HCB1612/2019 RE HAN, CATHERINE (韓熙庭, formerly known as 韓文虹) - LawHero
HCB1612/2019
高等法院（破產）Deputy High Court Judge William Wong SC15/9/2019[2019] HKCFI 2274
HCB1612/2019
A A
HCB 1612/2019
B [2019] HKCFI 2274 B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF FIRST INSTANCE D
BANKRUPTCY PROCEEDINGS NO 1612 OF 2019
E E
____________
F F
RE : HAN, CATHERINE (韓熙庭,
G formerly known as 韓文虹) Debtor G
H
EX PARTE : ZHONGTAI FINANCING H
(HONG KONG) LIMITED
I
(中泰金融 (香港) 有限公司) Petitioner I
____________
J J
Before: Deputy High Court Judge William Wong SC in Court
K K
Date of Hearing: 27 August 2019
L Date of Judgment: 16 September 2019 L
M M
JUDGMENT
N N
O THE PETITION O
P 1. Zhongtai Financing (Hong Kong) Limited (“the Petitioner”) P
presented a bankruptcy petition against Han Catherine (“the Debtor”) on
Q Q
19 March 2019 (“the Petition”). In the Petition, it is stated, inter alia, that:
R R
“ 2. The Debtor is justly and truly indebted to us for the
aggregate sum of US$51,633,560.13 as of 8 June 2018 (‘Debt’),
S being the outstanding debt due and owing by the Debtor pursuant to: S
(1) A Loan Agreement dated 30 June 2017 between Shu Zhi
T Hong Kong Trading Co., Limited as borrower (‘Borrower’) T
and the Petitioner as lender; and
U (2) A Guarantee dated 30 June 2017 (‘Guarantee’) signed by U
the Debtor as guarantor.
V V
A - 2 - A
…
B B
4. Pursuant to the Guarantee, the Debtor provided a guarantee
to the Petitioner for the debt and liabilities of the Borrower under
C C
the Loan Agreement, including repayment for principal of the Loan,
accrued interests and accrued damages.
D … D
6. The Borrower fails to repay the principal of the Loan
E in an amount of US$40,000,000.00 (‘Outstanding Principal’) E
or any part thereof and all interests and damages accrued from
31 December 2017 onwards. Up to 8 June 2018, the accrued
F interests is in the sum of US$1,836,529.70 (‘Outstanding Interests’) F
and the accrued damages is in the sum of US$9,797,030.43
(‘Outstanding Damages’). Further, a daily interest of US$10,958.90
G G
on the Outstanding Principal will be accrued each day and further
damages will be accrued at a daily rate of 0.15% on any outstanding
H sums under the Loan Agreement (including the Outstanding H
Principal and any outstanding interests) until the date of full
repayment.
I I
7. Under the Guarantee, the Debtor as guarantor has the
J
liability to repay the full outstanding amount under the Loan J
Agreement, including the Outstanding Principal, Outstanding
interests and Outstanding Damages.
K … K
9. On 10 August 2018, three statutory demands (‘Statutory
L Demands’) for the Outstanding Principal, Outstanding Interests and L
Outstanding Damages calculated as of 8 June 2018 respectively
were served upon the Debtor by advertising three notices of the
M same respectively once in the Sing Tao Daily, a Chinese newspaper M
widely circulating in Hong Kong in respect of the above-mentioned
N Debt. To the best of our knowledge and belief, the Statutory N
Demands (or any of them) have neither been complied with nor set
aside in accordance with the Rules, and no application to set them
O (or any of them) aside is outstanding.” O
P P
2. There is no dispute about the Outstanding Principal,
Q Outstanding Interests and Outstanding Damages. Mr Yuen SC, who Q
appeared for the Debtor, very fairly, did not dispute that the Debtor signed
R R
the Guarantee. He submitted, nevertheless, there are substantial disputes
S as to the validity of the Guarantee on two principal grounds: S
T (1) The Debtor signed the Guarantee under the undue influence of T
her husband, of which the Petitioner had notice;
U U
V V
A - 3 - A
B (2) The Guarantee was executed in the wrong form, namely, a B
corporate form. Hence, the Guarantee provides for liability of
C C
a company, instead of the personal liability of the Debtor.
D D
APPLICABLE LEGAL PRINCIPLES
E E
3. It is well established that the burden is on a debtor to
F demonstrate to the Court with sufficiently precise factual evidence that F
there is a bona fide dispute of the petitioning debt on substantial grounds.
G G
It is not enough for a debtor to simply raise some factual disputes and
H submit that such factual disputes have to be resolved in a trial. H
I I
4. In Re Leung Cherng Jiunn (debtor) [2016] 1 HKLRD 850,
J Kwan JA (as she then was) at §27 said: J
K “ 27. I would endeavour to state my understanding of the law K
in this way:
L L
(1) For the purpose of establishing a bona fide dispute on
substantial grounds, I could discern no meaningful difference
M between a bankruptcy petition and a winding-up petition, M
notwithstanding the material differences in procedure
between the two as noted by the Judge at [20] and r.70 of the
N Bankruptcy Rules which has no equivalent in winding-up. N
See Re Malcolm Westley Casselle at [24].
O O
(2) The wording of O.14, r.3 is different from the test of bona fide
dispute on substantial grounds. The test of bona fide dispute
P involves different considerations in respect of the evidence. P
The difference may not be significant, but there is still a
difference. See ICS Computer at 183F and Re Yuen Mun Wa
Q Q
at [11].
R (3) The distinction between the two tests lies in establishing R
a bona fide defence (for resisting a petition) and a fair
probability of establishing a bona fide defence (for obtaining
S leave to defend a civil action, whether unconditionally or with S
condition). So in that sense, the threshold test for resisting a
petition would require a higher standard. See ICS Computer
T T
at 183G–J and Re Grandfield Pacific Hotel Ltd at [11].
U U
V V
A - 4 - A
(4) Notwithstanding this difference, it is fair to say that
B B
the threshold tests in both situations are broadly similar,
as noted in the two recent English authorities. If a petition
C is dismissed on the basis there is a bona fide dispute on C
substantial grounds, it would be most unlikely that summary
judgment could be obtained. Most probably, the defendant
D D
would be given leave to defend, whether unconditionally, or
with conditions imposed if his defence is regarded as shadowy.
E Conversely, where a defendant has obtained leave to defend, E
unconditionally or with conditions, it would be most unlikely
that a petition would be granted. See Markham v Karsten at
F [45]. The statements of Rogers J in ICS Computer at 183E–F F
did not suggest otherwise.
G G
(5) This is not to say it should be easier for a creditor to
succeed in a petition than in seeking summary judgment
H in a civil action, notwithstanding the higher threshold test H
for resisting a petition in the sense as explained above. It is
well established that petitions are not meant to be used for the
I purpose of debt collection and the winding-up or bankruptcy I
jurisdiction of the court would be exercised only in very clear
J cases. Where oral evidence is required to decide a real and J
substantial dispute of fact, the court will dismiss the petition.
And if there is an abuse of process in invoking the jurisdiction
K of the court in an improper manner, the petitioning creditor K
may be ordered to pay indemnity costs.” (emphasis added)
L L
5. I am of the view that the key is for the Court to assess whether
M M
there are real and substantial disputes of fact which render the summary
N procedure of a bankruptcy and/or winding up proceedings unsuitable for the N
determination of such real and substantial disputes of fact. In such scenario,
O O
the validity of petitioning debt would need to be fully investigated in a trial.
