RE LUI CHUN KIT

HCB 5816/2024

[2025] HKCFI 6194

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5816 OF 2024

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J U D G M E N T

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A.  INTRODUCTION

1.  This is a bankruptcy petition filed by Treasure Stars Investments Limited (“Treasure Stars”) against Lui Chun Kit (“Mr Lui”). It is based on a statutory demand issued for an outstanding debt of over HK$7 million owed by the borrower, Lu Ximao (“Lu”)” under a loan agreement. Mr Lui is the guarantor of the loan under a written guarantee.

2.  Mr Lui opposes the petition on grounds that: (1) there is a pending action in HCMP 771/2023 against Lu concerning the same loan; and (2) there is a bona fide dispute to the debt as Mr Lui has repaid the Loan through one Mr Lee to Treasure Stars.

3.  Mr Lee denied receipt of money on behalf of Treasure Stars. Treasure Stars’ position is that Lui has failed to discharge his burden of establishing a bona fide dispute on substantial grounds and that he should be adjudged bankrupt.

B.  BACKGROUND LEADING UP TO ISSUE OF THE STATUTORY DEMAND

4.  The facts are taken from the helpful summary of Mr Dexter Leung, counsel for Treasure Stars.

5.  Treasure Stars was and is a licensed money lender. Mr Lee Chun-pong Bruce (“Mr Lee”) was a shareholder of Treasure Stars at the material time.

6.  The borrower, Lu, is the cousin of Mr Lui.

7.  Before the loan was granted, Mr Lee and Mr Lui already knew each other and had a cordial business and personal relationship. This personal relationship had led to Treasure Stars being willing to offer the subject loan at a lower interest rate.

8.  On 7 September 2022, Treasure Stars and Lu entered into a Loan Agreement, by which Treasure Stars agreed to lend and Lu agreed to borrow $7,000,000 (“the Loan”) for a term of 12 months, with interest thereon payable at the rate of 0.5% per calendar month (effective interest rate of 6% p.a.). Interests were repayable by 12 equal monthly instalments of $35,000, with the principal to be repaid on 7 September 2023.

9.  As security for the Loan, Mr Lui executed a Personal Guarantee and Lu executed a Second Legal Charge, both on 7 September 2022.

10.  Under clauses 1(a) and 2(a) of the Personal Guarantee , Mr Lui agreed, as principal debtor, to forthwith pay Treasure Stars on demand the indebtedness owed by Lu to Treasure Stars under the Loan.

11.  The Loan was advanced by way of a cheque issued by Treasure Stars, which was deposited into Lu’s bank account.

12.  7 instalments of $30,000 each for the partial repayment of interest on the Loan had been made on 7 dates between 12 October 2022 and 11 April 2023.

13.  Contending that Lu had defaulted by failing to make any further repayment of interest on the Loan and failing to repay the principal, on 19 May 2023, Treasure Stars brought a money lender’s action and mortgage action against Lu under Orders 83A and 88 by way of originating summons (“OS”) in HCMP 771/2023. Treasure Stars seeks money judgment and possession of the charged property.

14.  On 17 November 2023, Treasure Stars issued a statutory demand to Mr Lui (“the SD”), contending that there was outstanding indebtedness of $7,413.470.57 under the Loan and demanding that he forthwith pay that sum in accordance with the Personal Guarantee.

15.  On 7 December 2023, acting in person, Mr Lui applied to set aside the SD in HCSD 57/2023. In his homemade supporting affirmation, Mr Lui raised 3 grounds to set aside the SD:

(1)  The borrower under the Loan Agreement did not receive the Loan proceeds, and the related dispute was being litigated;

(2)  Treasure Stars was a moneylender with unstable finances, with a risk of ceasing business; and

(3)  If the Loan proceeds were not received, the petitioning debt did not exist, and so, as guarantor, Mr Lui did not guarantee any loan sum of the borrower, Lu.

16.  DHCJ Johnathan Wong heard HCSD 57/2023 on 5 February 2024. As shown in the transcript, the following occurred.

(1)  On instructions, Mr Lui’s solicitor raised a new ground to set aside the SD, namely that Mr Lui (not Lu) had made repayment by altogether 15 instalments, the last of which fell on 24 April, totalling over $6 million; documents were being ordered from the bank.

