KANG JIANFANG v. METAVERSE YUNJI TECHNOLOGY GROUP COMPANY LTD (formerly known as Zioncom Holdings Ltd)

HCCW 70/2024

[2025] HKCFI 5556

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 70 OF 2024

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BETWEEN

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JUDGMENT

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A. Introduction

1.  This is the hearing of the winding up Petition dated 1 February 2024 (as amended on 8 April 2024) (the “Amended Petition”) presented by the Petitioner against the Respondent (“Company”).

B. Factual background

2.  The Company, previously known as Zioncom Holdings Limited, was incorporated in the Cayman Islands on 29 January 2016. Since 20 June 2016, the Company has been registered as a non-Hong Kong company. Its share capital is divided into 50 billion ordinary shares and the amount paid up is HK$10,560,000.

3.  Since 18 January 2018, the shares of the Company were listed for trading on the GEM Board of The Stock Exchange of Hong Kong Limited (stock code: 8287). However, the Company was delisted on 4 December 2023.

4.  The Company and its subsidiaries (collectively the “Group”) have been principally engaged in the production, development and sale of wired and wireless networking products and its operations are mainly based in Mainland China and Vietnam. One of its subsidiaries that featured in the present case is Zioncom (Hong Kong) Technology Limited (“Zioncom HK”), a limited company incorporated in Hong Kong.

5.  There were disputes between 2 shareholders of the Company, with Absolute Skill Holdings Ltd (“Absolute”) on the one hand and Lincats (BVI) Ltd (“Lincats”) on the other. Those disputes related to the struggle for the control of the board of the Company arising out of resolutions passed at extraordinary general meetings of the Company held on 29 April 2022 (at 8 am) and 29 April 2022 (at 9 am). I do not intend to go into the details of those disputes. They are set out in the Decision of Madam Justice Linda Chan in HCA 641/2022 and HCMP 526/2022 handed down on 28 October 2022 (i.e. [2022] HKCFI 3328). For present purposes, it is pertinent to note that one Mr. Kim Jun Yeob (“Mr. Kim”) was the 1^st Defendant in HCMP 526/2022 and was then a director of the Company nominated by Lincats. As elaborated below, Kim also featured in the present case.

6.  After the Decision of Madam Justice Linda Chan, the board of the Company was reconstituted, with Kim and 5 other related directors (collectively the “Impugned Directors”) removed as directors of the Company. Amongst others, Madam Cai Peiyao (“Cai”) was re-appointed as an executive director of the Company on 30 October 2022. Cai was first appointed as an independent non-executive director of the Company and a member of its audit committee of the Company on 24 September 2021. On 31 March 2022, she was removed as a director of the Company.

7.  On 3 November 2022, the Company published an announcement, stating that the former management failed to hand over all the documents, properties and assets of the Group and they illegally retained those documents and assets of the Group.

8.  On 18 November 2022, the Company published another announcement, stating, inter alia, that there has been an ongoing investigation against the Impugned Directors; and that during such investigation, the board of the Company discovered certain suspected withdrawal of the Company’s funds from the bank account of a new subsidiary of approximately HK$22.8 million during the period between 5 October 2022 and 28 October 2022.

9.  On 28 November 2022, the Company issued another announcement, stating, inter alia, that the Listing Committee had decided to cancel the Company’s listing status.

10.  It is pertinent to note that, on 19 October 2023, the Company published an announcement (the “19/10/2023 Announcement”), stating that there were suspicious transactions found in the bank account of Zioncom HK. The 19/10/2023 Announcement reads, inter alia, as follows:-

“The Board wishes to inform the shareholders of the Company and potential investors that, upon an ongoing internal auditing process and reading a statement of account of a subsidiary of the company, [Zioncom HK]’s bank account in The Hongkong and Shanghai Banking Corporation Limited (the “Bank Account” as at 31 December 2021, the Board discovered several suspicious movements in the Bank Account between 3 December 2021 and 31 December 2021, including notably 2 deposits into the Bank Account with amount of around HK$5 million and HK$13 million from the same unknown source of an individual third party (“Suspicious Deposits”), and several withdrawals out of the Bank Account to (i) a former controlling shareholder of the Company; (ii) one of the transferees of the possible dissipation of funds disclosed by the previous announcements of the Company and (iii) other unknown sources with the total amount approximate to the Suspicious Deposits (the “Suspicious Withdrawals”). The Board confirm that the Company has no knowledge on the purposes regarding both he Suspicious Deposits and the Suspicious Withdrawals, and based on the information and records available to the Board, they are not connected with the Company’s daily operations to any extent.” [Emphasis added]

11.  Specifically, according to the Affirmation of Cai filed on 28 March 2024 for the Company in opposition to the Petition, the suspicious transactions found in the bank account of Zioncom HK relate to the following:-

