Zhang Liyuan v Luu Hung Viet Derrick

CourtHigh Court (Hong Kong)
Judgment Date08 February 2012
Judgement NumberHCB4776/2011
Subject MatterBankruptcy Proceedings
HCB4776/2011 ZHANG LIYUAN v. LUU HUNG VIET DERRICK

HCB4776/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 4776 OF 2011

____________________

BETWEEN

ZHANG LIYUAN Petitioner
and
LUU HUNG VIET DERRICK Respondent

____________________

AND

HCSD31/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO. 31 OF 2011

____________________

BETWEEN

ZHANG LIYUAN Petitioner
and
LUU HUNG VIET DERRICK Respondent

____________________

(Heard Together)

Before : Hon Barma J in Court

Date of Hearing : 8 February 2012

Date of Judgment : 8 February 2012

____________________

J U D G M E N T

____________________

1. This is the hearing of two matters, the first being a bankruptcy petition issued by the creditor in these proceedings, Mr Zhang Liyuan, against the debtor, Mr Luu Hung Viet Derrick, in respect of a debt allegedly due by the debtor to the creditor of some HK$61,203,560.87.

2. The petition is based on a statutory demand which was served on the debtor on 29 April 2011. The petition itself was presented on 1 August 2011.

3. Subsequent to the presentation of the petition the debtor applied out of time to set aside the statutory demand which had been served on him on the ground that it was confusing and had thereby caused prejudice to him by leaving him in a situation which he did not and could not know the exact amount owed by him to the creditor.

4. The application to set aside the statutory demand out of time was not immediately dealt with as the parties agreed by a consent order that both the petition and the application to set the statutory demand aside out of time should be dealt with at the same time, taking the view that the issues that would be raised in both applications were substantially the same.

5. It is in those circumstances that both the petition and the application to set aside the statutory demand out of time have come before me today.

6. The debt on which the petition is based arises out of a judgment in High Court Action No. 644 of 2010, in which the petitioner was the plaintiff and the debtor the defendant. In those proceedings the petitioner claimed the sum of HK$43 million from the debtor.

7. Those proceedings were commenced on 10 May 2010. Just under a month after their commencement, on 9 June 2010, the parties entered into a consent order in the form of a Tomlin order which in effect obliged the debtor to pay the full amount claimed of HK$43 million plus interest thereon as from 6 May 2009 at a rate of 24 per cent per annum.

8. Provision was made for the settlement of the $43 million principal of the judgment by the transfer of a certain number of shares in a company that is now known as Wai Chun Mining Industry Group Company Limited (“Wai Chun”), and the payment of a certain further amount of cash to top up the payment to an agreed value of HK$43 million.

9. It appears that the debtor did not comply with the terms of this first consent order and in the event a second consent order was subsequently entered into on 8 December 2010, which in essence reiterated the terms of the first consent order, albeit with some variation as to the details in relation to the transfer of shares and the amount that was to be paid in addition to the shares to be transferred.

10. This second consent order was also not complied with and as a result the petitioner applied, as he was entitled to do under the terms of the consent order, to obtain a formal judgment against the debtor of the amount in respect of the claim.

11. That application came on for hearing before Master K Lo on 15 February 2011. Prior to the hearing, the debtor had put in an affirmation in which he made various points in opposition to the entering of judgment against him. One point in particular is of relevance for present purposes – that is the debtor’s allegation that an amount of HK$8.12 million of the principal of the debt had, in fact, been satisfied by the transfer by him to a plaintiff in other proceedings (who was not the petitioner) of a certain number of shares in Wai Chun.

12. The exact nature of the debtor’s case on this is somewhat complicated but it involves the proposition that HCA 664 of 2010 (in which the judgment debt that is the subject of the petition arose) and the other set of proceedings, HCA 1962 of 2010, in both of which the debtor was a defendant, proceedings were in some way related and that the plaintiffs in the two sets of proceedings were in fact nominees for a Mr Lam, who had entered into a stock lending arrangement with the debtor. It is suggested that the effected payment by transfer of shares in order to settle HCA 1962 of 2010 was to be taken into account so as to simultaneously reduce the amount of the judgment in HCA 644 of 2010 by the amount of HK$8.12 million.

13. Notwithstanding this argument Master K Lo made an order giving judgment for the creditor of HK$43 million. It seems to me, therefore, that the position must be that the debtor’s argument as to the payment of HK$8.12 million was rejected by the master and judgment for the full amount was accordingly entered against him.

14. Thereafter, there was no appeal against this order. Instead, there were two further consent orders that were made with a view to trying to settle the payment due under the judgment but neither of these resulted in anything and ultimately the statutory demand was served on 29 April 2011.

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