(2)  The Deputy Judge observed, “It seems that your client’s conduct is not consistent with disputing that the debt is owed to the lender”. Mr Lui’s solicitor then answered, “He did not dispute his capacity as a guarantor”.

(3)  Mr Lui’s solicitor sought leave to adduce a supplemental affirmation.

(4)  The Deputy Judge said, “If you need to oppose the petition on the basis that, for example, on the basis that you have made full payment, you can argue it in the context of the petition”.

(5)  Upon the Deputy Judge’s query, Mr Lui’s solicitor confirmed that he was not disputing the SD.

(6)  The Deputy Judge pointed out that Mr Lui’s stance at the hearing was different to what he had previously stated in his affirmation, where he had affirmed that Lu had not received the Loan sum at all.

(7)  The Deputy Judge stated that if it was Mr Lui’s case that the Loan had been fully repaid, it was an argument that could be raised under section 6D of the Bankruptcy Ordinance, Cap 6, if Treasure Stars proceeded to present a bankruptcy petition.

17.  Having heard the parties’ submissions, the Deputy Judge dismissed the set aside application and made the following ruling:

(1)  Mr Lui’s solicitors have confirmed that Mr Lui was not disputing the statutory demand.

(2)  Although Mr Lui’s solicitors had then sought to resile from such admission earlier, it was inconsistent with Mr Lui’s case that he made payments in relation to the petitioning debt.

(3)  Any argument arising from section 6D of the Bankruptcy Ordinance should be argued in the context of the bankruptcy petition.

C.  HCMP 771/2023

18.  Shortly afterwards, on 7 February 2024, Lu filed his affirmation in opposition in HCMP 771/2023. Lu affirmed that, according to the information provided to him by Mr Lui, Mr Lui had fully repaid the Loan principal by making 15 payments to Mr Lee as set out below:

Table 1

No	Date	Amount	Payment method
1.	9 Sept 2022	100,000	Cash
2.	13 Sep 2022	300,000	Cash
3.	14 Sept 2022	100,000	Cash
4.	16 Sept 2022	300,000	Cash
5.	23 Sept 2022	400,000	Cash
6.	3 Oct 2022	900,000	Cash
7.	24 Oct 2022	100,000	Bank Transfer
8.	31 Oct 2022	190,000	Cash
9.	11 Nov 2022	100,000	Bank Transfer
10.	21 Nov 2022	700,000	Cash
11.	29 Nov 2022	100,000	Bank Transfer
12.	6 Feb 2023	1,500,000	Cash
13.	20 Feb 2023	700,000	Cash
14.	17 Apr 2023	1,000,000	Cash
15.	24 Apr 2023	510,000	Cash
Total		7,000,000

19.  There was a further round of affirmations in opposition filed by Lu and Mr Lui on 20 March 2024 in HCMP 771/2023. Lu and Mr Lui gave another account of the repayment, stating that Mr Lui had fully repaid the Loan principal by making 12 payments to Mr Lee. These 12 payments are set out as follows:

Table 2

No	Date	Amount	Payment method
1	9 Sept 2022	100,000	Cash
2	14 Sept 2022	400,000	Cash
3	16 Sept 2022	300,000	Cash
4	23 Sept 2022	400,000	Cash
5	30 Sept 2022	900,000	Cash
6	24 Oct 2022	100,000	Bank Transfer
7	31 Oct 2022	190,000	Cash
8	11 Nov 2022	100,000	Bank Transfer
9	17 Nov 2022	700,000	Cash
10	29 Nov 2022	100,000	Bank Transfer
11	24 Feb 2023	2,200,000	Cash
12	24 Apr 2023	1,510,000	Cash
Total		7,000,000

[Differences between Tables 1 and 2 are shaded.]

20.  Thereafter, Treasure Stars filed an affirmation made by Mr Lee on 7 June 2024 in HCMP 771/2023. Mr Lee denied that he had ever received any repayments of the Loan “on behalf of” Treasure Stars. Mr Lee acknowledges that he had received 2 bank transfers from Mr Lui (items 6 and 8 of Table 2, each in the sum of $100,000), but they were unrelated to the Loan and were repayments of other personal loans advanced by Mr Lee to Mr Lui.

D.  THE PETITION FOR BANKRUPTCY AGAINST MR LUI

21.  On 21 August 2024, Treasure Stars presented the present bankruptcy petition against Mr Lui, which was amended and re-filed on 24 October 2024 (“the Petition”).