P However, peripheral and/or disputes of fact which do not go to the P
foundation of the petitioning debt are normally distractions and are
Q Q
irrelevant in determining whether there are bona fide disputes to the
R petitioning debt on substantial grounds. R
S S
UNDUE INFLUENCE
T T
6. The Debtor had a successful career as a famous artiste.
U U
V V
A - 5 - A
B 7. From the age of 19, the Debtor took up jobs as a model. In B
2007, at the age of 24, she went to the United States of America to attend a
C C
UCLA extension course for two years. In 2009, upon completion of the said
D English course, she returned to the Mainland, China to commence her career D
as a film artiste.
E E
F 8. In January 2012, she attended the 69th Golden Globe Awards F
ceremony in the USA in her capacity as an actress in The Flowers of War,
G G
which was nominated for “Best Foreign Language Film”.
H H
9. In the same year, she married Mr Wang Yonghong (“Mr Wang”)
I I
who was a high-profile and successful businessman before the collapse of
J his business empire. He was on Forbes’ “China Rich List 2015”. J
K K
10. There is no dispute that the Debtor, after marriage, depended
L on her husband financially. Mr Maurellet SC for the Petitioner referred to L
two specific incidents:
M M
(1) In May 2017, Mr Wang participated in the auction of a double-
N dragon celadon-glazed amphora organised by Christie’s. He N
won the bid for the Debtor by offering HK$140 million with
O O
buyer’s premium.
P P
(2) Mr Wang purchased a property at Sassoon Road and the Debtor
was appointed as a director of the company owning the property
Q Q
on 21 December 2016.
R R
11. In May 2017, Mr Wang approached the Petitioner for a loan of
S S
US$40 million for his company, Shu Zhi Hong Kong Trading Co, Limited
T (the “Borrower”). The purpose of the loan was to finance the purchase of T
Aman Hotel.
U U
V V
A - 6 - A
B 12. The Petitioner, after its due diligence exercise, decided to lend B
the sum to the Borrower with one of the conditions that the Debtor, being
C C
Mr Wang’s wife, had to be one of the guarantors. This condition is clearly
D stated in the execution notice dated 29 June 2017. D
E E
13. On 30 June 2017, the Debtor personally executed the
F Guarantee. The Loan Agreement and the Guarantee were signed and F
executed in Mr Wang’s office in Beijing in the presence of Mr Wang, the
G G
Debtor, Mr Ye Huanjiang (a notary), Mr Sun Zihao and some other staff
H members of the Petitioner. H
I I
14. It is of great importance that there is a transcript of the interview
J (“the Transcript”) between the Debtor and the notary (“公證詢問筆錄”) J
which was signed and verified by the Debtor to be true and accurate. In
K K
the Transcript, the Debtor confirmed that she acted voluntarily and fully
L understood that she would be liable if the Borrower defaulted. L
M M
15. The Petitioner remitted US$40 million to the Borrower on
N 30 June 2017. However, the Borrower has failed to repay the principal of N
the loan and the interests and damages accruing from 31 December 2017
O O
onwards.
P P
Legal principles in relation to undue influence
Q Q
16. Legal principles in relation to undue influence are clearly set out
R R
in Mr Justice Godfrey Lam’s judgment in Bank of China (Hong Kong) Ltd
S v Wong Kam Ho [2014] 1 HKLRD 41. In §§25 – 31 and §34, the learned S
Judge said:
T T
U U
V V
A - 7 - A
“ 25. Undue influence is a doctrine of equity that enables the
B B
court to strike down a transaction where the intention to enter
into it had been procured unconscionably. This may arise where
C the claimant had been overborne or coerced by another person, C
or where a person in whom the claimant had reposed trust and
confidence abused that relationship in procuring the claimant’s
D D
consent. The forms that undue influence can take are infinitely
varied and cannot be exhaustively set out, but they all result in
E the conclusion that the consent and intention of the claimant is so E
vitiated that it ‘ought not fairly to be treated as the expression of
a person’s free will’: Etridge, supra, [7] per Lord Nicholls.
F F
26. Whether or not a transaction was brought about by the
exercise of undue influence is a question of fact. The burden of
G proving this fact lies with the person who asserts it, that is to say, G
generally, the person who claims to have been unduly influenced.
H As with other matters of fact, this question can be determined by H
the court by reference to direct evidence, such as the oral evidence
of the person complaining of undue influence that she signed the
I document in question as a result of being subject to ‘excessive I
pressure, emotional blackmail or bullying’, or by inference from
other, indirect evidence.
J J
27. What facts can and should be found by inference is a
K question that depends on the circumstances of each case. The K
question is ‘whether the evidence justifies the inference that, on a
balance of probabilities, the impugned transaction was procured
L by undue influence, that is to say, by an abuse by the allegedly L
dominant party of the trust and confidence reposed in him by the
allegedly subservient party’: Li Sau Ying v Bank of China (Hong
M M
Kong) Ltd (2004) 7 HKCFAR 579, per Lord Scott NPJ [34].
N
28. In a case where a man is said to have unduly influenced N
his wife, the fact that the wife has reposed trust and confidence
in the husband in relation to the management of her financial
O affairs, coupled with the fact that the transaction is one that calls O
for explanation, are normally sufficient basis, absent evidence to
the contrary, to infer that the transaction was brought about by
P P
the husband’s undue influence over the wife. In Etridge, supra,
Lord Nicholls said [14]:
Q Proof that the complainant placed trust and confidence Q
in the other party in relation to the management of the
R complainant’s financial affairs, coupled with a transaction R
which calls for explanation, will normally be sufficient,
failing satisfactory evidence to the contrary, to discharge
S the burden of proof. On proof of these two matters the S
stage is set for the court to infer that, in the absence of
a satisfactory explanation, the transaction can only have
T T
been procured by undue influence. In other words, proof of
these two facts is prima facie evidence that the defendant
U abused the influence he acquired in the parties’ relationship. U
V V
A - 8 - A
He preferred his own interests. He did not behave fairly
B B
to the other. So the evidential burden then shifts to him.
It is for him to produce evidence to counter the inference
C which otherwise should be drawn. C
29. The concept of a transaction that calls for explanation has
D been put in different ways, such as a transaction that is ‘not readily D
explicable by the relationship of the parties’ (Etridge, supra, [21],
per Lord Nicholls), a transaction that is ‘not to be reasonably
E E
accounted for on the ground of friendship, relationship, charity,
or other ordinary motives on which ordinary men act’ (Allcard v
F Skinner (1887) LR 36 Ch D 145, 185, per Lindley LJ; Etridge, supra, F
[22], [29], per Lord Nicholls), and a transaction that ‘constituted
an advantage taken of the person subjected to the influence which,
G failing proof to the contrary, was explicable only on the basis G
that undue influence had been exercised to procure it’ (National
H Westminster Bank plc v Morgan [1985] AC 686, 704, per Lord H
Scarman; Etridge, supra, [25], [29], per Lord Nicholls). As will be
seen, it is a concept quite separate and different from the question
I whether the third party is put on inquiry, which arises at the second I
stage of the analysis.