(1) Deposits of HK$4,910,611.90 from the Petitioner on 3 December 2021;

(2) Remittance of HK$220,000 to Lincats on 6 December 2021;

(3) Remittance of HK$3,000,000 to Draco Global Supply (“Draco”) on 6 December 2021;

(4) Deposits of HK$12,625,371.01 from the Petitioner on 8 December 2021;

(5) Remittance of HK$8,500,000 to Lincats on 8 December 2021;

(6) A cheque withdrawal of HK$4,383,995.72 in favour of the Petitioner on 13 December 2021; and

(7) Remittance of HK$1,550,000 to Lincats on 30 December 2021.

12.  Items (1) and (4) are relevant for the purpose of the hearing of the Amended Petition.

13.  On 4 December 2023, the listing status of the Company was cancelled.

14.  On 27 December 2023, the Petitioner through her solicitors issued to the Company the statutory demand, demanding for the payment of a debt in the sum of HK$17,535,982.91 (the “Debt”). According to the Petitioner, the Debt arose from liability owed by the Company to the Petitioner under a bond (“Bond”) issued by the Company for a principal sum of HK$17,535,982.91 bearing interest of 12.5% per annum for a term of 2 years, which was subscribed by the Petitioner pursuant to a subscription agreement written in Chinese dated 8 December 2021 (the alleged “Subscription Agreement”) and was evidenced by a bond certificate written in Chinese numbered 2021-0001 dated 8 December 2021 (the alleged “Bond Certificate”).

C. The Petitioner’s case

15.  The Petitioner’s case was helpfully summarized in the Petitioner’s Skeleton Argument. The salient facts may be set out as follows.

C1. The Capital Investment Entrant Scheme

16.  According to the Petitioner’s evidence, in around 2014, the Petitioner decided to relocate to Hong Kong through the Capital Investment Entrant Scheme (the “Scheme”) and applied to the Immigration Department for formal approval.

17.  Under the Scheme, the Petitioner had to invest not less than HK$10 million net in Permissible Investment Assets (“PIA”) to which she was beneficially entitled. At the material time, PIA included equities, debt securities and collective investment schemes, etc. However, PIA did not include real estate.

18.  In June 2015, the Petitioner invested in the follow collective investment schemes through CMB Wing Lung Bank (“Wing Lung Bank”):-

(1) HK$3,000,310 or 221,289.4300 units in Schroder International Selection Fund-China Opportunities A Accumulation HKD Share Class (“ISF Fund”); and

(2) HK$7,001,636.04 or 37,496.0420 units in SCOP China New Balance Opportunity A-ACC-HKD (“CSOP Fund”).

19.  On 18 December 2015, the Petitioner’s application under the Scheme was approved by the Immigration Department. Under the Scheme, the Petitioner was required to maintain her portfolio of PIA during the Petitioner’s period of continuous residency in Hong Kong.

(1) the Petitioner was not allowed to withdraw or remove any appreciation from her portfolio of PIA even if the subsequent market value of those assets rose above the requisite minimum level of HK$10 million net, with the exception of, amongst others, cash dividend income and interest income.

(2) Switches between PIA must comply with certain requirements. For example, not more than 14 calendar days may elapse between the date of the contract for the sale of the asset being sold and the date of the contract for the purchase of the reinvestment asset.

20.  By November 2021, the Petitioner’s PIA portfolio in Wing Lung Bank comprised of Allianz HKD Income AIM DIS-HKD/C (“Allianz Fund”), CUAM Hong Kong Dollar Bond A-HKD/C (“CUAM Fund”) and the CSOP Fund (collectively, the “Funds”).

C2. Circumstances leading to the Subscription Agreement

21.  It is the Petitioner’s case that, in around 2021, the Petitioner came across an immigration consultant (the “Immigration Consultant”) through a Mainland business acquaintance. However, for reasons unknown, the Immigration Consultant was never identified in the Petitioner’s evidence. According to the Petitioner’s evidence, the Immigration Consultant informed her that:-

(1) The Company intended to issue a bond to support its business operations and expansion.

(2) The terms of the bond could be tailored to the needs of the Petitioner under the Scheme. For instance, the exact principal sum of the bond could be finalised after she redeemed the Funds from her PIA. Further, an upfront interest could be offered. This was important to the Petitioner because it meant she could, in effect, liquidate and withdraw part of her investments.

22.  In around September / October 2021, the Immigration Consultant sent to the Petitioner the Company’s corporate profile and pitch book. The Immigration Consultant arranged a call between the Petitioner and Mr. Kim, who was then a director of the Company. Mr. Kim introduced the background of the Company and assured the Petitioner that her intended investment would be put to good use in supporting the Company’s business development. The Petitioner visited the Company’s address in Sha Tin to make sure that it was a genuine business.