22.  On 6 January 2025, the Court ordered that the hearing of the Petition be adjourned for substantive argument. Despite leave granted to the parties to file supplemental affirmations, none was filed by Mr Lui.

23.  On 15 February 2025, Master Dick Ho ordered that the OS in HCMP 771/2023 be continued as if the cause had been begun by writ (“Master Dick Ho’s Order”).

24.  In resisting the present Petition, Mr Lui has adopted his and Lu’s affirmations filed in HCMP 771/2023.

E.  THE DEBTOR’S CASE

25.  There are in substance 3 grounds of opposition to the Petition:

(1)  There is a pending action in relation to the primary indebtedness in HCMP 771/2023;

(2)  The petitioning debt has been fully repaid; and

(3)  The Personal Guarantee is not enforceable because Mr Lui had not been informed that it was a personal guarantee and had therefore been misled into signing it.

F.  APPLICABLE LEGAL PRINCIPLES

26.  The principles on resisting a bankruptcy petition are trite, as stated in Re Miao Zhenguo [2022] HKCFI 1852 at §36:

(1)  The burden is on Mr Lui to demonstrate to the Court with sufficiently precise factual evidence that there is a bona fide dispute of the petitioning debt on substantial grounds.

(2)  It is not enough for a debtor to simply raise some factual disputes and submit that such factual disputes have to be resolved in a trial.

(3)  The key is for the Court to assess whether there are real and substantial disputes of fact which render the summary procedure of bankruptcy proceedings unsuitable for the determination of such real and substantial disputes of fact. In such a scenario, the validity of the petitioning debt would need to be fully investigated at trial.

(4)  Peripheral and/or disputes of fact which do not go to the foundation of the petitioning debt are normally distractions and are irrelevant in determining whether there are bona fide disputes to the petitioning debt on substantial grounds.

27.  In relation to the interplay between a summary judgment regarding the underlying indebtedness and a bankruptcy petition, and their respective evidentiary threshold, the case of Re Leung Cherng Jiunn [2016] 1 HKLRD 850 at §36 laid down the following principles:

“…

(2) The wording of Order 14 rule 3 is different from the test of bona fide dispute on substantial grounds. The test of bona fide dispute involves different consideration in respect of the evidence. The difference may not be significant, but there is still a difference. …

(3) The distinction between the two tests lies in establishing a bona fide defence (for resisting a petition) and a fair probability of establishing a bona fide defence (for obtaining leave to defend a civil action, whether unconditionally or with condition). So in that sense, the threshold test for resisting a petition would require a higher standard. …

(4) Notwithstanding this difference, it is fair to say that the threshold tests in both situations are broadly similar, as noted in the two recent English authorities. If a petition is dismissed on the basis there is a bona fide dispute on substantial grounds, it would be most unlikely that summary judgment could be obtained. Most probably, the defendant would be given leave to defend, whether unconditionally, or with conditions imposed if his defence is regarded as shadowy. Conversely, where a defendant has obtained leave to defend, unconditionally or with conditions, it would be most unlikely that a petition would be granted. …

(5) This is not to say it should be easier for a creditor to succeed in a petition than in seeking summary judgment in a civil action, notwithstanding the higher threshold test for resisting a petition in the sense as explained above. It is well established that petitions are not meant to be used for the purpose of debt collection and the winding-up or bankruptcy jurisdiction of the court would be exercised only in very clear cases. Where oral evidence is required to decide a real and substantial dispute of fact, the court will dismiss the petition. And if there is an abuse of process in invoking the jurisdiction of the court in an improper manner, the petitioning creditor may be ordered to pay indemnity costs.” (underlines added)

28.  The Court looks at the debtor’s evidence critically even if unconditional leave to defend has been obtained to defend a civil action. The principles have been summarized in Yip Hai Tak v Swiss Cosmeceutics (Asia) Ltd, [2024] HKCA 186, §21 , Au J, following Re Hong Kong Construction (Works) Limited (HCCW 670/2002, 7 January 2003) at [6(1)] - [6(4)], Kwan J (as she then was):

“(1) The burden is on the company to establish that there is a genuine dispute of the debt on substantial grounds. In this context, ‘substantial’ means having substance and not frivolous. An honest belief in an insubstantial ground of defence is not sufficient to avoid a winding-up order.