J 30. Many of the cases that have come before the courts in J
both the United Kingdom and Hong Kong concern guarantees
K or securities provided by wives for the husbands’ business debts. K
On this type of cases, Lord Nicholls said in Etridge, supra, [27],
[30] and [31]:
L L
[27] The problem has arisen in the context of wives guaranteeing
payment of their husband’s business debts.
M … M
[30] I do not think that, in the ordinary course, a guarantee
N of the character I have mentioned is to be regarded as a N
transaction which, failing proof to the contrary, is explicable
only on the basis that it has been procured by the exercise of
O undue influence by the husband. Wives frequently enter into O
such transactions. There are good and sufficient reasons
P why they are willing to do, despite the risks involved for P
them and their families. They may be enthusiastic. They
may not. They may be less optimistic than their husbands
Q about the prospects of the husbands’ businesses. They Q
may be anxious, perhaps exceedingly so. But this is a far
cry from saying that such transactions as a class are to be
R R
regarded as prima facie evidence of the exercise of undue
influence by husbands.
S S
[31] I have emphasised the phrase ‘in the ordinary course’.
There will be cases where a wife’s signature of a guarantee
T or a charge of her share in the matrimonial home does call T
for explanation. Nothing I have said above is directed at
such a case.
U U
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A - 9 - A
31. Similarly, in Etridge, supra, at [159] and [162], Lord Scott
B B
said:
[159] … In cases where experience, probably bitter, had led a wife
C C
to doubt the wisdom of her husband’s financial or business
decisions, I still would not regard her willingness to support
D those decisions with her own assets as an indication that D
he had exerted undue influence over her to persuade her to
do so. Rather I would regard her support as a natural and
E admirable consequence of the relationship of a mutually E
loyal married couple. The proposition that if a wife, who
F generally reposes trust and confidence in her husband, F
agrees to become surety to support his debts or his business
enterprises a presumption of undue influence arises is one
G that I am unable to accept. To regard the husband in such G
a case as a presumed ‘wrongdoer’ does not seem to me
consistent with the relationship of trust and confidence
H H
that is a part of every healthy marriage.
…
I [162] In the surety wife cases it should, in my opinion, I
be recognised that undue influence, though a possible
explanation for the wife’s agreement to become surety,
J J
is a relatively unlikely one. O’Brien itself was a
misrepresentation case. Undue influence had been
K alleged but the undoubted pressure which the husband K
had brought to bear to persuade his reluctant wife to sign
was not regarded by the judge or the Court of Appeal as
L constituting undue influence. The wife’s will had not L
been overborne by her husband. Nor was O’Brien a case
M in which, in my opinion, there would have been at any M
stage in the case a presumption of undue influence.
…
N N
34. It seems to me that even if one accepts this evidence
at face value, it does not demonstrate any undue influence
O exercised by Yeung. It is said that Lee completely trusted Yeung, O
and that she signed the document because Yeung told her to do so,
without knowing what it was that she signed. I accept there was a
P relationship of trust and confidence. But such trust is not unusual P
between husband and wife. It is as much in Hong Kong as in the
Q United Kingdom ‘a part of every healthy marriage’ (per Lord Scott Q
in Etridge, supra, [159]). In my opinion, the transaction is not
one that calls for explanation in the sense described in [29] above.
R The business of Wing Fat was the business of Yeung (jointly with R
Wong), who was the breadwinner of the family. What Yeung
earned from that business would be the income of the family. Lee
S S
has a real interest in seeing that business prosper, and therefore in
providing her guarantee and security over the Property required for
T the borrowing necessary for the business. The Property, which they T
jointly held, was acquired with funds earned from the husband’s
previous business and had been charged before more than once
U U
V V
A - 10 - A
for bank financing to support [the] husband’s business. In
B B
the transaction in question, Yeung, the husband, also gave a
guarantee for Wing Fat’s debts in favour of the bank. The
C fortunes of the husband and wife were tied together.” C
(emphasis added)
D D
17. I am of the view that the above legal principles apply aptly to
E E
the facts of the present case. The Debtor executed the Guarantee voluntarily
F and was not under any undue influence from her husband, Mr Wang, albeit F
that naturally she reposed trust and confidence in him. There is nothing in
G G
the transaction which calls for explanation.
H H
18. First, the evidence shows that the Debtor made an informed
I I
decision to sign and execute the Guarantee without any impropriety from her
J husband. I agree that the Petitioner had taken reasonable steps to ensure J
that the Debtor understood the content of the Guarantee, the extent of her
K K
liabilities, before she willingly signed the Guarantee:
L L
(1) Before the Debtor signed the Guarantee, Mr Sun of the
M Petitioner explained to her the content of the Loan Agreement M
and the Guarantee. Mr Sun explained to her that, if the Borrower
N defaulted, she would be personally liable. She knew that the N
loan was in the sum of US$40 million and for a period of six
O O
months.
P P
(2) The Guarantee is a simple document in Chinese. The Debtor
was given ample time to read it before she executed the same.
Q Q
Indeed, she had read the document for quite a long time before
R she signed it. R
(3) The Debtor signed and submitted to the notary the application
S S
form for notarization at the time of signing of the Guarantee
T on 30 June 2017 in her husband, Mr Wang’s office. T
U U
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A - 11 - A
B (4) The notary confirmed that the content and effect of the B
Guarantee was explained to the Debtor before she signed
C C
the same voluntarily.
D (5) The Petitioner’s case is corroborated by the notarial certificate D
and the Transcript which show that:
E E
(a) the Debtor understood that she would be liable if the
F Borrower defaulted in its repayment obligations; and F
G
(b) the Debtor acted voluntarily. G
(6) Significantly, the Transcript recorded, inter alia, that:
H H
(a) The Debtor confirmed that she understood that the legal
I meaning and effect of the Guarantee, i.e., if the Borrower I
defaults, the creditor can demand the guarantor to pay
J J
directly.
K (b) The Debtor voluntarily executed the Guarantee because K
“according to the risk management need of the creditor,
L L
a guarantee from me is required, I become a guarantor
M voluntarily”. M
N 19. I agree with Mr Maurellet SC that the notarial certificate and N
the Transcript are reliable contemporaneous documents and they prove that
O O
the Debtor assumed the liability of a guarantor voluntarily. There is no
P P
room for the operation of any undue influence by her husband, Mr Wang.
Q Q
20. Indeed, other than the fact that the Debtor reposed trust
R and confidence in her husband, the Debtor has not alleged or produced R
any evidence to show that she was bullied or pressurised to sign the
S S
Guarantee such that her signature on the Guarantee did not signify her
T T
informed consent or expression of free will. That really should be the end
U
of this defence. U
V V
A - 12 - A
B 21. Secondly, Mr Maurellet SC stressed and I agree that the Debtor B
clearly understood the content and effect of the Guarantee:
C C
(1) She had a successful career as an artiste. For example, in January
D D
2012, she attended the 69th Golden Globe Awards ceremony in
the USA in her capacity as an actress in The Flowers of War,
E E
which was nominated for “Best Foreign Language Film”.
F F
(2) The Guarantee was a short and simple document in simplified
Chinese. She had read the Guarantee carefully before signing
G G
the same.
H H
(3) The content and effect of the Guarantee had been explained
to her.