23.  Having reviewed and preliminarily agreed to the terms of the draft subscription agreement of the bond, the Petitioner redeemed the Funds on 29 November 2021 in anticipation of the formal signing of the Subscription Agreement. In particular, a total of HK$17,535,982.91 was redeemed from the Funds:-

(1) 498,539.279 units of the Allianz Fund were redeemed at the unit price of HK$9.85 for a total consideration of HK$4,910,611.90.

(2) 33,257.948 units of the CSOP Fund were redeemed at the unit price of HK$297.23 for a total consideration of HK$9,885,259.86. The redemption of the CSOP Fund took place through three transactions in the sum of HK$4,535,119.88, HK$2,972,299.99 and HK$2,377,839.99 respectively.

(3) 282,777,208 units of the CUAM Fund were redeemed at the unit price of HK$2,740,111.15 for a total consideration of HK$2,740,111.15.

24.  According to the Petitioner, with a view to paying the whole of the subscription price by 8 December 2021 and upon the advice of the Petitioner’s relationship manager at Wing Lung Bank that the subscription price for the Bond should be paid in batches to avoid raising alert or attracting queries from the Wing Lung Bank, on 3 December 2021, the Petitioner paid HK$4,910,611.90 (the exact amount redeemed from the Allianz Fund) to the bank account of Zioncom HK, as per Clause 3 of the Subscription Agreement as further particularised below.

25.  Pausing here, it is significant to note that Petitioner paid the sum of HK$4,910,611.90 even before the signing of the Subscription Agreement and the issue of the Bond Certificate on 8 December 2021.

C3. Signing of the Subscription Agreement and the issue of the Bond Certificate on 8 December 2021

26.  On 8 December 2021, the parties executed the Subscription Agreement and the Petitioner paid the remainder of the subscription price in the sum of HK$12,625,371.01 to the designated account of Zioncom HK as per Clause 3(a) of the Subscription Agreement. It is the Petitioner’s evidence that, due to Covid-19, the Petitioner and Mr. Kim signed the Subscription Agreement in counterparts.[1] The Company issued the Bond Certificate as per Clauses 2.1 and 3(b) of the Subscription Agreement. According to the Bond Certificate, it is governed by the laws of Hong Kong.