(2) The court should look at the company’s evidence against so much of the background and evidence that is not disputed or not capable of being disputed in good faith; in other words, the evidence is not to be approached with a wholly uncritical eye.

(3) The court would caution itself against unsubstantiated and unparticularised assertions, especially where particulars and information have been sought by the other side. It is incumbent on the company to put forward ‘sufficiently precise factual evidence’ to substantiate its allegations.

(4) The court does not try the dispute on affidavit but is to determine whether a substantial dispute exists. In so doing, the court necessarily has to take a view on the evidence, to see if the company is merely ‘raising a cloud of objections on affidavits’ or whether there really is substance in the dispute raised by the company. Even where the company has obtained unconditional leave to defend in an application for summary judgment, the Companies Court is not precluded from examining the evidence and taking a view on whether the debt is disputed on substantial grounds.” (underline added)

G. PENDING ACTION IN HCMP 771/2023

29.  Treasure Stars only sues Lu but not Mr Lui in HCMP 771/2023. In fact, HCMP 771/2023, HCSD 57/2023, and this Petition involve the same underlying debt owed by Lu to Treasure Stars. Lu and Mr Lui’s case throughout is that, although the Loan was taken out in Lu’s name, it was Mr Lui who had obtained the proceeds of the Loan to ease his cashflow and was responsible for repayment. In HCMP 771/2023, Lu contested the proceedings. He put in issue, amongst others, full repayment of the Loan. He had to rely on Mr Lui’s account in showing that the Loan had been repaid, in whole or in part.

30.  Master Dick Ho’s Order was made after considering the affirmations of Treasure Stars, Lu and Mr Lui at a hearing. This was an indication that he refused to grant summary judgment in the light of triable issues raised by Lu.

31.  Any repayment in satisfaction of the debt owed by Lu would necessarily reduce or negate the liability of Mr Lui as guarantor. It is thus impossible to say that the triable issues in HCMP 771/2023 do not equally apply to Mr Lui’s defence to this Petition.

32.  If this Court were to summarily reject Mr Lui’s arguments in the Petition, Lu may still raise the defence of full repayment at the trial of HCMP 771/2023, with Mr Lui as his witness. There will be a risk of inconsistent findings between 2 sets of proceedings.

33.  I have asked Mr Leung during this hearing whether there have been new developments since Master Dick Ho’s Order which would cause this Court to find Lu’s defence to be moonshine. Mr Leung answered in the negative.

34.  Accordingly, the issue of full repayment of the Loan ought to be tried in HCMP 771/2023 and this Petition should not continue. The bankruptcy court should not be used for the purpose of debt collection from a related party, the guarantor.

H.  FULL REPAYMENT OF THE LOAN

35.  The latest version of Mr Lui is that he had made 12 cash repayments totalling HK$6,700,000 and 3 bank transfers totalling HK$300,000 to Mr Lee in 7 months, between 9 September 2022 and 24 April 2023.

36.  Mr Leung submits that Mr Lui’s case is not credible for 3 reasons.

(1)  Full repayment is wholly inconsistent with the original defence of Mr Lui, when he applied to set aside the SD, that the borrower (ie Lu) had not received the Loan proceeds;

(2)  There are discrepancies between accounts in Lu and Mr Lui’s affirmations; and

(3)  Lack of cogent evidence supporting any of the alleged repayments.

H1.  Inconsistent defences

37.  In his home-made affirmation in support of his application to set aside the SD, Mr Lui stated that “借款人沒有收到有關貸款，有關爭議還在訴訟中”. At the hearing before DHCJ Jonathan Wong, Mr Lui’s solicitor informed the Court that there had been repayment of about $6 million. There was no documentary support. The inconsistent stance of Mr Lui was picked up by the learned Deputy Judge.

38.  Both Lu and Mr Lui have since set out in their affirmations that the Loan proceeds were transferred by Lu to a company of Mr Lui. Their case all along was that it was Mr Lui who had wanted a loan and thus sought the help of Lu in securing a loan from Treasure Stars. Accordingly, Mr Lui explained that in filing his homemade affirmation in HCSD 57/2023, he stated that the borrower (Lu) had not received the Loan proceeds.

39.  Unfortunately in the HCSD proceedings, Mr Lui was not given a chance to file an affirmation to explain. DHCJ Jonathan Wong dismissed HCSD 57/2023, stating that Mr Lui could explain in this bankruptcy proceeding. It would not be just now to deny Mr Lui’s chance to put forward the defence of full repayment.

