RE SO MEI TAO CANDY

HCB 956/2025

[2025] HKCFI 1773

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 956 OF 2025

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REASONS FOR JUDGMENT

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Introduction

1.  By a petition dated 7 February 2025, Wisdom Champion (26) Ltd (the “Petitioner”) sought to bankrupt Ms So Mei Tao Candy (the “Debtor”).

2.  At the hearing on 28 April 2025, I made a usual bankruptcy order against the Debtor. These are the reasons for my judgment.

Background

3.  The Petitioner was the landlord of Office Unit 2602, 26^th Floor, The Metropolis, Nos 6-10 Metropolis Drive, Kowloon, Hong Kong (the “Premises”).

4.  By a tenancy agreement dated 23 December 2021 (the “Tenancy Agreement”), the Petitioner leased the Premises to Able Power Holdings Ltd (the “Tenant”) at the monthly rental of HK$34,800. The Debtor was the guarantor in respect of the Tenant’s obligations under the Tenancy Agreement.

5.  From 1 June 2023 onwards, the Tenant had failed to pay the monthly rental and other charges pursuant to the terms of the Tenancy Agreement.

6.  Hence, the Petitioner commenced HCA 1814/2023 against the Tenant and the Debtor.

7.  On 18 December 2023, Master Dick Ho entered summary judgment (the “Summary Judgment”) against the Tenant and the Debtor. It was adjudged that:-

(1)  The Tenant should deliver vacant possession of the Premises.

(2)  For the period from 1 December 2023 until vacant possession of the Premises was delivered, the Tenant and the Debtor should pay (i) mesne profit at the rate of HK$34,800.00 per month; (ii) management fees at the rate of HK$6,868.80 per month; (iii) air-conditioning charges at the rate of HK$2,798.40 per month; (iv) Government rates at the rate of HK$5,250.00 per quarter; (v) Government rent at the rate of HK$3,150.00 per quarter; and (vi) costs of the action.

8.  Only on 10 May 2024 did the Petitioner recover vacant possession of the Premises with the assistance of the bailiff.

9.  Meanwhile, pursuant to the Summary Judgment:-

(1)  On 31 January 2024, the Petitioner issued a statutory demand (the “Previous SD”) for the sum of HK$377,256.28 in respect of the indebtedness (including the mesne profit, air-conditioning charges and Government rent/rates) that was accrued up to 31 January 2024.

(2)  On 13 March 2024, the Petitioner took out a bankruptcy petition under HCB 1794/2024 (the “Previous Petition”) based on the claims under the Previous SD.

10.  It transpired that the Debtor paid the sum claimed under the Previous SD on 10 May 2024. As a result, the Petitioner obtained leave to withdraw the Previous Petition on 4 June 2024.

11.  On 30 September 2024, the Petitioner issued a fresh statutory demand against the Debtor (the “New SD”) claiming an aggregate sum of HK$377,311.86. This indebtedness concerned:-

(1)  outstanding mesne profit of HK$115,625.81, outstanding management fees of HK$22,822.14, outstanding air-conditioning charges of HK$9,297.91 and outstanding Government rent and rates in the respective sums of HK$3,540.66 and HK$5,461.54 (pursuant to the Summary Judgment) that accrued during the period from 1 February 2024 (ie the date immediately after the Previous SD) to 10 May 2024 (ie the date when the Petitioner recovered vacant possession of the Property);

(2)  legal costs in the sum of HK$188,191.00;

(3)  reinstatement costs of HK$158,480.00; and

(4)  administrative charges equivalent to 10% of the reinstatement costs in the amount of HK$15,848.00.

12.  On 14 October 2024, the New SD was duly served on the Debtor personally. The same has not been set aside.

13.  As such, the Petitioner took out the present Petition on 7 February 2025.

Legal Principles

14.  The legal principles are well-established and set out by Linda Chan J in Re Tam Kwok Hung Johnson [2024] HKCFI 1573 at paras 11 to 13:-

“11. The Debtor did not comply with the SD and was deemed unable to pay his debts by virtue of s.6A(1)(a) of the Bankruptcy Ordinance (Cap. 6).

12. The burden is on the Debtor to show that there is a bona fide dispute on substantial grounds in respect of the Judgment Debt by adducing sufficiently precise evidence which is believable, and must establish that he has a defence of substance, not just a fair probability of one (Re Leung Cherng Jiunn [2016] 1 HKLRD 850, §27). For this purpose, it is not sufficient for the Debtor to merely raise ‘a cloud of objections on affidavits’ (Artech Development Ltd v Posismo Ltd [2018] HKCFI 344, §10(4)).