27.  The alleged Subscription Agreement contains, inter alia, the following terms and conditions:-

	Clause
1.1	“Bond” means bond to be issued by the Company with a tenure of 2 years at a coupon rate of 12.5% per annum in an aggregate principal amount of HK$17,535,982.91 upon and subject to the terms and conditions set out therein. (Chinese Original:「債券」指本公司根據文據的條款及條件及文據載述的債券條款及條件擬發行總本金額為港幣17,535,982.91 的年票息12.5% 2 年期債券。)
1.1	“Subscription Price” means the subscription price of the Bond in the sum of HK$17,535,982.91. (Chinese Original:「認購價」指債券的總認購價港幣17,535,982.91 。)
2.1	The Subscriber will subscribe the Bond on the Completion Date at the Subscription Price. (Chinese Original:認購人將按認購價於完成日期認購債券。)
2.1	Clause 2.1: On the Completion Date, subject to full receipt of the Subscription Price, the Company will issue the Bond to the Subscriber at the Subscription Price. (Chinese Original:於完成日期，待完全收取認購價後，本公司將按認購價向認購人發行債券。)
3.	Clause 3: Completion will take place at the principal place of business of the Company in Hong Kong at Unit A, 9/F, Phase 2, King’s Rise Plaza, 1 On Kwan Street, Shatin, New Territories, Hong Kong at 11:30 a.m. (Hong Kong time) on the Completion Date: (a) The Subscriber shall pay the Subscription Price (which shall be immediately available and transferable funds) to the following account of the Company’s wholly-owned subsidiary; and Account Name: Zioncom (Hong Kong) Technology Limited Account Number: 636-395733-001 Bank: The Hongkong and Shanghai Banking Corporation (HSBC) SWIFT Code: HSBCHKHHXXX (b) Subject to the full receipt of the Subscription Price, which shall be immediately available and transferable funds, the Company shall execute the Instrument and issue the Bond Certificate to the Subscriber and a prepayment of 2 years’ interest in the sum of HK$4,383,995.72, and within five (5) Business Days thereafter deliver to the Subscriber (a) a Bond Certificate duly issued in favour of the Subscriber; and (b) a copy of the executed instrument. (Chinese Original:完成將於完成日期上午十一時三十分（香港時間）在本公司香港主要營業地點（香港新界沙田安群街1 號京瑞廣場2 期9 樓A 室）作實： (a) 認購人應解除及支付認購價（應為即時可用及可轉讓資金）予本公司的全資子公司的以下帳戶；及 帳戶名稱： Zioncom (Hong Kong) Technology Limited 帳戶號碼： 636-395733-001 銀行：香港上海匯豐銀行（ HSBC) SWIFT Code: HSBCHKHHXXX (b) 待完全收取認購價（應為即時可用及可轉讓資金）後，本公司簽立文據及向認購人發行證書和預付2 年利息港幣4,383,995.72, 且於其後五個營業日內向認購人交付(a) 以認購人為受益人正式發行的債券證書；及(b)經簽署文據的副本。)
5.1	The Company hereby guarantees and represents to the Subscriber: … (b) The Company shall have the power under its constitutional documents to enter into this Subscription Agreement and this Subscription Agreement is duly authorised and shall constitute a valid, binding and enforceable obligation of the Company upon execution; (c) The Company shall have full power and authority to issue the Bond and to perform the obligations thereunder. (Chinese Original:本公司謹此向認購人擔保及聲明： … (b) 本公司享有其憲章文件項下賦予的權力以訂立本協議，且本協議屬正式授權及於正式簽立時將構成本公司的有效、具有法律約束效力及可強制執行的責任; (c) 本公司享有十足權力及授權發行債券及履行其項下責任。)
10.1	Time is of the essence. (Chinese Original:時間為本協議的要素。)
10.5	This Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein (without any reliance by a party on any representations or warranties of the other party not contained herein) and this Agreement supersedes all and any prior agreements, arrangements or understandings between the parties hereto with respect to the matters referred to herein, and all such prior agreements, arrangements or understandings, if any, shall cease and terminate as of the date hereof. (Chinese Original: 本協議構成其各訂約方之間就其指涉事項訂立的完整協議（概無訂約方倚賴另一訂約方未於本協議作出的任何磬明或擔保），且本協議替代其訂約方之間就於本協議提述的事項而訂立的全部及任何過往協議、安排或諒解，同時所有相關過往協議、安排或諒解（如有）自本協議日期起停止及終止。)
10.7	If any provision of this Agreement shall at any time be or become illegal, invalid or unenforceable in any respect, the remaining provisions thereof shall not be affected or impaired in any way. (Chinese Original: 倘若本協議的任何條文於任何時間在任何方面為或成為非法、無效或不可強制執行，則其餘下條文將決不因此而受影響或削弱。)
12.	This Agreement shall be governed by and construed in accordance with the laws of Hong Kong. The parties hereby submit to the non-exclusive jurisdiction of the courts of Hong Kong in respect of any claim or matter arising under this Agreement. (Chinese Original: 本協議受香港法律規管並按其作出詮釋。各訂約方謹此就本協議項下發生的任何申索或事項服從香港法院的非專屬司法管轄。)

28.  The alleged Bond Certificate reads, inter alia, as follows:-

“證書編號2021-0001

Zioncom Holdings Limited

(於開曼群島成立的有限公司)

港幣17,535,982.91年票息12.5%發行日期起計期2年債券

Zioncom Holdings Limited「本公司」謹此核實KANG Jianfang，香港身份證號碼為xxx 之持有人，於本文據日期記人作為前述債券 (「債券」) 持有人的債券持有人的名冊。債券乃由本公司日期為2021年12月8日文據(「文據」其副本隨本文據附上且將構成本證書的重要部分)構成且須受文據轉述的條款及條件(「條件」)規限及享有相關利益。

本公司為已取得價值承諾贖回債券，並向債券持有人支付債券的尚未償還本金額連同根據條件到期的相關金額，且遵守條件。

本證書僅作所有權憑證。債券的所有權僅於債券持有人名冊上妥為登記後方才過戶，且僅有妥為登記的持有人有權收取本證書發行所涉及的債券付款。

本證書受中華人民共和國香港特別行政區法律規管且據此作出詮譯。

於2021年12月8日發行。” [Emphasis added]

29.  Pausing here, it is pertinent to note that whilst the alleged Bond Certificate refers to one written instrument (i.e. 文據) containing terms and conditions of the Bond, and that it was stated in the Bond Certificate that a copy of the said written instrument was attached to the Bond Certificate and formed an important part thereof, the Petitioner has not provided a copy of the said 文據.

30.  On 13 December 2021, i.e. just 5 days after the signing of the alleged Subscription Agreement and the issue of the Bond Certificate on 8 December 2021, the Company paid to the Petitioner interest in the sum of HK$4,383,995.72 from the account of Zioncom HK in accordance with Clause 3(b) of the Subscription Agreement.