H2.  Discrepancies in Lu and Mr Lui’s accounts of repayments

40.  Tables 1 and 2 contain discrepancies. Both tables arose out of information provided by Mr Lui to Lu. Table 2 purports to correct Table 1. Comparing the 2 Tables, the discrepancies were that:

(1)  there was a difference of 4 days between item 10 in Table 1 and item 9 in Table 2;

(2)  2 payments (items 12 and 13 in Table 1) were in fact paid on one occasion (item 11 in Table 12);

(3)  2 payments (items 4 and 5 in Table 1) were in fact paid on one occasion (item 12 in Table 12).

41.  The discrepancies did not affect the overall picture of the sequence of repayments and overall sum repaid, and hence not so significant as would, in themselves, discredit Mr Lui.

H3.  Lack of cogent evidence supporting any of the alleged repayments

42.  Unsurprisingly, save for 2 payments by bank transfers, Mr Lee denied ever receiving monies from Mr Lui “on behalf of Treasure Stars”. The WhatsApp messages that Mr Lui produced did not state the amount paid on each occasion. It stretches anyone’s imagination for such significant sums to be paid one after another in cash on 9 occasions without a single receipt or acknowledgement from the alleged recipient.

43.  I have also tabulated the specific case of each party concerning those 12 payments below:

Table 3

No.	Date	Amount	Mr Lui’s case	Treasure Stars’ case
1	9 Sept 2022	100,000	Repayment was one day after Mr Lui received the partial transfer of the Loan from [Lu]. Mr Lui‘s tight cash flow had been relatively eased by such receipt. He met Mr Lee to pay him.	It was just 2 days after drawdown of the loan
2	14 Sept 2022	400,000	The phone messages showed an unanswered call from Mr Lee to Mr Lui. Mr Lee asked Mr Lui to call back. At 1606, Mr Lee asked Mr Lui to bring [it] over to him that nite and gave the address at Kln. Mr Lui then said Jerry would bring [it] over. Mr Lui gave $400,000 to Jerry for him to give to Mr Lee at an address in Kln Tong.	Mr Lui’s message to Mr Lee that day simply stated that he would ask Jerry to take “something” (without specifying what it was) to Mr Lee.
3	16 Sept 2022	300,000	Mr Lee personally went to Mr Lui’s office in Kln Bay to collect $400,000 in cash.	Inconsistent evidence: Table 1 stated that Mr Lui paid $300,000 to Mr Lee, but § 41 of Mr Lui’s affirmation, stated that he gave Mr Lui $400,000.   Mr Lui’s voice messages with Mr Lee simply stated that Mr Lee was about to arrive. There was nothing about the purpose of the meeting.
4	23 Sept 2022	400,000	Mr Lee went to Mr Lui’s office to collect the cash at around 5:30 pm from his colleague called Ah Ming.	No corroborating evidence.
5	30 Sept 2022	900,000	On that day, Mr Lee forwarded to Mr Lui a screenshot of another WhatsApp message from Mr Lee to one Victor and one 大師兄Alvin 方，stating that Mr Lui would repay Mr Lee the following week. On seeing the message, Mr Lui called Mr Lee, who requested Mr Lui to repay $900,000 that day. They met up and Mr Lui paid Mr Lee.   Mr Lui’s company, Core of Commerce & Policy Consultancy (“CCPC”) had been paid $978,000 in cash (on his request) by a client Ruitai Construction Enginering Company on 29 September 2022 and he used this cash to pay Mr Lee.	Nothing in the WhatsApp message to connect the repayment to the Loan.   Nothing to show that Mr Lui was the beneficial owner of CCPC. BR record did not connect Mr Lui to CCPC.   Receipt allegedly issued by CCPC to this client on 29 September 2022 did not specify the method of payment, Mr Lui had not given any particulars about the underlying transaction between CCPC and this client, nor evidence of the request made to this client to make payment of this sum in cash.
6	24 Oct 2022	100,000 (by bank transfer)	Mr Lui provided a bank statement of a company called Core of Commerce & Policy Management Ltd (“CCPM”) recording this bank transfer and item 8.	Mr Lee claimed that these 2 transfers were unrelated to the Loan, but were to repay other personal loans he made to Mr Lui.
7	31 Oct 2022	190,000	On this day, Mr Lee messaged Mr Lui, “今個星期好轉番條數俾我啦 我3號飛要用錢“. Mr Lui met Mr Lee to repay him.	Nothing to indicate that this was a request for repayment of the Loan; rather, Mr Lee was pressing Mr Lui as Mr Lee himself had a need to use money.