13. Where, as here the debt is based on a judgment, the court will treat the judgment as prima facie evidence that the debtor is indebted to the creditor. Although the bankruptcy court may in an appropriate case ‘go behind’ the judgment, it would only do so where the judgment is obtained by ‘fraud’, ‘collusion’ or that there is a ‘miscarriage of justice’ which impinges on the validity of the judgment (Re Tam Mei Kam, CACV 87/2012, 8 May 2013).”

Deliberation

15.  Although the Debtor filed an affirmation in opposition on 15 April 2025, she has failed to raise a bona fide dispute on substantial grounds.

Indebtedness under the Summary Judgment

16.  The Debtor has failed to raise any bona fide dispute in respect of the claims regarding the outstanding mesne profit of HK$115,625.81, outstanding management fees of HK$22,822.14, outstanding air-conditioning charges of HK$9,297 and outstanding Government rent and rates of HK$3,540.66 and HK$5,461.54 that accrued during the period from 1 February 2024 to 10 May 2024. As pointed out, these claims are based on the Summary Judgment granted by the Court. It is apparent that this is not an appropriate case to “go behind” the Summary Judgment, which has neither been set aside nor challenged.

17.  In her affirmation in opposition, the Debtor emphasized that she has already paid considerable amount of money to the Petitioner pursuant to the Previous SD and/or the Previous Petition. However, the claims thereunder concerned indebtedness that accrued during the period from 1 June 2023 to 31 January 2024, whereas the claims under the Present SD and the present Petition concerned the indebtedness that accrued during the period from 1 February 2024 to 10 May 2024. There is no room to conflate the two different periods.

18.  The Debtor also said that the air-conditioning at the Premises was out of order for a few months during the tenancy period and thus the air-conditioning fees should be reduced. This is a bare assertion that is neither particularized nor supported by documentary evidence. I do not accept the Debtor’s assertion In any event, the Debtor does not suggest that the air-conditioning at the Premises was out of order during the period from 1 February 2024 to 10 May 2024.

19.  Further, the Debtor alleged she could not enter the Premises after 27 March 2024 and she insinuated that the Petitioner had locked the door of the Premises. This is another bare assertion that is neither particularized nor supported by documentary evidence. As evidenced by the letter issued by the bailiff, vacant possession of the Premises was only delivered by the bailiff to the Petitioner on 10 May 2024. Had the Petitioner been able to recover vacant possession of the Premises, it would not have resorted to the bailiff at all. In my view, the Debtor’s suggestion does not make sense.

Reinstatement Expenses and 10% Administrative Fees

20.  I do not lose sight that (i) pursuant to clause 3.28(a) of the Tenancy Agreement, the Debtor is under an obligation to deliver the Premises in a “bare shell” condition; and (ii) if the Tenant fails to reinstate the Premises in accordance with clause 3.28(a) of the Tenancy Agreement, pursuant to clause 3.28(b), the Petitioner is entitled to charge administrative fee equivalent to 10% of the reinstatement expenses.

21.  As evidenced by the photos adduced by the Petitioner, the Debtor did not deliver the Premises in a “bare shell” condition. As a result, the Petitioner had to engage a contractor, namely Concord Contracting Co Ltd (“Concord Contracting”), to reinstate the Premises, thereby incurring expenses in the amount of HK$158,480.00.

22.  The reinstatement works carried out by Concord Contracting were evidenced by, inter alios, the tender documents, the photos, the certification of works completion issued by Concord Contracting. Meanwhile, the payment made to Concord Contracting was evidenced by the cheque of HK$158,480.00 dated 9 August 2024 and the receipt dated 14 August 2024 issued by Concord Contracting.

23.  In the premises, there is no question that the Debtor, being the Tenant’s guarantor, is liable to the Petitioner for the reinstatement expenses in the amount of HK$158,480.00[1] and the 10% administrative charge in the amount of HK$15,848.00[2].

24.  The Debtor has no answer to the Petitioner’s claims in respect of the reinstatement expenses and 10% administrative charge, and no bona fide dispute on substantial grounds have been raised at all.

Conclusion

25.  For all the above reasons, I am of the view that the Petitioner was entitled to seek a bankruptcy order against the Debtor, and I accordingly made the usual bankruptcy order against her.

26.  I thank Ms Elizabeth Lee and Ms Natalie Lam for the assistance rendered to me.