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Re Lee Wai Kwok

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date13 January 2016
Year2016
Judgement NumberHCB5994/2014
Subject MatterBankruptcy Proceedings
CourtHigh Court (Hong Kong)
HCB5994/2014 RE LEE WAI KWOK

HCB 5994/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5994 OF 2014

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RE : LEE WAI KWOK, the Debtor
EX-PARTE : PRUDENTIAL HONG KONG LIMITED, the Petitioning Creditor

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Before : Hon Ng J in Court
Date of Hearing : 6 August 2015
Date of Judgment: 13 January 2016

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J U D G M E N T

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Introduction

1. There is before this court a bankruptcy petition dated 7 August 2014 (“Petition”) presented by Prudential Hong Kong Limited (“Prudential”) against Mr Lee Wai Kwok (“Debtor”). The Petition is based on the Debtor’s non-compliance with a statutory demand dated 2 April 2014 (“statutory demand”) for the sum of over HK$2 million. There was no prior application by the Debtor to set aside the statutory demand.

2. As indicated in Prudential’s skeleton submissions, for the present purpose, it will only rely on the Debtor’s non payment of items (a) and (b) in the statutory demand i.e. Sign-on Fee and Monthly Finance. They add up to over HK$1.83 million (“Debt”). The Debtor does not dispute having received these two sums.

Background

3. Prudential is an insurance company carrying on its business in Hong Kong. The Debtor is an insurance agent of considerable experience.

4. In March 2012, the Debtor joined Prudential as its Senior Regional Manager effective from 1 March 2012 (“Effective Date”) and had signed a number of documents setting out the terms of his appointment. They are

(1) a Service Agreement[1] for Senior Regional Manager signed on or about 5 March 2012.

(2) an Agency Agreement and a Supplementary Agreement for Managers signed on or about 8 March 2012. Both agreements are expressed to be effective from the Effective Date.

(3) an Addendum[2] to the Service Agreement signed on or about 26 March 2012 which provided for a new Clause 4A.2 regarding “Clawback of Sign‑on Fee” to replace the existing one and added a new Clause 4A.3 regarding “Catch up of Sign-on Fee”.

5. According to Clause 2 of the Service Agreement, the Debtor also agreed to be bound by inter alia Prudential's Agency Terms and Conditions ("AT&C").

6. Clause 4A.1 of the Service Agreement provided that Prudential would advance to the Debtor a lump sum Sign-on Fee of HK$1,548,000 within 30 days from the date it activated his agent code. On 30 March 2012, Prudential duly paid the Sign-on Fee to the Debtor.

7. Upon receipt of the Sign-on Fee, the Debtor signed an acknowledgement form expressly indicating his agreement "to be bound by all the terms of the Service Agreement" and his understanding that "the Sign‑on Fee is subject to terms of repayment under the Service Agreement and the Company shall have the right to take whatever steps as may be necessary to recover the Sign-on Fee from [him] if [the Debtor triggers] any causes of repayment thereunder".

8. In this regard, Clause 4A.2 of the Service Agreement, as provided for in the Addendum,stated that:

“After its release, the Sign-on Fee will be subject to clawback rules as follows:

(a) if your appointment hereunder is terminated (whether by you or the Company) before the end of your 24th month of appointment (counting from the Effective Date) for whatever reasons, you shall have to repay the full amount of the Sign-on Fee to the Company forthwith upon our demand…”

9. Clause 4B of the Service Agreement also provided that Prudential would advance a Monthly Financing to the Debtor. Under this provision, Prudential had advanced a monthly sum of HK$64,500 to the Debtor from the Effective Date for three months. Owing to the Debtor’s failure to meet certain production target, Prudential reduced the amount of Monthly Financing to HK$32,250 in June, July and August 2012 and suspended it altogether as from September 2012. As a result, the total Monthly Financing advanced by Prudential to the Debtor is HK$290,250 ie HK$64,500 x 3 months + HK$32,250 x 3 months[3].

10. Clause 6 of the Service Agreement provided that the Sign‑on Fee, Monthly Financing etc. paid to the Debtor are in the nature of credit advance. According to Table G thereunder, the Sign‑on Fee, Monthly Financing and other credit advance would be repayable in full if the Service Agreement, the Agency Agreement and/or the Supplementary Agreement is/are terminated by either party for whatever reasons within 24 months. If the Debtor’s appointment was terminated after 24 months, but within 25 to 36 months, he would still have to repay 60% of the Sign‑on Fee, Monthly Financing and other credit advance.

11. Without going into the minute details, Prudential claims the Debtor’s performance has been unsatisfactory for quite a long time ever since his appointment. As recorded in an email to the Debtor dated 16 September 2013, there was a meeting between Prudential’s management and the Debtor held on 13 September 2013 in which it was said:

“…We have already explained to you that your performance for the past 18 months was not satisfactory and could not able to meet your contracts’ requirements. In view of this, we have the right to terminate your contract. However, we agreed to extend your contract until the end of Nov 2013 with the support of your leader, Anna. You are also be reminded that Company will closely monitor your production and performance progress. If your performance is still found not satisfactory and does not meet with any of the contract requirements during this period. The Company will take appropriate action without further notice.”

12. In another email dated 16 October 2013 to the Debtor, Winnie Law, Senior Manager, Agency Compensation, of Prudential said:

“During the meeting, you have agreed to submit a cheque to repay the negative balance of your commission account if you have no business in Sep and this is also one of the requirement for us to consider to extend your contract to Nov. You have sufficient time to submit the cheque to us before your business trip on 9 Oct 2013. However, you have broken your promise. We are not going to extend your contract to Nov if I cannot receive your repayment on or before 21 Oct 2013. Please arrange somebody to submit the cheque to me by hand if you are still not in Hong Kong.”

13. Lastly, by an email dated 14 January 2014 from Winnie Law to the Debtor, Prudential recapped the situation and gave notice to terminate the Debtor’s appointment. It reads:

“According to my email to you dated 16 Sep 2013, we had clearly stated Company’s position that we have the right to terminate your contract if you fail to meet your contracts’ requirement. Your contact had already been specially extended to Nov 2013 after our meeting on 13 Sept 2013. We had already provided you sufficient time to catch up your business. By the end of Nov, you were found to be failed to achieve a satisfactory level of personal persistency (85%) and group persistency (80%) which were 54% and 71.27%. In view of this, we try our best to arrange meetings twice with you to discuss your performance and your...

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