I I
J 22. Thirdly, the Debtor did have a practical interest in executing the J
Guarantee to support the business of her husband. There is no dispute that
K K
the Debtor benefitted from the success of her husband, and the fortunes of
L the Debtor and her husband were and are inextricably intertwined: L
M (1) The purpose of the loan was to finance the purchase of Aman M
Hotel. The Debtor would inevitably benefit from the success
N N
of her husband’s businesses.
O (2) In May 2017, her husband participated in the auction of a O
double-dragon celadon-glazed amphora organised by Christie’s.
P P
(3) The Debtor had an account with Christie’s, which she used
Q “for bidding handbags and jewelries in auctions (typically with Q
prices below HK$1 million.” There is no suggestion that her
R R
purchases were not financed by her husband.
S (4) Mr Wang also financed the purchase of a property at Sassoon S
Road for the benefit of, inter alia, the Debtor.
T T
U U
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B 23. I agree that the execution of the Guarantee did not call for any B
explanation.
C C
D
24. Mr Yuen SC for the Debtor submitted that the present case is not D
the typical case where the wife agreed to mortgage a jointly owned property
E E
to support her husband’s business. The facts of the present case are more
F complex in that the Debtor was asked to stand as guarantor just one day before F
the Guarantee were to be signed and she was assuming a personal liability for
G G
the debts of the Borrower. Despite the very able and eloquent submissions
H of Mr Yuen SC, I am of the view that the suggested differences are H
immaterial. The key is that the Debtor had clear knowledge and full
I I
understanding of the content and effect of the Guarantee and she, for
J perfectly explicable and may be admirable reasons, voluntarily executed J
the Guarantee. There was no emotional blackmail, bullying or excessive
K K
pressure exerted by her husband.
L L
THE FORM OF THE GUARANTEE
M M
25. Having decided that, as a matter of substance, the Debtor
N N
voluntarily signed the Guarantee with an informed consent, strictly speaking,
O it is not necessary for this Court to deal with the issue of whether the form O
of the Guarantee signed by the Debtor was the correct form or not as the
P P
correct approach should be for the Court to take into account all relevant
Q evidence, including the notarial certificate and the Transcript, and then Q
decided, as a matter of fact, what the Debtor had agreed to.
R R
S 26. In any event, this Court will deal with the Debtor’s argument S
that there were three versions of guarantees produced by the Petitioner. The
T T
first version was not signed by her but by her husband. Mr Maurellet SC
U U
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A - 14 - A
B indicated to this Court that that was a mistake and no reliance is placed on B
that version of the guarantee.
C C
D
27. The second version is the Guarantee that the Petitioner relies D
upon in the present Petition. The Debtor argued that this version is a
E E
corporate rather than a personal form because it provides that:
F F
「 為了確保甲方適當履行《借款合同》項下義務，當甲方發生
借款合同違約行為時，本公司自願向乙方提供無限連帶責任
G 彌償和擔保……」 (emphasis added) G
H H
28. It is common ground that an incorrect form, i.e., the corporate
I form, was mistakenly included and subsequently signed by the Debtor and I
notarised. The simple issue is whether by personally signing on a corporate
J J
form, the Debtor’s liability is thereby absolved.
K K
29. The parties have no dispute that the Guarantee is governed by
L L
Hong Kong laws. This is because the Loan Agreement is governed by Hong
M Kong laws, and in the premises, the Guarantee which is inextricably related M
to the Loan Agreement is also governed by Hong Kong laws. The learned
N N
authors of The Modern Contract of Guarantee (3rd ed) at §14-069 stated:
O O
“ In the absence of an express choice of law, the courts are likely
to infer that the proper or applicable law of the guarantee is that
P of the principal contract, on the ground that the same law should P
govern the principal and the secondary obligations.”
Q Q
30. Applying Hong Kong laws to the construction of the Guarantee,
R R
I have no doubt that the Debtor assumed personally liability by signing the
S
Guarantee, albeit in corporate form. There can be no doubt that the Debtor S
was the intended guarantor, and that she was not acting as agent on behalf of
T T
any company. Indeed, none has been suggested. The Debtor’s reliance on
U the case of Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 at §107 U
V V
A - 15 - A
B per DHCJ Thomas Au (as he then was), with respect, is misplaced. The B
Debtor was not contracting for a disclosed but unnamed principal. At all
C C
material times, she acted in her personal capacity. She signed the Guarantee
D with full knowledge that she agreed to assume personal liability. This is D
made abundantly clear from the notarial certificate and the Transcript.
E E
F 31. In any event, the Petitioner has also disclosed yet another F
version of the Guarantee which the Debtor signed in the correct form albeit
G G
that this version was not notarised. The validity of the Guarantee, as a matter
H of Hong Kong laws, does not depend on whether the same is notarised or not. H
I I
32. In paragraph 8 of the Debtor’s 3rd Affirmation, she deposed that:
J J
“ As I stated in paragraph 20 of my 2nd Affirmation (which was made
before the Petitioner’s solicitors informed us that the original of
K the Purported Non-notarised Guarantee was no longer available), K
the signature on the Purported Non-notarised Guarantee does not
look like my usual signature.” (emphasis added)
L L
M 33. Mr Maurellet SC for the Petitioner submitted that the Debtor M
has chosen her words advisedly. She did not on oath positively state that
N N
the signature was not hers. It is the Debtor’s duty to adduce sufficiently
O precise factual evidence to demonstrate to the Court that she has a bona fide O
dispute to the petitioning debts on substantial grounds. The Debtor cannot
P P
discharge such duty by merely making an allegation that “the signature on
Q the Purported Non-notarised Guarantee does not look like my usual signature” Q
and requiring the matter to be resolved in a trial.
R R
S 34. I am of the view that the documentary evidence (including S
the notarial certificate and the Transcript) clearly demonstrate that the
T T
Debtor signed the Guarantee with full knowledge and agreed that she
U U
V V
A - 16 - A
B would assume personally liability if the Borrower defaulted its repayment B
obligations. The Borrower has defaulted and the Debtor has to discharge
C C
her personal liability qua guarantor. The facts of the present case are very
D simple and the answer is clear. D
E E
DISPOSITION
F F
35. For all the reasons stated above, I make the following orders:
G (1) A bankruptcy order be made against the Debtor; G
H (2) A costs order nisi that the Debtor is to pay the costs of and H
incidental to the Petition to the Petitioner, on a party to party
I I
basis, with a certificate for two counsel, to be taxed if not agreed.
The costs order nisi will be made absolute unless the parties
J J
take out applications to vary the same within 14 days from the
K date hereof. K
L L
36. As for the Summons dated 22 August 2019, since this Court
M has relied on the 3rd Affirmation of the Debtor, formal leave will be given M
to the Debtor to file her 3rd Affirmation with costs to the Petitioner to be
N N
taxed if not agreed. Service of the same is dispensed with.