31.  It is the Petitioner’s case that, the Bond matured on 8 December 2023 and since then the Company became liable to pay the Debt.

D3. Procedural history and correspondence

32.  As such, on 27 December 2023, the Petitioner’s former solicitors, C&T Legal LLP (“CTL”) issued to the Company the Statutory Demand.

33.  On 1 February 2024, the Petition was presented against the Company.

34.  On 27 March 2024, the Company filed Cai’s Affirmation opposing the Petition.

35.  On 8 April 2024, CTL presented the Amended Petition.

36.  On 3 June 2024, Messrs. David Fong & Company (“DFC”) filed its notice of change of solicitors for the Petitioner.

37.  On 4 June 2024, MLC wrote to DFC alleging that the Company had reported the alleged Bond Certificate and the alleged Subscription Agreement as false instruments to the Police.

38.  On 17 July 2024, the Petitioner filed her 3^rd Affirmation in reply, explaining the circumstances leading to the signing of the alleged Subscription Agreement and the issue of the alleged Bond Certificate.

39.  On 2 September 2024, MLC wrote to DFC again repeating what was stated in their letter dated 4 June 2024 and threatened to strike out the Petition.

40.  On 4 September 2024, DFC noted MLC’s two letters and denied that the Petition was an abuse of process. It further stated that the Company’s report to the Police does not negate the legitimacy of the Petition.

41.  On 10 January 2025, Messrs. CLKW Lawyers LLP (“CLKW”) filed its notice of change of solicitors of the Company.

E. The Company’s case

42.  In opposition to the Petition, the Company filed and relied upon Cai’s Affirmation. It is the Company’s case that it never issued the alleged Bond, the alleged Bond Certificate or entered into the alleged Subscription Agreement with the Petitioner. Mr. Mike Yeung, counsel for the Company, argued that the Company’s case was corroborated by the fact that there was no mention of any issuance of bonds in the Company’s announcements or its annual report for the financial year of 2021. He argued that the Subscription Agreement and the Bond are nothing but sham.

43.  Further, Mr. Yeung also relied upon the 19/10/2023 Announcement in which the Company raised a number of suspicious transfer of funds.

44.  On the question of the Court’s jurisdiction, it is the Company’s case that the Court should not exercise its jurisdiction to wind up the Company, when one or more of the core requirements for the winding up of a foreign company cannot be satisfied in the present case.

F. The issues

45.  The major issues for determination are (1) whether there are any bona fide disputes in respect of the Debt on substantial grounds; and (2) whether the Court should exercise any jurisdiction to wind up the Company pursuant to section 327 of the Companies (Miscellaneous Provisions and Winding up) Ordinance (Cap 32).

G. Bona fide dispute on substantial grounds: the applicable principles

46.  I shall first address the question of whether there are bona fide dispute on substantial grounds. The principles are well-established. In order to successfully oppose a petition on the basis of a bona fide dispute on substantial grounds, the Company has to adduce sufficiently precise factual evidence which is believable, and must establish that it has a defence of substance, not just a fair probability of one: see for instance Re Asia View Enterprises Limited [2020] HKCFI 2812 at §28; Re China Cultural City Limited [2020] HKCFI 1598 at §§9-10.

47.  At the hearing, I also referred Counsel to the Court of Appeal’s decision in Re Leung Cherng Jiunn [2016] 1 HKLRD 850, a case involving an appeal against the decision of Recorder Linda Chan SC (as she then was) dismissing the bankruptcy petition on the basis that there was a bona fide dispute on substantial grounds. Whilst the case involved a bankruptcy petition, the Court of Appeal held, inter alia, that for the purpose of establishing a bona fide dispute on substantial grounds, there was no meaningful difference between a bankruptcy petition and a winding up petition, notwithstanding the material differences in procedure between the two: §27(1), per Kwan JA (as she then was). For the present purposes, it is also pertinent to note the following points from the Court of Appeal’s decision:-

(1) In Re Leung Cherng Jiunn (above), Kwan JA quoted the judgment at first instance, in which Recorder Linda Chan SC said, inter alia, that “[where] the debtor disputes the debt upon which the statutory demand is based, the petitioner must prove that the debt is due and payable in a summary manner. If the petitioner is unable to discharge this burden, the petition must be dismissed”. Kwan JA observed that those principles as summarized by Recorder Linda Chan SC could not be criticized: see §§19-21.

