THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD v. HON KWOK CHING

HCB 4042/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 4042 OF 2011

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J U D G M E N T

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1.  This is a bankruptcy petition presented by the Hongkong and Shanghai Banking Corporation against Mr Hon Kwok-ching. The basis of the petition is a judgment debt obtained by the petitioner against the debtor in the District Court. That judgment, as I understand it, is not the subject of any appeal, and the debtor therefore accepts his liability to the petitioner in respect of the petitioning debt.

2.  The debtor says, however, that owing to the fact that he has an outstanding appeal in other proceedings (to which the petitioner is not a party) against an associated company of the petitioner, Hongkong Bank Trustees Limited, these proceedings should either be stayed and the petition adjourned until the outcome of those proceedings, or alternatively that the petition should be dismissed.

3.  As far as the suggestion that there should be a stay is concerned, an application for a stay of execution was in fact made by the debtor and dealt with by Deputy Judge Louis Chan on 10 February 2012, when Deputy Judge Chan dismissed the application for a stay.

4.  Today Mr Hon has indicated that he wishes to consider appealing against the judgment of Deputy Judge Chan, and has asked for further time to enable him to lodge that appeal.  He has also made some other submissions to me, the first being to suggest that there is in fact evidence that the petitioner and the party in the other proceedings which are under appeal are related, and for this purpose he put before me a document which does indicate that Hongkong Bank and Hongkong Bank Trustees are connected parties in relation to certain transactions involving the Sunlight Reit.

5.  However, as to this, although the petitioner and Hongkong Bank Trustee are undoubtedly related parties in the sense that Hongkong Bank Trustee is a company within the overall Hongkong Bank group, it has to be borne in mind that they are separate legal entities, and that success by Mr Hon in any appeal involving Hongkong Bank Trustees which may result in some liability accruing to Hongkong Bank Trustees will not assist him so far as the petitioner is concerned, since even if it is the parent company of Hongkong Bank Trustee, the petitioner is not thereby responsible for all of its subsidiary’s obligations and debts.

6.  Mr Hon has also suggested that it is odd that Hongkong Bank should wish to pursue these bankruptcy proceedings through which they are unlikely to make any substantial recovery against him, whereas if they were to wait and he were to be successful in his appeal, he might well have the funds with which to pay the debt on which the petition is based.

7.  However, it is not necessary for a creditor to await the outcome of proceedings which may or may not provide funds out of which a debtor will be able to pay his debt, and the court is not in a position to speculate as to the prospects of success of Mr Hon’s appeal in those other proceedings.  Moreover, even if the court were to make a bankruptcy order, that would not necessarily be the end of Mr Hon’s appeal, because it would be for his Trustee in Bankruptcy, in whom Mr Hon’s assets would be vested, to assess the situation and consider whether or not the appeal is one that is worth pursuing.  If it is, the Trustee would be likely to try to pursue it if possible as part of the process of recovering whatever assets Mr Hon has of value, with a view to paying his creditors.

8.  I therefore do not think that either of the points that Mr Hon made to me today concerning the connections between Hongkong Bank and Hongkong Bank Trustee provides any basis for resisting the making of a bankruptcy order against him.

9.  In those circumstances, given that Mr Hon does not dispute the judgment on which the petitioning debt is based, and as there is no stay of execution of that judgment, Mr Hon’s application for a stay having been unsuccessful, I do not think that the matter should be stood over further, and it seems to me that the appropriate course would be to make the usual bankruptcy order with costs, as there is no ground of any substance on which this debt can be disputed or enforcement of it delayed.