RE SIMERAY JANNICK JACQUES

HCB 8016/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 8016 OF 2012

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J U D G M E N T

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1. There is before this court a Petition filed on 3 December 2012 seeking a bankruptcy order against the judgment debtor (“JS”), who is a French national.  The Petition is based upon 3 costs orders made against JS on 7 September 2011, 8 December 2011 and 3 February 2012 amounting to an aggregate sum of HK$225,700 (“Judgment Debt”). 

2. The Judgment Debt has not been paid despite, the judgment creditor (“GW”) says, a Statutory Demand dated 15 October 2012 (“SD”) having been served on JS personally. 

3. The issues before this court are straightforward and the material facts can be briefly stated.  All 3 costs orders in question were made in HCA 1480/2010 (“Action”).  It was an action involving, inter alia, GW and JS. 

4. On the material filed by JS and based on the submissions made by him to the court, it appears that he and one Mr Michael Sivan (“MS”), the managing director of GW, were once business partners.  JS is an inventor and he owned certain patent rights in respect of his inventions. JS and MS collaborated in a business to exploit those patent rights, and JS was to be paid certain licence fees or consultancy fees for the use of his patents.  However, the business venture did not work out as anticipated by JS and he ended up getting involved in the Action.  By his counterclaim filed in the Action, both GW and MS (together with another company called JM Concepts Ltd (“JMC”)) were made defendants thereto. 

5. JS maintains that he was cheated by MS in that he was never paid the licence fees which he was entitled to.  He has brought a criminal complaint against MS in France, which is being investigated by the French court.

6. There are 3 issues before the court, namely, whether the SD and the Petition have been properly served on JS and whether this court has jurisdiction over him in these matters.

7. In respect of the service of the SD, I am of the view that although JS had refused to accept the SD which a representative of GW’s solicitors endeavoured to serve on him on 18 October 2012 in Shenzhen (see the 1^st affirmation of Jonathan Lam filed on 3 December 2012), it is quite plain from the evidence that he was aware of the attempt to effect personal service of the SD on him and a copy of the SD was left at the premises where he was found.

8. JS contends that the Shenzhen address was that of his brother and that the person by the name of Simeray who answered the door on 18 October 2012 was his brother.  However, as pointed out by Mr Leung, who appeared for GW, the Shenzhen address was stated to be JS’ address as recorded in a police statement of his dated 22 February 2012.  It was, to GW’s knowledge, the latest address of JS at the material time.

9. Further, assuming that the Shenzhen address was where JS’ brother resided, I do not understand why JS’ brother would have behaved in an evasive manner if he were the person who answered the door on the 18 October 2012. 

10. I am not convinced by JS and I am satisfied that the SD was properly served on him.

11. I am equally satisfied that the Petition has been properly served on JS pursuant to an order of Master Ho dated 28 March 2013 (see the 4^th affirmation of Jonathan Lam filed on 27 May 2013).

12. In respect of the jurisdictional issue, it turns upon the question whether JS had carried on business in Hong Kong at any time during the period of 3 years ending with the filing of the Petition (see s 4(1)(c)(ii) of the Bankruptcy Ordinance, Cap 6). 

13. I am satisfied on the basis of the evidence contained in the 2^nd and 3^rd affirmations of MS that JS had carried on business in Hong Kong during the relevant period.  I should say that there is a delay in the filing of the 3^rd affirmation of MS which replied to the draft 2^nd affirmation of JS (that document has now been affirmed and filed with the court).  However, the situation was caused by JS’ failure to serve his draft affirmation on GW by the end of October 2013 in accordance with para 3 of the order of Mr Justice G Lam dated 23 September 2013.  I do not accept the allegation of JS that he only received MS’ 2^nd affirmation (to which his draft 2^nd affirmation responded) in November.  Such allegation is contradicted by the 3^rd affirmation of Lam Sik Kwan filed on 4 October 2013. 

14. The evidence adduced via MS’ affirmations demonstrates that he and JS co-operated in a business operated via JMC, a Hong Kong company.  The shares in that company were held by the two of them in the proportions of 51% (MS) and 49% (JS).  JS was a director of JMC until the 25 November 2010.  There was an agreement dated 19 December 2009 made between MS and JS concerning their co-operation under JMC.  Under the terms of that agreement, JS was required to spend 50% of his time with JMC in order to earn his monthly salary or consultancy fee (clause 7.1) and he was in charge of marketing, product development and all other executive operation of JMC except those under MS’ responsibility (clause 10.2).  Further, the agreement contained a no competition clause (11.1) and was governed by Hong Kong law (clause 13.2). 

15. According to the audited financial statements of JMC for the year ended 31 March 2011, it was an active company and liable to pay Hong Kong tax on any profits made.  During that financial year, the borrowing of JS from the company had increased slightly and that he was paid consultancy fee by JMC in the sum of HK$42,000. 

16. Further, there is a tripartite agreement between JMC, JS and Ms dated 7 June 2010 under which JS was entitled to be paid by MS consultancy fee in the sum of HK$22,000 per month in return for his work in the development of toys and filing of patent applications. 

17. The above evidence clear shows that JS was, during the relevant period, carrying on a business in Hong Kong.  However, in his submissions JS denied that he was working in Hong Kong.  He said that JMC had no office in Hong Kong.  Instead, its business was carried out in Shenzhen.  I regret to say that JS has not been candid with the court.  According to a facsimile dated 11 October 2010 (exhibit 14 of JS’ 2^nd affirmation) it appears that JMC did have an office in Hong Kong and that JS had been working full-time for that company. 

18. It may be the case that JS has a genuine grievance in respect of his business dealings with MS but, as I have explained to him, it does not constitute a valid defence to the Petition.  In fairness to JS, he has accepted that he is liable to pay the Judgment Debt.  However, it is his wish that the matter be dealt with in France so that it can be set-off (he used the term “balanced”) against what is owed to him and that pending the adjudication by the French court the payment of the Judgment Debt can be “frozen”.  With respect, I am unable to see any real defence to this Petition.

19. In these premises, I make the usual bankruptcy order with costs against JS.