O O
37. Finally, it remains for me to thank Mr Maurellet SC and
P P
Mr Ng for the Petitioner and Mr Yuen SC and Mr Ko for the Debtor for
Q the able and helpful assistance they rendered to this Court. Q
R R
S S
T T
(William Wong SC)
Deputy High Court Judge
U U
V V
A - 17 - A
B B
Mr José-Antonio Maurellet SC and Mr Tom Ng, instructed by and
C Mr Frederick Hui (solicitor advocate), of Zhong Lun Law Firm, C
for the petitioner
D Mr Rimsky Yuen SC and Mr Tony Ko, instructed by AH Lawyers, D
for the debtor
E Attendance of the Official Receiver was excused E
F F
G G
H H
I I
J J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
A A
HCB 1612/2019
B [2019] HKCFI 2274 B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF FIRST INSTANCE D
BANKRUPTCY PROCEEDINGS NO 1612 OF 2019
E E
____________
F F
RE : HAN, CATHERINE (韓熙庭,
G formerly known as 韓文虹) Debtor G
H
EX PARTE : ZHONGTAI FINANCING H
(HONG KONG) LIMITED
I
(中泰金融 (香港) 有限公司) Petitioner I
____________
J J
Before: Deputy High Court Judge William Wong SC in Court
K K
Date of Hearing: 27 August 2019
L Date of Judgment: 16 September 2019 L
M M
JUDGMENT
N N
O THE PETITION O
P 1. Zhongtai Financing (Hong Kong) Limited (“the Petitioner”) P
presented a bankruptcy petition against Han Catherine (“the Debtor”) on
Q Q
19 March 2019 (“the Petition”). In the Petition, it is stated, inter alia, that:
R R
“ 2. The Debtor is justly and truly indebted to us for the
aggregate sum of US$51,633,560.13 as of 8 June 2018 (‘Debt’),
S being the outstanding debt due and owing by the Debtor pursuant to: S
(1) A Loan Agreement dated 30 June 2017 between Shu Zhi
T Hong Kong Trading Co., Limited as borrower (‘Borrower’) T
and the Petitioner as lender; and
U (2) A Guarantee dated 30 June 2017 (‘Guarantee’) signed by U
the Debtor as guarantor.
V V
A - 2 - A
…
B B
4. Pursuant to the Guarantee, the Debtor provided a guarantee
to the Petitioner for the debt and liabilities of the Borrower under
C C
the Loan Agreement, including repayment for principal of the Loan,
accrued interests and accrued damages.
D … D
6. The Borrower fails to repay the principal of the Loan
E in an amount of US$40,000,000.00 (‘Outstanding Principal’) E
or any part thereof and all interests and damages accrued from
31 December 2017 onwards. Up to 8 June 2018, the accrued
F interests is in the sum of US$1,836,529.70 (‘Outstanding Interests’) F
and the accrued damages is in the sum of US$9,797,030.43
(‘Outstanding Damages’). Further, a daily interest of US$10,958.90
G G
on the Outstanding Principal will be accrued each day and further
damages will be accrued at a daily rate of 0.15% on any outstanding
H sums under the Loan Agreement (including the Outstanding H
Principal and any outstanding interests) until the date of full
repayment.
I I
7. Under the Guarantee, the Debtor as guarantor has the
J
liability to repay the full outstanding amount under the Loan J
Agreement, including the Outstanding Principal, Outstanding
interests and Outstanding Damages.
K … K
9. On 10 August 2018, three statutory demands (‘Statutory
L Demands’) for the Outstanding Principal, Outstanding Interests and L
Outstanding Damages calculated as of 8 June 2018 respectively
were served upon the Debtor by advertising three notices of the
M same respectively once in the Sing Tao Daily, a Chinese newspaper M
widely circulating in Hong Kong in respect of the above-mentioned
N Debt. To the best of our knowledge and belief, the Statutory N
Demands (or any of them) have neither been complied with nor set
aside in accordance with the Rules, and no application to set them
O (or any of them) aside is outstanding.” O
P P
2. There is no dispute about the Outstanding Principal,
Q Outstanding Interests and Outstanding Damages. Mr Yuen SC, who Q
appeared for the Debtor, very fairly, did not dispute that the Debtor signed
R R
the Guarantee. He submitted, nevertheless, there are substantial disputes
S as to the validity of the Guarantee on two principal grounds: S
T (1) The Debtor signed the Guarantee under the undue influence of T
her husband, of which the Petitioner had notice;
U U
V V
A - 3 - A
B (2) The Guarantee was executed in the wrong form, namely, a B
corporate form. Hence, the Guarantee provides for liability of
C C
a company, instead of the personal liability of the Debtor.
D D
APPLICABLE LEGAL PRINCIPLES
E E
3. It is well established that the burden is on a debtor to
F demonstrate to the Court with sufficiently precise factual evidence that F
there is a bona fide dispute of the petitioning debt on substantial grounds.
G G
It is not enough for a debtor to simply raise some factual disputes and
H submit that such factual disputes have to be resolved in a trial. H
I I
4. In Re Leung Cherng Jiunn (debtor) [2016] 1 HKLRD 850,
J Kwan JA (as she then was) at §27 said: J
K “ 27. I would endeavour to state my understanding of the law K
in this way:
L L
(1) For the purpose of establishing a bona fide dispute on
substantial grounds, I could discern no meaningful difference
M between a bankruptcy petition and a winding-up petition, M
notwithstanding the material differences in procedure
between the two as noted by the Judge at [20] and r.70 of the
N Bankruptcy Rules which has no equivalent in winding-up. N
See Re Malcolm Westley Casselle at [24].
O O
(2) The wording of O.14, r.3 is different from the test of bona fide
dispute on substantial grounds. The test of bona fide dispute
P involves different considerations in respect of the evidence. P
The difference may not be significant, but there is still a
difference. See ICS Computer at 183F and Re Yuen Mun Wa
Q Q
at [11].
R (3) The distinction between the two tests lies in establishing R
a bona fide defence (for resisting a petition) and a fair
probability of establishing a bona fide defence (for obtaining
S leave to defend a civil action, whether unconditionally or with S
condition). So in that sense, the threshold test for resisting a
petition would require a higher standard. See ICS Computer
T T
at 183G–J and Re Grandfield Pacific Hotel Ltd at [11].
U U
V V
A - 4 - A
(4) Notwithstanding this difference, it is fair to say that
B B
the threshold tests in both situations are broadly similar,
as noted in the two recent English authorities. If a petition
C is dismissed on the basis there is a bona fide dispute on C
substantial grounds, it would be most unlikely that summary
judgment could be obtained. Most probably, the defendant
D D
would be given leave to defend, whether unconditionally, or
with conditions imposed if his defence is regarded as shadowy.
E Conversely, where a defendant has obtained leave to defend, E
unconditionally or with conditions, it would be most unlikely
that a petition would be granted. See Markham v Karsten at
F [45]. The statements of Rogers J in ICS Computer at 183E–F F
did not suggest otherwise.
G G
(5) This is not to say it should be easier for a creditor to
succeed in a petition than in seeking summary judgment
H in a civil action, notwithstanding the higher threshold test H
for resisting a petition in the sense as explained above. It is
well established that petitions are not meant to be used for the
I purpose of debt collection and the winding-up or bankruptcy I
jurisdiction of the court would be exercised only in very clear
J cases. Where oral evidence is required to decide a real and J
substantial dispute of fact, the court will dismiss the petition.
And if there is an abuse of process in invoking the jurisdiction
K of the court in an improper manner, the petitioning creditor K
may be ordered to pay indemnity costs.” (emphasis added)
L L
5. I am of the view that the key is for the Court to assess whether
M M
there are real and substantial disputes of fact which render the summary
N procedure of a bankruptcy and/or winding up proceedings unsuitable for the N
determination of such real and substantial disputes of fact. In such scenario,
O O
the validity of petitioning debt would need to be fully investigated in a trial.