(2) In that case, one of the issues before the Court of Appeal concerned the distinction between opposing a petition on the ground of bona fide dispute on substantial grounds in the case of bankruptcy/winding up petitions and the standard in resisting an application for summary judgment under Order 14 of the rules of the High Court. Kwan JA then referred to the 2 lines of cases. In the first line of cases such as the oft-cited decision in Re ICS Computer Distribution Ltd [1996] 1 HKLR 181, 183F-J the debtor must show that he has a bona fide defence, not a fair probability of one, so in that sense it is a higher standard that that required of a defendant in resisting summary judgment. The second line of cases included cases such as Markham v Karsten [2007] BPIR 1109, where Briggs J (as he then was) held that the test for the existence of a genuine triable issue in relation to the defence of a bankruptcy petition should be no more stringent than that applied in an application for summary judgment: §§22-26.

(3) After referring to the two line of cases, Kwan JA then discussed the relevant principles in §27. She held that the wording of O14, r3 is different from the test of bona fide dispute on substantial grounds. The test of bona fide dispute involves different considerations in respect of the evidence. The difference may not be significant; but there is still a difference. Notwithstanding the difference, the threshold tests in both situations are broadly similar: §27.

48.  Counsel had no dispute that the principles discussed in Re Leung Cherng Jiunn (above) applied to the present case. Amongst other things, Counsel had no dispute that, in this case, the Petitioner must prove that the Debt is due and payable in a summary manner, or the Amended Petition would have to be dismissed.

H. Discussion

49.  The parties raised numerous arguments. It is not necessary for me to need to set them out all here. Suffice it to say that I have considered all of the arguments raised by the parties both in the skeleton arguments and oral submissions. The following discussion is sufficient for the purpose of the disposal of the Amended Petition.

H1. The Petitioner’s case unsupported by contemporaneous documents

50.  In the present case, the Company challenged and maintained that it had not entered into the Bond and the Subscription Agreement with the Petitioner. In those circumstances, one would also expect the Petitioner to rely on the contemporaneous documents exchanged between the parties so as to demonstrate that they did enter into the alleged Bond and the alleged Subscription Agreement and that the Company did issue the alleged Bond Certificate.

51.  Further, the Company’s solicitors had requested for the inspection of the original of the alleged Bond Certificate (together with its those terms as set out in the copy of the written instrument attached thereto) and the original of the alleged Subscription Agreement. However, the Petitioner so far has not been able to produce any of those original documents as requested by the Company. Even worse, whilst the first paragraph of the alleged Bond Certificate stated that a copy of the 文據 dated 8 December 2021 (i.e. the indenture) was attached to the alleged Bond Certificate and formed part of the Bond Certificate, that copy of the 文據 was never produced by the Petitioner.

52.  As the Courts repeatedly observed, in this day and age, it is common that there would have been exchange between the parties through SMS and email messages; and that it would be rare in modern commercial litigation to encounter a case which there is no contemporaneous documentary record of any kind. Yet the Petitioner has not been able to produce any such contemporaneous documents. When the Petitioner was challenged on the lack of contemporaneous documents such as emails and SMS messages, the Petitioner’s explanation was that she could no longer locate the WeChat messages due to the passage of time and the change of her mobile phones. However, there is nothing to stop her from retrieving the messages from WeChat, or to approach the Immigration Consultant for some of those messages or contemporaneous documents.

53.  Apart from exhibiting a copy of the alleged Bond Certificate and the alleged Subscription Agreement, there are simply no contemporaneous documents which the Court could rely upon for the purpose of considering the veracity of the Petitioner’s case. Even worse, whilst it is the Petitioner’s case that she subscribed for the alleged Bond through the introduction of the Immigration Consultant, the Petitioner throughout her evidence has not even provided the identity of the Immigration Consultant.

H2. Advance of HK$4.9 million even before the signing of the Bond

54.  Second, as stated above, it is not disputed that, before the signing of the alleged Subscription Agreement and the issue of the alleged Bond Certificate, the Petitioner and the Company did not have any prior business deals. In other words, the subscription of the alleged Bond in question was indeed the very first transaction that the Petitioner made with the Company.

55.  On this basis, one immediately asks why the Petitioner was prepared to and did make a substantial payment of over HK$4.9 million on 3 December 2021, when the alleged Bond and the alleged Subscription Agreement were not yet entered into.

56.  The only explanation provided by the Petitioner was that she was advised by her relationship manager of Wing Lung Bank to pay in tranches so as not to alert the Bank and hence she made the first batch of payment to have a “trial run”: Petitioner’s 3^rd Affirmation §§27-28. However, the identity of the relationship manager of Wing Lung Bank was not provided. Worse still, whilst the Petitioner may want to split the subscription prices in two tranches, there was still no reason why she was prepared to and did pay the hefty sum of HK$4,910,611.90 for a “trial run” on 3 December 2021, even before the execution of the Subscription Agreement on 8 December 2021. Had she desired to have a “trial run”, there was no reason why she could not do so with a deposit of much smaller sum; or to do it after the execution of the Subscription Agreement.

