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Re She Ka Kui

Judgment Cited authorities 6 Cited in 1 Precedent Map Related
Vincent
Judgment Date26 April 2018
Neutral Citation[2018] HKCFI 601
Year2018
Judgement NumberHCB1013/2017
Subject MatterBankruptcy Proceedings
CourtCourt of First Instance (Hong Kong)
HCB1013/2017 RE SHE KA KUI

HCB 1013/2017

[2018] HKCFI 601

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 1013 OF 2017

_______________

Re: SHE KA KUI Debtor
EX-PARTE: CHUBB LIFE INSURANCE COMPANY LTD Petitioner
(formerly known as ACE LIFE INSURANCE COMPANY LTD)

_______________

Before: Hon Ng J in Court
Date of Hearing: 2 February 2018
Date of Judgment: 26 April 2018

_________________

J U D G M E N T

_________________

Introduction

1. There is before this court a bankruptcy petition dated 20 February 2017 (“Petition”) presented by the Petitioner (“Chubb”) against Mr She Ka Kui (“Debtor”). The Petition is based on the non-compliance with a statutory demand dated 7 April 2016 (“statutory demand”) for the sum of over HK$2.7 million. In her skeleton submissions, Ms Liao said Chubb is prepared to reduce HK$120,000 from that amount by way of set-off and proceed with the Petition on the basis of an outstanding debt of around HK$2.66 million (“Debt”).

2. The statutory demand was served by advertisement in the Sing Pao Daily News. It has not been complied with and there was no application to set it aside.

Chubb’s case

3. The Debtor was an insurance agent of Chubb from 25 September 2014 to 15 October 2015. The contractual terms governing the relationship between the parties were contained in the following documents:

(1) Agent’s Agreement dated 25 September 2014 (“Agent’s Agreement”).

(2) Remuneration Agreement dated 25 September 2014 (“Remuneration Agreement”).

(3) Manager’s Agreement dated 26 September 2014 (“Manager’s Agreement”).

(4) Letter on “Advanced Manpower Growth Bonus” (“Growth Bonus Agreement”) dated 26 September 2014.

(5) Letter on “Rental Allowance” dated 15 December 2014 (“Rental Agreement”).

4. Pursuant to the Remuneration Agreement, the Growth Bonus Agreement and the Rental Agreement, Chubb has paid the Debtor a Sign-on Bonus (“Sign-on Bonus”), Advanced Manpower Growth Bonus (“Growth Bonus”), Monthly Special Allowance (“Special Allowance”), and a rental deposit (“Rental Deposit”) as follows:

(1) Sign-on Bonus in the sum of HK$1 million in September 2014;

(2) Growth Bonus in the sum of HK$1 million in September 2014;

(3) Special Allowance in the total sum of HK$640,953.47 for the months September 2014 to April 2015; and

(4) Rental Deposit in the sum of HK$120,000 on 17 December 2014.

5. As regards termination of the contractual relationship between Chubb and the Debtor:

(1) The Agent’s Agreement might be terminated by either party giving to the other not less than 30 days prior written notice: Clause 16.1.

(2) The Manager’s Agreement would terminate immediately upon the termination of the Agent’s Agreement: Clause 5.

(3) The Remuneration Agreement would be in force until the expiry of 3 years or termination of the Agent’s Agreement, whichever is earlier: Clause 5.

6. As far as Sign-on Bonus, Growth Bonus and Special Allowance are concerned, they are subject to the “claw-back” mechanism set out in Clause 4.1 of the Remuneration Agreement — in the event the Agent’s Agreement is terminated for any reason within two years from the date of the Debtor’s appointment ie 25 September 2014, the Debtor is liable to repay 100% of them to Chubb upon termination.