P However, peripheral and/or disputes of fact which do not go to the P
foundation of the petitioning debt are normally distractions and are
Q Q
irrelevant in determining whether there are bona fide disputes to the
R petitioning debt on substantial grounds. R
S S
UNDUE INFLUENCE
T T
6. The Debtor had a successful career as a famous artiste.
U U
V V
A - 5 - A
B 7. From the age of 19, the Debtor took up jobs as a model. In B
2007, at the age of 24, she went to the United States of America to attend a
C C
UCLA extension course for two years. In 2009, upon completion of the said
D English course, she returned to the Mainland, China to commence her career D
as a film artiste.
E E
F 8. In January 2012, she attended the 69th Golden Globe Awards F
ceremony in the USA in her capacity as an actress in The Flowers of War,
G G
which was nominated for “Best Foreign Language Film”.
H H
9. In the same year, she married Mr Wang Yonghong (“Mr Wang”)
I I
who was a high-profile and successful businessman before the collapse of
J his business empire. He was on Forbes’ “China Rich List 2015”. J
K K
10. There is no dispute that the Debtor, after marriage, depended
L on her husband financially. Mr Maurellet SC for the Petitioner referred to L
two specific incidents:
M M
(1) In May 2017, Mr Wang participated in the auction of a double-
N dragon celadon-glazed amphora organised by Christie’s. He N
won the bid for the Debtor by offering HK$140 million with
O O
buyer’s premium.
P P
(2) Mr Wang purchased a property at Sassoon Road and the Debtor
was appointed as a director of the company owning the property
Q Q
on 21 December 2016.
R R
11. In May 2017, Mr Wang approached the Petitioner for a loan of
S S
US$40 million for his company, Shu Zhi Hong Kong Trading Co, Limited
T (the “Borrower”). The purpose of the loan was to finance the purchase of T
Aman Hotel.
U U
V V
A - 6 - A
B 12. The Petitioner, after its due diligence exercise, decided to lend B
the sum to the Borrower with one of the conditions that the Debtor, being
C C
Mr Wang’s wife, had to be one of the guarantors. This condition is clearly
D stated in the execution notice dated 29 June 2017. D
E E
13. On 30 June 2017, the Debtor personally executed the
F Guarantee. The Loan Agreement and the Guarantee were signed and F
executed in Mr Wang’s office in Beijing in the presence of Mr Wang, the
G G
Debtor, Mr Ye Huanjiang (a notary), Mr Sun Zihao and some other staff
H members of the Petitioner. H
I I
14. It is of great importance that there is a transcript of the interview
J (“the Transcript”) between the Debtor and the notary (“公證詢問筆錄”) J
which was signed and verified by the Debtor to be true and accurate. In
K K
the Transcript, the Debtor confirmed that she acted voluntarily and fully
L understood that she would be liable if the Borrower defaulted. L
M M
15. The Petitioner remitted US$40 million to the Borrower on
N 30 June 2017. However, the Borrower has failed to repay the principal of N
the loan and the interests and damages accruing from 31 December 2017
O O
onwards.
P P
Legal principles in relation to undue influence
Q Q
16. Legal principles in relation to undue influence are clearly set out
R R
in Mr Justice Godfrey Lam’s judgment in Bank of China (Hong Kong) Ltd
S v Wong Kam Ho [2014] 1 HKLRD 41. In §§25 – 31 and §34, the learned S
Judge said:
T T
U U
V V
A - 7 - A
“ 25. Undue influence is a doctrine of equity that enables the
B B
court to strike down a transaction where the intention to enter
into it had been procured unconscionably. This may arise where
C the claimant had been overborne or coerced by another person, C
or where a person in whom the claimant had reposed trust and
confidence abused that relationship in procuring the claimant’s
D D
consent. The forms that undue influence can take are infinitely
varied and cannot be exhaustively set out, but they all result in
E the conclusion that the consent and intention of the claimant is so E
vitiated that it ‘ought not fairly to be treated as the expression of
a person’s free will’: Etridge, supra, [7] per Lord Nicholls.
F F
26. Whether or not a transaction was brought about by the
exercise of undue influence is a question of fact. The burden of
G proving this fact lies with the person who asserts it, that is to say, G
generally, the person who claims to have been unduly influenced.
H As with other matters of fact, this question can be determined by H
the court by reference to direct evidence, such as the oral evidence
of the person complaining of undue influence that she signed the
I document in question as a result of being subject to ‘excessive I
pressure, emotional blackmail or bullying’, or by inference from
other, indirect evidence.
J J
27. What facts can and should be found by inference is a
K question that depends on the circumstances of each case. The K
question is ‘whether the evidence justifies the inference that, on a
balance of probabilities, the impugned transaction was procured
L by undue influence, that is to say, by an abuse by the allegedly L
dominant party of the trust and confidence reposed in him by the
allegedly subservient party’: Li Sau Ying v Bank of China (Hong
M M
Kong) Ltd (2004) 7 HKCFAR 579, per Lord Scott NPJ [34].
N
28. In a case where a man is said to have unduly influenced N
his wife, the fact that the wife has reposed trust and confidence
in the husband in relation to the management of her financial
O affairs, coupled with the fact that the transaction is one that calls O
for explanation, are normally sufficient basis, absent evidence to
the contrary, to infer that the transaction was brought about by
P P
the husband’s undue influence over the wife. In Etridge, supra,
Lord Nicholls said [14]:
Q Proof that the complainant placed trust and confidence Q
in the other party in relation to the management of the
R complainant’s financial affairs, coupled with a transaction R
which calls for explanation, will normally be sufficient,
failing satisfactory evidence to the contrary, to discharge
S the burden of proof. On proof of these two matters the S
stage is set for the court to infer that, in the absence of
a satisfactory explanation, the transaction can only have
T T
been procured by undue influence. In other words, proof of
these two facts is prima facie evidence that the defendant
U abused the influence he acquired in the parties’ relationship. U
V V
A - 8 - A
He preferred his own interests. He did not behave fairly
B B
to the other. So the evidential burden then shifts to him.
It is for him to produce evidence to counter the inference
C which otherwise should be drawn. C
29. The concept of a transaction that calls for explanation has
D been put in different ways, such as a transaction that is ‘not readily D
explicable by the relationship of the parties’ (Etridge, supra, [21],
per Lord Nicholls), a transaction that is ‘not to be reasonably
E E
accounted for on the ground of friendship, relationship, charity,
or other ordinary motives on which ordinary men act’ (Allcard v
F Skinner (1887) LR 36 Ch D 145, 185, per Lindley LJ; Etridge, supra, F
[22], [29], per Lord Nicholls), and a transaction that ‘constituted
an advantage taken of the person subjected to the influence which,
G failing proof to the contrary, was explicable only on the basis G
that undue influence had been exercised to procure it’ (National
H Westminster Bank plc v Morgan [1985] AC 686, 704, per Lord H
Scarman; Etridge, supra, [25], [29], per Lord Nicholls). As will be
seen, it is a concept quite separate and different from the question
I whether the third party is put on inquiry, which arises at the second I
stage of the analysis.
