Re Liu Wing Ting Stephen (Debtor) [2025] 2 HKLRD 744, [2025] HKCFI 1434 (Lydia Leung)
Lydia Leung represented the petitioner in Re Liu Wing Ting Stephen (Debtor) [2025] 2 HKLRD 744, [2025] HKCFI 1434.
In May 2024, the petitioner (P) issued a statutory demand against the debtor (D). There was no dispute that $2 million in loans was advanced from P to D, which D had failed to repay. In July 2024, P’s first attempt to serve D with a bankruptcy petition (the Petition) did not comply with r.59 of the Bankruptcy Rules (Cap.6A, Sub.Leg.) (the Rules) which requires personal service. On 11 September 2024, D’s solicitors filed and served a notice of opposition. On 12 September 2024, P’s solicitors purported to effect personal service by their clerk leaving a copy of the Petition at the office of D’s solicitors. D opposed the Petition on two grounds: (i) it had not been served in compliance with r.59 of the Rules; and (ii) that he and P agreed in March 2023 that P would pay D a co-operation fee and D issued a receipt to P purportedly recording such fee as off-setting the outstanding loans. Relying on WhatsApp messages, P claimed that the co-operation agreement was a memorandum of understanding and that D had acknowledged to P that he was liable to repay the outstanding loans. D objected to P’s reliance on the WhatsApp messages, arguing that they recorded without prejudice discussions.
Held, dismissing the Petition, that:
(1) The doctrine of without prejudice privilege applied to communications with genuine attempts to settle a dispute and not an admission of liability to repay outstanding loans with a request for an indulgence, which was the case here. A distinction was also drawn between attempts to resolve a dispute over the existence or extent of the liability (which was privileged) and discussions as to how an admitted liability was to be repaid (which was not privileged because there was no dispute). There were no genuine attempts to settle a dispute in the WhatsApp messages. Further, the co-operation agreement was too vague to constitute a legally enforceable contract and did not create a set-off extinguishing the obligation to repay the loans. Thus, D had not established a bona fide defence on substantial grounds (Re Jinro (HK) International Ltd [2002] 4 HKC 90, Bradford & Bingley plc v Rashid [2006] 1 WLR 2066, Secretary for Justice v Wong Lai Yin [2021] HKCA 1982 applied). (See paras.6-10.)
(2) The court’s power to regulate its own proceedings under the Rules should not be used to override the clear legislative intent that it must first be satisfied before making a bankruptcy order that personal service had been effected on the debtor. Here, the Court was not satisfied that personal service had been effected on D in compliance with r.59 of the Rules. When P’s solicitors purported to effect personal service on 12 September 2024, they had no reason to believe that D’s solicitors had authority to accept service on behalf of D. P’s solicitors should have written to D’s solicitors asking them to confirm that they had authority to do so and unless P’s solicitors received such written confirmation, they should have taken additional steps to ensure that r.59 had been complied with (Ma Wing, Michael v Fong Sze Ming [1988] 1 HKLR 354 applied). (See paras.13, 15-16.)
(3) But for P’s non-compliant personal service of the Petition on D, the Court would have made the normal bankruptcy order. (See paras.10, 17.)
[The above is excerpted from the headnote to the report in HKLRD.]
