counterclaim in the other action, that of itself is not a sufficient reason for granting an adjournment or to refuse to make a bankruptcy order when, on the evidence, he is clearly, at the moment, unable to meet the judgment debt obtained by the Petitioner. As to the suggestion that the bankruptcy petition has not been brought bona fide, there is no evidence to substantiate that allegation. It is mere surmise on the part of the Debtor. Further, any bankruptcy order made against him does not necessarily mean that the counterclaim cannot be pursued : that must be a matter for the trustee in bankruptcy who will have to form a view as to its merits about which this court has no knowledge.

7. In my judgment, the suggestion that the petition was filed in order to bring pressure on the Debtor to drop the counterclaim has not been substantiated. In these circumstances, I see no reason why I should not make the bankruptcy order sought.