J 30. Many of the cases that have come before the courts in J
both the United Kingdom and Hong Kong concern guarantees
K or securities provided by wives for the husbands’ business debts. K
On this type of cases, Lord Nicholls said in Etridge, supra, [27],
[30] and [31]:
L L
[27] The problem has arisen in the context of wives guaranteeing
payment of their husband’s business debts.
M … M
[30] I do not think that, in the ordinary course, a guarantee
N of the character I have mentioned is to be regarded as a N
transaction which, failing proof to the contrary, is explicable
only on the basis that it has been procured by the exercise of
O undue influence by the husband. Wives frequently enter into O
such transactions. There are good and sufficient reasons
P why they are willing to do, despite the risks involved for P
them and their families. They may be enthusiastic. They
may not. They may be less optimistic than their husbands
Q about the prospects of the husbands’ businesses. They Q
may be anxious, perhaps exceedingly so. But this is a far
cry from saying that such transactions as a class are to be
R R
regarded as prima facie evidence of the exercise of undue
influence by husbands.
S S
[31] I have emphasised the phrase ‘in the ordinary course’.
There will be cases where a wife’s signature of a guarantee
T or a charge of her share in the matrimonial home does call T
for explanation. Nothing I have said above is directed at
such a case.
U U
V V
A - 9 - A
31. Similarly, in Etridge, supra, at [159] and [162], Lord Scott
B B
said:
[159] … In cases where experience, probably bitter, had led a wife
C C
to doubt the wisdom of her husband’s financial or business
decisions, I still would not regard her willingness to support
D those decisions with her own assets as an indication that D
he had exerted undue influence over her to persuade her to
do so. Rather I would regard her support as a natural and
E admirable consequence of the relationship of a mutually E
loyal married couple. The proposition that if a wife, who
F generally reposes trust and confidence in her husband, F
agrees to become surety to support his debts or his business
enterprises a presumption of undue influence arises is one
G that I am unable to accept. To regard the husband in such G
a case as a presumed ‘wrongdoer’ does not seem to me
consistent with the relationship of trust and confidence
H H
that is a part of every healthy marriage.
…
I [162] In the surety wife cases it should, in my opinion, I
be recognised that undue influence, though a possible
explanation for the wife’s agreement to become surety,
J J
is a relatively unlikely one. O’Brien itself was a
misrepresentation case. Undue influence had been
K alleged but the undoubted pressure which the husband K
had brought to bear to persuade his reluctant wife to sign
was not regarded by the judge or the Court of Appeal as
L constituting undue influence. The wife’s will had not L
been overborne by her husband. Nor was O’Brien a case
M in which, in my opinion, there would have been at any M
stage in the case a presumption of undue influence.
…
N N
34. It seems to me that even if one accepts this evidence
at face value, it does not demonstrate any undue influence
O exercised by Yeung. It is said that Lee completely trusted Yeung, O
and that she signed the document because Yeung told her to do so,
without knowing what it was that she signed. I accept there was a
P relationship of trust and confidence. But such trust is not unusual P
between husband and wife. It is as much in Hong Kong as in the
Q United Kingdom ‘a part of every healthy marriage’ (per Lord Scott Q
in Etridge, supra, [159]). In my opinion, the transaction is not
one that calls for explanation in the sense described in [29] above.
R The business of Wing Fat was the business of Yeung (jointly with R
Wong), who was the breadwinner of the family. What Yeung
earned from that business would be the income of the family. Lee
S S
has a real interest in seeing that business prosper, and therefore in
providing her guarantee and security over the Property required for
T the borrowing necessary for the business. The Property, which they T
jointly held, was acquired with funds earned from the husband’s
previous business and had been charged before more than once
U U
V V
A - 10 - A
for bank financing to support [the] husband’s business. In
B B
the transaction in question, Yeung, the husband, also gave a
guarantee for Wing Fat’s debts in favour of the bank. The
C fortunes of the husband and wife were tied together.” C
(emphasis added)
D D
17. I am of the view that the above legal principles apply aptly to
E E
the facts of the present case. The Debtor executed the Guarantee voluntarily
F and was not under any undue influence from her husband, Mr Wang, albeit F
that naturally she reposed trust and confidence in him. There is nothing in
G G
the transaction which calls for explanation.
H H
18. First, the evidence shows that the Debtor made an informed
I I
decision to sign and execute the Guarantee without any impropriety from her
J husband. I agree that the Petitioner had taken reasonable steps to ensure J
that the Debtor understood the content of the Guarantee, the extent of her
K K
liabilities, before she willingly signed the Guarantee:
L L
(1) Before the Debtor signed the Guarantee, Mr Sun of the
M Petitioner explained to her the content of the Loan Agreement M
and the Guarantee. Mr Sun explained to her that, if the Borrower
N defaulted, she would be personally liable. She knew that the N
loan was in the sum of US$40 million and for a period of six
O O
months.
P P
(2) The Guarantee is a simple document in Chinese. The Debtor
was given ample time to read it before she executed the same.
Q Q
Indeed, she had read the document for quite a long time before
R she signed it. R
(3) The Debtor signed and submitted to the notary the application
S S
form for notarization at the time of signing of the Guarantee
T on 30 June 2017 in her husband, Mr Wang’s office. T
U U
V V
A - 11 - A
B (4) The notary confirmed that the content and effect of the B
Guarantee was explained to the Debtor before she signed
C C
the same voluntarily.
D (5) The Petitioner’s case is corroborated by the notarial certificate D
and the Transcript which show that:
E E
(a) the Debtor understood that she would be liable if the
F Borrower defaulted in its repayment obligations; and F
G
(b) the Debtor acted voluntarily. G
(6) Significantly, the Transcript recorded, inter alia, that:
H H
(a) The Debtor confirmed that she understood that the legal
I meaning and effect of the Guarantee, i.e., if the Borrower I
defaults, the creditor can demand the guarantor to pay
J J
directly.
K (b) The Debtor voluntarily executed the Guarantee because K
“according to the risk management need of the creditor,
L L
a guarantee from me is required, I become a guarantor
M voluntarily”. M
N 19. I agree with Mr Maurellet SC that the notarial certificate and N
the Transcript are reliable contemporaneous documents and they prove that
O O
the Debtor assumed the liability of a guarantor voluntarily. There is no
P P
room for the operation of any undue influence by her husband, Mr Wang.
Q Q
20. Indeed, other than the fact that the Debtor reposed trust
R and confidence in her husband, the Debtor has not alleged or produced R
any evidence to show that she was bullied or pressurised to sign the
S S
Guarantee such that her signature on the Guarantee did not signify her
T T
informed consent or expression of free will. That really should be the end
U
of this defence. U
V V
A - 12 - A
B 21. Secondly, Mr Maurellet SC stressed and I agree that the Debtor B
clearly understood the content and effect of the Guarantee:
C C
(1) She had a successful career as an artiste. For example, in January
D D
2012, she attended the 69th Golden Globe Awards ceremony in
the USA in her capacity as an actress in The Flowers of War,
E E
which was nominated for “Best Foreign Language Film”.
F F
(2) The Guarantee was a short and simple document in simplified
Chinese. She had read the Guarantee carefully before signing
G G
the same.
H H
(3) The content and effect of the Guarantee had been explained
to her.