H3. Company’s upfront payment of interest

57.  Third, in the case of a bond, one would expect that interest would be paid either monthly, annually, on certain specific date or at the maturity of the bond. From the perspective of the Company, it is not clear why the Company was prepared to make an upfront payment of the entire interest under the alleged Bond on 13 December 2021, i.e. just 5 days after the signing of the alleged Subscription Agreement (when the entire interest in question represented about 25% of the subscription sums paid by the Petitioner pursuant to the Subscription Agreement).

58.  The Petitioner’s case is that such term was offered by the Company. However, there is no evidence (whether objective evidence such as the audited accounts of the Company or oral evidence from the parties) as to why the Company was prepared to offer such a substantial upfront payment of the entire interest payable just days after the execution of the Subscription Agreement. There is nothing in the evidence to suggest that the Company was in urgent need of funds such that it had to voluntarily offer such unfavourable terms to the Petitioner. There are no contemporaneous documents relating to the negotiation of the commercial terms either.

59.  In the Petitioner’s skeleton argument, relying upon authorities such as Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632 at §§74-79, Mr. Manzoni SC argued that if the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, the Court will give effect to that language, even though the consequences might appear hard for one side – the surrounding circumstances, and commercial common sense, do not represent a licence for the Court to rewrite a contract merely because its terms seem somewhat unexpected, a little unreasonable, or not commercially very wise. Mr. Manzoni SC also cited Chitty on Contracts (35^th ed) at §16-022 for the proposition that parties cannot, through the guise of “construction”, by referring to context and surrounding circumstances, effectively add to, vary or subtract from the terms of the contract. Relying upon these authorities, Mr. Manzoni SC submitted that the Company’s arguments that the alleged Bond was uncommercial fell flat.

60.  With respect, these arguments do not assist the Petitioner’s case. The disputes between the parties here simply have nothing to do with the construction of the alleged Subscription Agreement or the alleged Bond Certificate or the interpretation of any particular clauses thereof. Quite the contrary, the disputes here are of a much more fundamental nature, namely, whether the Petitioner and the Company did enter into the alleged Subscription Agreement; and whether the Company had issued the alleged Bond and the alleged Bond Certificate to the Petitioner. Those authorities relied upon the Petitioner are no answer to these crucial questions before the Court.

H4. Other unusual terms of the Subscription Agreement (and lack of the usual terms)

61.  Further, many usual terms of a bond could not be found in the alleged Subscription Agreement or the alleged Bond Certificate. For instance, one could not find standard provisions such as the event of default clauses or the prepayment clauses, etc. Further, as stated above, despite repeated requests from the Company’s solicitors, the Petitioner has not been able to produce the written instrument setting out the terms of the alleged Bond (as referred to in the alleged Bond Certificate).

62.  Mr. Yeung for the Company also argued that there was another unusual feature of this case, in that the principal sum under the Bond was a non-integer. The Petitioner’s explanation is that this was due to the fact that the figure of the principal sum was derived from the funds she redeemed from her investment. Whilst this may be so, it remains unusual that a company would have adopted the actual redeemed figures as the principal sum under the Bond, especially when the negotiation of the commercial terms (including the principal sum) would have started long before the actual redemption and there may be inherent uncertainties relating to the value actually redeemed by the Petitioner from her investment – which would affect the sum to be made available to the Company under the Bond.

H5. Performance of the alleged Subscription Agreement?

63.  Mr. Manzoni SC argued that the Company failed to raise any bona fide defence on substantial grounds, when it is not disputed that the Petitioner and the Company had performed the Subscription Agreement. With respect, I disagree, for such argument presupposed that the parties had entered into the alleged Subscription Agreement and the alleged Bond and that the monies were transferred from the Petitioner to the Company pursuant to the alleged Subscription Agreement. Such argument ignores the very fact that the Company actually disputed and denied that it had entered into the Subscription Agreement and the Bond. Further, well before the issue of the Statutory Demand, the Company had already made in the 19/10/2023 Announcement the suspicious nature of those transfers of funds.

64.  In my judgment, the complete lack of contemporaneous documents and relevant information, coupled with the various unusual features involved in this case, suggests that there is basis to doubt if the parties had entered into the alleged Subscription Agreement and the alleged Bond; and that there are also doubts as to the exact nature of the transfer of funds in question (i.e. those made on 3 December 2021, 8 December 2021 and 12 December 2021 between the Petitioner and the Company).

H6. Parties trading at arms’ length?

65.  In the skeleton argument and his oral submissions, Mr. Manzoni SC argued that the alleged the Subscription Agreement and the Bond were commercial agreements entered into by the Petitioner and the Company at arms’ length.