8	11 Nov 2022	100,000 (by bank transfer)	See item 6 above.	See item 6 above. The WhatsApp message between Mr Lui and Mr Lee on 11 Nov 2022 showed that the transfer made that day was unrelated to the Loan as Mr Lui stated “轉左10萬仲差你80“ and Mr Lee replied, “差我100” and “欠我123萬未計息“.
9	17 Nov 2022	700,000	Mr Lee met Mr Lui to receive this sum.   CCPC was paid $1,055,000 in cash on Mr Lui’s request by a client, Smart Progress. Mr Lui used the cash to pay Mr Lee. Nothing was raised by Treasure Stars or Mr Lee to contradict Mr Lui’s assertion, particularly the ability to pay via CCPC upon the invoice settled by Smart Progress Contracting HK Co Ltd.	No corroborative evidence.   Receipt allegedly issued by CCPC to this client on 17 Nov did not specify the method of payment.   No particulars of the underlying transaction between CCPC and this client, nor evidence of the request to this client to pay.
10	29 Nov 2022	100,000 (by bank transfer)	[Nothing mentioned in Mr Lui’s affirmation about this.]   Mr Lui provided CCPC’s bank statement recording this transfer. No denial by Mr Lee of this bank transfer.	No particulars and explanation in Mr Lui’s affirmations as to the circumstances in which this transfer was made, eg how and when Mr Lee requested him to repay by bank transfer.
11	24 Feb 2023	2,200,000	Mr Lui received $1.5m and $700,000 in cash from selling 2 watches on 1 and 14 Feb 2023. The WhatsApp message on 1/2/2023 stated “交左“and “150 萬” with photos of wads of bank notes and luxury watches, which corroborated Mr Lui’s assertion of the manner in which he could and had repaid Mr Lee.	Mr Lui has not provided any particulars of these 2 watches nor evidence of their sale other than 2 photos sent by WhatsApp message by a person called William, with wads of bank notes and numerous watches. Those 2 photos did not constitute cogent evidence of the alleged sale of the 2 watches.
12	24 Apr 2023	1,510,000	Mr Lui met Mr Lee. CCPC was paid $1,129,500 and $723,600 in cash on Mr Lui’s request by 2 clients. He used the money to pay Mr Lee.	Apart from the receipts allegedly issued by CCPC to these 2 clients on 3 and 18 April 2023 which did not specify the method of payment, Mr Lui has not given particulars about the underlying transaction between CCPC and these clients, or the alleged requests made to these clients to settle these large sums of cash.   No evidence that Mr Lui met up with Mr Lee on this date.
Total		7,000,000

44.  One can see from Table 3 that, the evidence that Mr Lui produced to prove repayment was less than cogent. For one thing, Mr Lui had tight cash flow and the duration of the Loan was 12 months. It was strange that he started repaying the day after he first received the Loan proceeds. And, with such significant funds that came through his hands, one also queries why he only paid interest of $30,000 each month instead of the agreed $35,000?

45.  7 months’ interests were paid to Treasure Stars. There was no documentary evidence of Treasure Stars or Mr Lee ever asking Mr Lui to repay the Loan in cash and why it should be so. Given that Mr Lui had allegedly once requested an acknowledgement of receipt from Mr Lee but was refused, it would be even more incredible that Mr Lui had continued to pay him in cash instead of using a traceable mode of payment, such as by cheque.

46.  Apart from items 2, 3, 4, there is also no evidence as to where Mr Lee and Mr Lui met when payments were made. When confronting Mr Lee about the OS in HCMP 771/2023 in the July 2023 message, Mr Lui did not allege that he had repaid any part of the Loan.

47.  Further, there is no cogent evidence to show how Mr Lui obtained $6.7 million cash to pay Mr Lee. CCPC and CCPM are not even shown on documents to be Mr Lui’s companies. In respect of e.g. items 5, 9 and 12, Mr Lui had not shown that he/his company was paid by clients in cash, so why would he have to pay Mr Lee in cash? In respect of items 11 and 12, for example, Mr Lui had received money a few days before he paid Mr Lee. There was no reason why Mr Lui could not have done a transfer or issued a cheque.