I I
J 22. Thirdly, the Debtor did have a practical interest in executing the J
Guarantee to support the business of her husband. There is no dispute that
K K
the Debtor benefitted from the success of her husband, and the fortunes of
L the Debtor and her husband were and are inextricably intertwined: L
M (1) The purpose of the loan was to finance the purchase of Aman M
Hotel. The Debtor would inevitably benefit from the success
N N
of her husband’s businesses.
O (2) In May 2017, her husband participated in the auction of a O
double-dragon celadon-glazed amphora organised by Christie’s.
P P
(3) The Debtor had an account with Christie’s, which she used
Q “for bidding handbags and jewelries in auctions (typically with Q
prices below HK$1 million.” There is no suggestion that her
R R
purchases were not financed by her husband.
S (4) Mr Wang also financed the purchase of a property at Sassoon S
Road for the benefit of, inter alia, the Debtor.
T T
U U
V V
A - 13 - A
B 23. I agree that the execution of the Guarantee did not call for any B
explanation.
C C
D
24. Mr Yuen SC for the Debtor submitted that the present case is not D
the typical case where the wife agreed to mortgage a jointly owned property
E E
to support her husband’s business. The facts of the present case are more
F complex in that the Debtor was asked to stand as guarantor just one day before F
the Guarantee were to be signed and she was assuming a personal liability for
G G
the debts of the Borrower. Despite the very able and eloquent submissions
H of Mr Yuen SC, I am of the view that the suggested differences are H
immaterial. The key is that the Debtor had clear knowledge and full
I I
understanding of the content and effect of the Guarantee and she, for
J perfectly explicable and may be admirable reasons, voluntarily executed J
the Guarantee. There was no emotional blackmail, bullying or excessive
K K
pressure exerted by her husband.
L L
THE FORM OF THE GUARANTEE
M M
25. Having decided that, as a matter of substance, the Debtor
N N
voluntarily signed the Guarantee with an informed consent, strictly speaking,
O it is not necessary for this Court to deal with the issue of whether the form O
of the Guarantee signed by the Debtor was the correct form or not as the
P P
correct approach should be for the Court to take into account all relevant
Q evidence, including the notarial certificate and the Transcript, and then Q
decided, as a matter of fact, what the Debtor had agreed to.
R R
S 26. In any event, this Court will deal with the Debtor’s argument S
that there were three versions of guarantees produced by the Petitioner. The
T T
first version was not signed by her but by her husband. Mr Maurellet SC
U U
V V
A - 14 - A
B indicated to this Court that that was a mistake and no reliance is placed on B
that version of the guarantee.
C C
D
27. The second version is the Guarantee that the Petitioner relies D
upon in the present Petition. The Debtor argued that this version is a
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corporate rather than a personal form because it provides that:
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「 為了確保甲方適當履行《借款合同》項下義務，當甲方發生
借款合同違約行為時，本公司自願向乙方提供無限連帶責任
G 彌償和擔保……」 (emphasis added) G
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28. It is common ground that an incorrect form, i.e., the corporate
I form, was mistakenly included and subsequently signed by the Debtor and I
notarised. The simple issue is whether by personally signing on a corporate
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form, the Debtor’s liability is thereby absolved.
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29. The parties have no dispute that the Guarantee is governed by
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Hong Kong laws. This is because the Loan Agreement is governed by Hong
M Kong laws, and in the premises, the Guarantee which is inextricably related M
to the Loan Agreement is also governed by Hong Kong laws. The learned
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authors of The Modern Contract of Guarantee (3rd ed) at §14-069 stated:
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“ In the absence of an express choice of law, the courts are likely
to infer that the proper or applicable law of the guarantee is that
P of the principal contract, on the ground that the same law should P
govern the principal and the secondary obligations.”
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30. Applying Hong Kong laws to the construction of the Guarantee,
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I have no doubt that the Debtor assumed personally liability by signing the
S
Guarantee, albeit in corporate form. There can be no doubt that the Debtor S
was the intended guarantor, and that she was not acting as agent on behalf of
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any company. Indeed, none has been suggested. The Debtor’s reliance on
U the case of Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 at §107 U
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A - 15 - A
B per DHCJ Thomas Au (as he then was), with respect, is misplaced. The B
Debtor was not contracting for a disclosed but unnamed principal. At all
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material times, she acted in her personal capacity. She signed the Guarantee
D with full knowledge that she agreed to assume personal liability. This is D
made abundantly clear from the notarial certificate and the Transcript.
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F 31. In any event, the Petitioner has also disclosed yet another F
version of the Guarantee which the Debtor signed in the correct form albeit
G G
that this version was not notarised. The validity of the Guarantee, as a matter
H of Hong Kong laws, does not depend on whether the same is notarised or not. H
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32. In paragraph 8 of the Debtor’s 3rd Affirmation, she deposed that:
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“ As I stated in paragraph 20 of my 2nd Affirmation (which was made
before the Petitioner’s solicitors informed us that the original of
K the Purported Non-notarised Guarantee was no longer available), K
the signature on the Purported Non-notarised Guarantee does not
look like my usual signature.” (emphasis added)
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M 33. Mr Maurellet SC for the Petitioner submitted that the Debtor M
has chosen her words advisedly. She did not on oath positively state that
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the signature was not hers. It is the Debtor’s duty to adduce sufficiently
O precise factual evidence to demonstrate to the Court that she has a bona fide O
dispute to the petitioning debts on substantial grounds. The Debtor cannot
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discharge such duty by merely making an allegation that “the signature on
Q the Purported Non-notarised Guarantee does not look like my usual signature” Q
and requiring the matter to be resolved in a trial.
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S 34. I am of the view that the documentary evidence (including S
the notarial certificate and the Transcript) clearly demonstrate that the
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Debtor signed the Guarantee with full knowledge and agreed that she
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A - 16 - A
B would assume personally liability if the Borrower defaulted its repayment B
obligations. The Borrower has defaulted and the Debtor has to discharge
C C
her personal liability qua guarantor. The facts of the present case are very
D simple and the answer is clear. D
E E
DISPOSITION
F F
35. For all the reasons stated above, I make the following orders:
G (1) A bankruptcy order be made against the Debtor; G
H (2) A costs order nisi that the Debtor is to pay the costs of and H
incidental to the Petition to the Petitioner, on a party to party
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basis, with a certificate for two counsel, to be taxed if not agreed.
The costs order nisi will be made absolute unless the parties
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take out applications to vary the same within 14 days from the
K date hereof. K
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36. As for the Summons dated 22 August 2019, since this Court
M has relied on the 3rd Affirmation of the Debtor, formal leave will be given M
to the Debtor to file her 3rd Affirmation with costs to the Petitioner to be
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taxed if not agreed. Service of the same is dispensed with.
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37. Finally, it remains for me to thank Mr Maurellet SC and
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Mr Ng for the Petitioner and Mr Yuen SC and Mr Ko for the Debtor for
Q the able and helpful assistance they rendered to this Court. Q
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S S
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(William Wong SC)
Deputy High Court Judge
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B B
Mr José-Antonio Maurellet SC and Mr Tom Ng, instructed by and
C Mr Frederick Hui (solicitor advocate), of Zhong Lun Law Firm, C
for the petitioner
D Mr Rimsky Yuen SC and Mr Tony Ko, instructed by AH Lawyers, D
for the debtor
E Attendance of the Official Receiver was excused E
F F
G G
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