66.  However, apart from referring back to the terms of the Bond and the Subscription Agreement, the Petitioner was not able to produce any other contemporaneous documents or circumstantial evidence to support the contention that the parties had been trading at arms’ length. Without the contemporaneous documents, coupled with the unusual features involved in the present case identified above, I am not able to conclude at this stage that the parties were trading at arms’ length.

67.  Quite the contrary, the undisputed fact is that the Petitioner saw fit to advance a hefty sum of more than HK$4.9 million to the Petitioner even before the execution of the Bond and the Subscription Agreement. Mr. Mike Yeung also made the point that the register of the Bond was never produced. In light of the various unusual features and the complete lack of contemporaneous documents, I am of the view that the Petitioner failed to establish the Debt summarily; and that there are bona fide disputes on substantial grounds as to the nature of the transfer of the funds between the Petitioner to the Company; and whether those transfers of funds were made pursuant to the alleged Bond and the alleged Subscription Agreement.

H7.    The Petitioner could rely upon a claim in restitution against the Company?

68.  At the hearing, Mr. Manzoni SC also argued that, instead of relying upon the Debt under the alleged Subscription Agreement and the alleged Bond Certificate, the Petitioner could also rely upon a claim in restitution for the HK$17 million for the winding up of the Company. I disagree, for this never forms part of the Petitioner’s pleaded case in the Amended Petition. It is well established that, although a petition is not a pleading, it must contain all necessary allegations in a form which is sufficient to enable the court to make the requisite findings and consider the appropriate order. There is no reason why the Petitioner could rely upon this unpleaded alternative ground belatedly raised at the hearing.

H8. The Company deemed insolvent?

69.  Mr. Manzoni SC also relied upon the Company’s failure to satisfy the Debt in the Statutory Demand and argued that the Company should be deemed insolvent. I disagree, for it is trite that the creditor does not have locus to present a winding-up petition if an alleged debt is bona fide disputed on substantial grounds by a company. It follows that the Company’s solvency would not become relevant unless and until the Court has come to the view that the Company has failed to establish a bona fide dispute of the debt on substantial grounds: Re Hyundai Engineering & Construction Co Ltd (No 2) [2002] 2 HKLRD 354, §29 (Kwan J, as she then was).

H9. Conclusion

70.  In conclusion, in light of the analysis above, there is basis to doubt if the Petitioner and the Company had entered into the alleged Subscription Agreement and the alleged Bond. In my judgment, the Companies Court cannot resolve such disputes summarily and therefore the Petition should be dismissed.

I. Jurisdiction to wind up a foreign company

71.  In the premises, it is not necessary for me to consider the question of whether there was jurisdiction to wind up the Company as a foreign company.

72.  For present purposes, I would only address one issue. In support of her contention that this Court has jurisdiction to wind up the Company, the Petitioner relied upon, inter alia, the fact that the Company had maintained a bank account with the DBS Bank in Hong Kong (the “DBS Bank Account”).

73.  In Cai’s Affirmation, the Company raised query as to why the Petitioner would have knowledge of the DBS Bank Account. According to Cai, the Company only announced in its financial reports that HSBC was its principal bankers and that the DBS Bank Account was not information in the public domain. As such, there is no reason why the Petitioner would have information or knowledge about the DBS Bank Account, especially when that account was already closed back in December 2019. On this basis, it is the Company’s case that the Petitioner must have been connected with the Impugned Directors.

74.  According to the Petitioner’s evidence, she learned about the DBS Bank Account from the Immigration Consultant, when the latter approached her back in 2021. However, this explanation begs further questions as to why the Immigration Consultant (whose identity remained unknown) would provide the Petitioner with information about the DBS Bank Account (when it was already closed back in 2019); and why the Immigration Consultant would have knowledge about such account when such information was not in the public domain. Mr. Yeung for the Company argued that this was another piece of evidence suggesting that the Petitioner was closely associated with the Impugned Directors. It is not necessary for me to make any finding on this. Suffice it to say that such dispute cannot be resolved on affidavits.

J. Conclusion and Disposition

75.  In conclusion, the Petitioner fails to establish the Debt summarily and I am satisfied that there are bona fide disputes on substantial grounds.

76.  Mr. Yeung argued that indemnity costs should be ordered against the Petitioner. This was resisted by the Petitioner. On the facts of the present case, Mr. Yeung’s arguments are justified when the Company’s solicitors repeatedly through correspondence warned the Petitioner that there were bona fide disputes and thus the Petitioner should be well aware of the existence of the bona fide disputes; and yet the Petitioner still chose to press ahead for the hearing of the Amended Petition.

77.  In the premises, I order that the Amended Petition be dismissed with costs to be paid by the Petitioner to the Company on indemnity basis, to be taxed if not agreed.