RE DAHIYA RAVINDER SINGH

HCB 7961/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7961 OF 2011

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J U D G M E N T

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1. This was the hearing of a bankruptcy petition presented on 21 December 2011 by Angel Garment Limited (“the Petitioner”) against Mr Dahiya Ravinder Singh (“the Debtor”).  The petition is based on a debt of HK$18,131.50, made up of a sum of HK$17,800 under a costs order made against the Debtor by the Labour Tribunal on 19 August 2011, following the trial of an unsuccessful claim by the Debtor against the Petitioner in that tribunal, and the interest accruing thereon between the date of the costs order and 11 November 2011, the date on which a statutory demand claiming payment of the costs plus accrued interest was served on the Debtor.  No payment was made by the Debtor in respect of any part of the amount claimed under the statutory demand, nor was any application made to set it aside.

2. The Debtor filed two affirmations in opposition to the petition.  The first affirmation (dated 23 December 2011) indicated that he was dissatisfied with the decision of the Labour Tribunal, and sought to oppose the petition on the basis that that decision was wrong, so that the costs order should not be enforced against him.

3. When the matter came before me on 20 February 2012, it became apparent that the Debtor had in fact applied for leave to appeal against the decision of the Labour Tribunal, but that his application had, on 12 October 2011, been dismissed by Yam J, against whose decision there can be no appeal (see section 32 of the Labour Tribunal Ordinance (Cap 25)).  This ground of opposition was therefore one which had no prospects of success.  The Debtor then stated that he also had cross‑claims against the Petitioner, which exceeded the amount of the debt on which the petition was based.  Accordingly, leave was given to the Debtor to file further evidence in opposition to the petition to deal with such asserted cross‑claims.

4. This he did by his second affirmation (dated 23 February 2011), to which was exhibited a statement in which the Debtor indicated that there were two cross-claims, namely:-

(1)   An amount of HK$2.18 million for a period of employment with the Petitioner said to have been from 1 February 2008 to 1 September 2010.

(2)   A further amount of US$12 million said to be the value of a website which the Debtor said he had created for the Petitioner.  This figure was arrived at on the basis that the website was worth US$3 million per year, and a claim was made for a period of four years, between April 2008 and March 2012.

A number of other documents, including what appear to be substantially all of the Debtor’s submissions to the Labour Tribunal in the Labour Tribunal proceedings to which I have referred and to the High Court in respect of his application for leave to appeal, were also exhibited to this affirmation.

5. The position is, therefore, that there is no dispute as to the debt underlying the petition, but that the Debtor resists the making of a bankruptcy order on the basis of the two cross‑claims mentioned above.  It is well established that in such a case, it is for the Debtor to demonstrate that the cross‑claims relied upon are bona fide and substantial – i.e., that they are brought in good faith, and that they have substance, and for this purpose to adduce sufficiently precise factual evidence to enable the court to come to the conclusion that the cross-claim is of substance.  Where this is done, the bankruptcy court will not generally inquire further into the merits of the dispute, leaving it to the parties to deal with it by legal proceedings in the ordinary way.

6. For the Petitioner, Ms Liang submitted that the Debtor had failed to adduce any sufficiently precise evidence of his asserted cross‑claims.  She pointed out that both of the claims put forward were simply assertions, with little or nothing in the way of supporting detail, information or documentation.

7. In the case of the first cross‑claim for HK$2.18 million, Ms Liang submitted that there was no breakdown as to the amount, nor any explanation of how it was arrived at.  Further, she submitted that insofar as it was suggested that this was in respect of unpaid salary or wages, the Labour Tribunal had already rejected the Debtor’s claim to have been an employee of the Petitioner, and had also gone on to find that even if the Debtor had been an employee, his involvement with the Petitioner had been terminated and come to an end by about September 2008, and that there were no further sums due to him beyond what he had already received.

8. In my view, the Debtor has not established the existence of a cross‑claim of substance in this respect.  The amount claimed is unparticularised, and it is not at all clear how it has been arrived at. Even assuming that the claim is based on an allegation (which appears in the submissions to the Labour Tribunal) that he was to be paid HK$80,000 per month for his services (whether as an employee or otherwise), there is little in the way of evidence to support such a claim.  Indeed, as the presiding officer explained in giving the judgment of the Labour Tribunal, the evidence before the tribunal at best established that the Petitioner had agreed to pay the Debtor HK$15,000 a month but that his relationship with the Petitioner had been terminated after a few months, and that further payments of HK$65,000 paid in each of three months prior to September 2008 were paid by a director of the Petitioner, Mr Mohinani, personally from his own personal bank account, and were loans to the Debtor.  In these proceedings, the Debtor has not put forward any further evidence that might support any allegation that the Petitioner is indebted to him in the amount claimed, and I am therefore unable to find that this cross-claim has the necessary substance that is required for the purposes of resisting the petition.

9. The position in relation to the second cross-claim is no better.  Although there is some evidence (in the papers before the Labour Tribunal) that the Debtor may have done some work towards the creation of a website, there is nothing to show whether this was done by agreement between the Petitioner and the Debtor, and if so, what (if anything) the Petitioner had agreed to pay the Debtor for doing this, beyond whatever it was paying him during the time that he was working for the Petitioner, whether as a consultant or an employee.  Moreover, there is nothing, beyond the Debtor’s bare assertion, to suggest that the value of the website was as much as US$3 million per annum, that the amount he should be paid in respect of it should be based on this asserted value, or to support his suggestion that he should be paid such an amount for a period of four years for his work on it. The claim is thus one which is also wholly lacking in the substance that is necessary for it to form a basis of resistance to the petition.

10. I would also note that, whatever the merits of the asserted cross-claims, it seems quite clear that such cross-claims would never be litigated, as the Debtor frankly accepted that he could not afford the time or cost involved in doing so.  In those circumstances, I have considerable doubt as to whether (even if, contrary to my view, they had any substance to them) they could properly be relied upon to resist the making of a bankruptcy order.

11. Thus, for all of the foregoing reasons, I am satisfied that the Debtor has not shown any viable grounds for resisting the petition, and I shall therefore make the usual bankruptcy order, with costs, against the Debtor.