48.  Mr Leung submits that due to the inconsistent case of Mr Lui that the Loan proceeds had not been received by Lu, even if Mr Lui has adduced sufficiently precise and credible evidence that he had repaid $7,000,000 to Mr Lee, such payments could not have been for the purpose of repaying the Loan. I am unable to accept this. There was evidence of the Loan proceeds being first paid into Lu’s account, which were then passed on to CCPC. For present purposes, Mr Lui’s evidence on repayment must be viewed as referring to the Loan.

49.  That said, I do not think Mr Lui’s evidence can be rejected outright when considered against the version of Mr Lee. Apparently, Mr Lui and Mr Lee had been on good terms with money passing between their hands. Undeniably, 3 bank transfers were made. For item 8, Mr Lee was probably right. He corrected Mr Lui as to the balance of the debt being $1 million and interest as $1.23 million. The principal owed under the Loan (items 9-12, assuming 8 repayments had been made) was $4,510,000. However, there is dispute as to the purpose of item 6 and Mr Lee never explained what item 10 was for.

50.  Mr Lui had produced some documents as to the source of cash that he had used to pay Mr Lee. Although CCPC was not on record a company of Mr Lui, Lu had passed on the Loan proceeds of CCPC indicating control of Mr Lui over this company. In respect of item 2, Mr Lee did not state what it was that Mr Lui gave to him. In respect of item 3, the evidence from the voice messages indicated that Mr Lee and Mr Lui had met, and Mr Lee never denied it.

51.  I accept Mr Tam’s submission that there are triable issues as to (a) whether at least some repayments had been made and how much; (b) whether any repayment was related to the Loan; and (c) whether the documents produced by Mr Lui as to the source of money are credible. These questions are also relevant to the questions of liability and quantum in HCMP 771/2023.

52.  I have not overlooked Lu’s challenge to the honesty of Mr Lee, in that the latter was arrested by the ICAC in around June 2023 for the offences of conspiracy to defraud and fraud (on different matters). (See Exhibit LXM-4 omitted from the trial bundle.) Lu also queried if Lee had passed on payments received from Mr Lui to Treasure Stars.

53.  The defence of Mr Lui cannot be rejected summarily as being “a cloud of objections”. I decline to adjudge him bankrupt.

I.  PERSONAL GUARANTEE NOT ENFORCEABLE

54.  Mr Lui contends that the Personal Guarantee is unenforceable as he had not been informed that it was a personal guarantee and had therefore been misled into signing it.

55.  This contention has no merits as:

(1)  It has never been raised in HCSD 57/2023. It is an abuse of the Court’s process for him to run this argument now, which could and should have been run in HCSD 57/2023 and without explanation as to why it was not run then: Re Yip Kim Po [2022] 3 HKLRD 356, §21, Linda Chan J.

(2)  As a person of full age and not suffering from disability, Mr Lui is bound by what he had signed.

(3)  In his affirmation in HCMP 771/2023, Mr Lui stated that he had told Lu, before the Loan Agreement and the Personal Guarantee were signed, that he (ie Mr Lui) “would be personally liable and guaranteed for the loan”. He, as alleged, personally repaid the Loan.

56.  Mr Tam, rightly, did not pursue this issue in his written submission.

J.  WHETHER TO STAY OR DISMISS

57.  Mr Leung submits that this Court may stay the Petition pending trial of HCMP 771/2023. However, I do not consider it appropriate to leave the Petition hanging over the head of Mr Lui when the trial dates of HCMP 771/2023 are not even in sight. I also take the view that Treasure Stars is using the Petition to speed up the debt recovery from Mr Lui when the civil court has effectively given leave to Lu to defend the OS including the issue of repayment and Treasure Stars could have sued Mr Lui there as well. Accordingly, I hold that a dismissal of the Petition is more appropriate than a stay pending trial of HCMP 771/2023.

K.  CONCLUSION AND COSTS

58.  I dismiss the Petition, there being a bona fide dispute on the issue of repayment of the Loan.

59.  Costs should follow the event. On a nisi basis, I order Treasure Stars to bear the costs of Mr Lui, summarily assessed at $250,000.

60.  I thank counsel for their assistance.