7. The Agent’s Agreement was terminated by Chubb with effect from 15 October 2015 by a letter to the Debtor dated 15 September 2015. Since the termination was within two years from 25 September 2014, Chubb contends that the Debtor is obliged to repay all the Sign-on Bonus, Growth Bonus and Special Allowance totaling HK$2.64 million. Concerning the Rental Deposit of HK$120,000 which was also repayable upon termination of the Agent’s Agreement, since Chubb is prepared to forego this amount, it is unnecessary for this court to go into the reason for it. Lastly, the Debtor is said to owe HK$26,605.24 to Chubb by way of “negative commission”, which is undisputed by him.

8. Accordingly, the Debt consists of the following 4 items:

Sign-on Bonus HK$1,000,000.00
Growth Bonus HK$1,000,000.00
Special Allowance HK$640,953.47
Negative Commission HK$26,605.24
Total: HK$2,667,558.71

Deliberation

9. It is well-established that in order to successfully oppose a Petition, a debtor has to show a bona fide dispute to the debt on substantial grounds, by sufficiently precise evidence which is believable, and must establish that he actually has a defence of substance, not just a fair probability of one: Wong Lo Fung v AXA China Region Insurance Co Ltd unrep; HCB 1864/2013; 29 August 2014 at [25]-[26].

10. It is equally well-established that bankruptcy proceedings are summary in nature and are not intended to be used for the purpose of debt collection. Where there are bona fide disputes turning to a substantial extent on disputed questions of fact which require viva voce evidence, such disputes could not properly be decided on a Petition, in which case the Petition should be dismissed: Re Yuen Mun Wah (debtor) [2015] 2 HKLRD 108.

11. The jurisdiction to make a bankruptcy order is only exercised in very clear cases: Re Leung Cherng Jiunn (debtor) [2016] 1 HKLRD 850. At [27(5)], Kwan JA set out the law in these terms:

“ (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.” (Emphasis Added)

12. Mr Lin, for the Debtor, submits that his client has a bona fide defence to the Debt. His defence is based on certain promises made by Ms Phyllis Wong (“Ms Wong”), Agency Development Officer of Chubb, to him resulting in an oral agreement he reached with Ms Wong on behalf of Chubb in May 2013. His defence is also based on the reassurance made to him by Mr Alan Lam (“Mr Lam”), CEO of Chubb, in December 2013.

13. Mr Lin further submits, on the basis of the oral agreement and those promises and reassurance, the Debtor has a genuine and serious cross-claim against Chubb which exceeds the amount of the Debt.

14. According to the Debtor’s affirmation in opposition, the promises, the oral agreement and the reassurance were made in these circumstances.

15. From 1 August 2011 to 12 September 2014, the Debtor worked for AIA International Ltd (“AIA”) as a District Manager. The Debtor had a successful career in AIA — he had more than 40 downline agents under him and his income in the financial year of 2011/2012, for instance, was over HK$2 million.

16. In or about May 2013, the Debtor was approached by Ms Wong who told him Chubb wanted to recruit him and his team of downline agents. As there were restrictions in his contract with AIA ie he was contractually bound to work for AIA for 6 years, failing which he had to pay substantial compensation, the Debtor hesitated. In order to induce him and his team to join Chubb, Ms Wong made the following promises to the Debtor:

(1) The Debtor could be a silent partner of Chubb with immediate effect and send a silent Agency Director to work for Chubb on his behalf prior to him officially joining Chubb.

(2) Chubb could wait until September 2014 for the Debtor to officially join it on condition that his downline agents should gradually start to move to Chubb from May/June 2013 onwards. The Debtor should transfer his...

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1 cases
  • Re Li Wing Sang
    • Hong Kong
    • Court of First Instance (Hong Kong)
    • 12 April 2019
    ...to establish that a debtor actually has a defence or cross-claim of substance, not just a fair probability of one: Re She Ka Kui [2018] HKCFI 601 at §§9, (2) Bankruptcy proceedings are summary in nature and are not intended to be used for the purpose of debt collection. The jurisdiction to ......

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