Re Dai Guoliang
Court of First Instance
Bankruptcy Proceedings No 2343 of 2018
Deputy Judge Maurellet SC in Court
28 February 2019

Bankruptcy — petition — jurisdiction over foreign debtor — debtor personally present in Hong Kong on day petition presented pursuant to jurisdictional gateway under Bankruptcy Ordinance (Cap. 6) s. 4(1)(b) — notwithstanding, whether court to exercise discretion to dismiss or stay petition by reason of debtor’s lack of sufficient connection with Hong Kong — discretion flexible and fact specific

The petitioner (“P”) presented an amended bankruptcy petition (the “Petition”) against the debtor (“D”) based on a debt of over $10 million, arising from a guarantee executed by D in P’s favour (the “Guarantee”). The Petition relied on all the possible jurisdictional gateways under s. 4(1) of the Bankruptcy Ordinance (Cap. 6) (“BO”). D opposed the Petition on the grounds that: (a) P could not establish any of the jurisdictional gateways save for that relying on D’s personal presence in Hong Kong on the day the Petition was presented under s. 4(1)(b) (the “Personal Presence Gateway”); and (b) in any case, the Court should not exercise its discretion in P’s favour as D was domiciled and resident in Fujian Province and therefore had insufficient connection with Hong Kong. At issue was whether a bankruptcy order automatically followed from the fact of D’s presence in Hong Kong when the Petition was presented. D argued that the Court should exercise its discretion to make a bankruptcy order against a foreigner on the same basis as an overseas company which was sought to be wound up under s. 327 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32).

Held, granting the bankruptcy order, that:

1) The court’s approach to exercising its discretion for winding up overseas companies should not be applied to personal bankruptcy cases. A unitary principle governing both regimes was not necessary, practical or apposite (Kam Leung Sui Kwan v Kam Kwan Lai (2015) 18 HKCFAR 501 distinguished). (See paras. 24–26, 30–32.)

2) For personal bankruptcy cases, the court retained a discretion when jurisdiction had been established, but this flexible and fact-specific discretion was best left unfettered, and to be developed incrementally over time. The Court would not provide an exhaustive list of factors relevant to the exercise of such discretion. (See paras. 27, 29, 34.)

3) Here, it was only necessary to consider the Personal Presence Gateway. D could not be said to be someone with a limited or tenuous connection to Hong Kong. He was a Hong Kong Identity Card holder and the former director and substantial shareholder of a company listed on the Stock Exchange of Hong Kong with offices in Hong Kong. Further, the fact that D had agreed to guarantee the company’s debts with the Guarantee using Hong Kong law as the governing law and jurisdiction clause was a weighty factor in demonstrating more than a sufficient connection to the jurisdiction; such connection arising by virtue of D’s own choice. (See para. 35–39.)

Petition

This was a bankruptcy petition presented by the petitioner against the debtor based on a debt arising from a guarantee. The facts are set out in the judgment.

Jurisdictions: 

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