YEUNG LUI MING AND LAI KAR YAN as the Joint and Several Trustees of the Property of WONG YUK TUNG (a bankrupt) v. TANG MO LIN, IRENE AND ANOTHER

YEUNG LUI MING AND LAI KAR YAN as the Joint and Several Trustees of the Property of WONG YUK TUNG (a bankrupt) v. TANG MO LIN, IRENE AND ANOTHER

The court found on the evidence that the Agreement, the Deed and the transfer of the 38 cemetery sites were linked and formed one composite transaction entered into within two years of the presentation of the bankruptcy petition; Bright Success was the legal and beneficial owner of the 38 sites prior to transfer; the Perfecta group was insolvent or in dire financial distress at the relevant time; the consideration involved substantial set-offs of indebtedness and a cash portion but, viewed from the company’s perspective, the transaction was at undervalue and therefore voidable under the insolvency avoidance principles applied.

Citation
[2019] HKCFI 1848
Parties
Plaintiffs (joint and Several Trustees of the Property of Wong Yuk Tung, a Bankrupt): Yeung Lui Ming and Lai Kar Yan; First Defendant: Tang Mo Lin (Irene); Second Defendant: Cheong Tai International Holdings Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
25 July 2019
Case Number
HCA1197/2015
Procedural Posture
Transaction at Undervalue / Bankruptcy Avoidance Claim / Judgment (trial Concluded)
Outcome
Judgment for the Trustees on substantive findings: the Agreement, Deed and transfers constituted a composite transaction within two years of bankruptcy and were vulnerable to avoidance as transactions at undervalue; material aspects of the set-off and transfers were not supported by defendants’ evidence and...
Legal Topics
Transaction at Undervalue, Associate Relationship, Solvency Assessment, Set Off of Debts, Composite/linked Transactions, Valuation of Sale Shares, Disposition of Assets (cemetery Sites)
Source Language
EN
Insolvency Company Law Trusts and Equitable Remedies Property Law Contractual Interpretation Commercial Litigation Transaction at Undervalue Associate Relationship +5 more

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Parties

Yeung Lui Ming and Lai Kar Yan

Plaintiffs (joint and Several Trustees of the Property of Wong Yuk Tung, a Bankrupt)

Tang Mo Lin (Irene)

First Defendant

Cheong Tai International Holdings Limited

Second Defendant

Procedural Posture

Transaction at Undervalue / Bankruptcy Avoidance Claim / Judgment (trial Concluded)

Legal Issues

  1. 1 whether the Agreement, the Deed and the transfer of 38 cemetery sites constituted a single composite transaction
  2. 2 whether Tang was an associate of the Bankrupt
  3. 3 whether Perfecta and Silver Yield were insolvent at the time of the transaction

Ratio Decidendi

The court found on the evidence that the Agreement, the Deed and the transfer of the 38 cemetery sites were linked and formed one composite transaction entered into within two years of the presentation of the bankruptcy petition; Bright Success was the legal and beneficial owner of the 38 sites prior to transfer; the Perfecta group was insolvent or in dire financial distress at the relevant time; the consideration involved substantial set-offs of indebtedness and a cash portion but, viewed from the company’s perspective, the transaction was at undervalue and therefore voidable under the insolvency avoidance principles applied.

Court Disposition

Judgment for the Trustees on substantive findings: the Agreement, Deed and transfers constituted a composite transaction within two years of bankruptcy and were vulnerable to avoidance as transactions at undervalue; material aspects of the set-off and transfers were not supported by defendants’ evidence and...

Orders

  • Declare that the Agreement, the deed and the transfer of the 38 cemetery sites formed one composite transaction entered into within two years of presentation of the bankruptcy petition and was vulnerable to avoidance
  • Set aside or declare voidable the transfers made pursuant to the composite transaction to the extent necessary to restore assets to the bankrupt's estate or to the trustees for the benefit of creditors