Case Detail

DCMP 878/2018

[2022] HKDC 1176

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 878 OF 2018

________________________

	IN THE MATTER OF the Property comprised in a Mortgage dated 9^th March 2007 and registered in the Land Registry by Memorial No.07032800250249, namely, Flat C on 25^th Floor, St. Louis Mansion, No.20 Macdonnell Road, Hong Kong.
	and
	IN THE MATTER OF a Guarantee dated 8^th March 2007
	and
	IN THE MATTER OF Order 88 rule 1 and Order 28 of the Rules of the District Court, Cap.336H

________________________

BETWEEN

	STANDARD CHARTERED BANK (HONG KONG) LIMITED	Plaintiff
	and
	WONGGENOS ENTERPRISES COMPANY LIMITED (黃振諾企業有限公司)	1^st Defendant
	WONG PO LING (黃寶齡)	2^nd Defendant
	WONG YUK TUNG (黃煜東)	3^rd Defendant

________________________

Before: His Honour Judge MK Liu in Chambers (Open to Public)

Date of Hearing: 20 October 2022

Date of Decision: 20 October 2022

________________________

DECISION

________________________

1. By a summons dated 5 September 2022 (“the Summons”), the 1^st and the 2^nd Defendants (“the Company” and “Madam Wong”) seek the following orders in these proceedings:

“(1)  a Declaration be made that the 1^st and 2^nd Defendants' legal interests in the Mortgaged Property (Unit 25C)  by way of the Mortgage dated 9 March 2007 which was registered on 28 March 2007 shall have priority over the 3^rd Defendant's interest under the Judgment dated 30 September 2016 in HCA899/2012 which was registered on 13 October 2016 and/or under the Judgment of HCA899/2012 dated 29 July 2022 both of which are under an appeal in CACV296/2022 dated 1 August 2022;
(2)  a Declaration that the Plaintiff's legal interest in the Mortgaged Property would be entitled to priority and ranks only ahead of the equitable interest of the 1^st and 2^nd Defendant in the Mortgage Property and that the Plaintiff shall take the legal estate i.e. the Mortgaged Property free of the said equitable interest of only the 1^st and 2^nd Defendants;
(3)  a Declaration that the 3^rd Defendant has no legal interest or equitable interest in the Mortgage Property by way of the Mortgage dated 9 March 2007 which was registered on 28 March 2007, and shall have no priority over the 1^st and 2^nd Defendants under the Judgment dated 30 September 2016 in HCA899/2012 which was registered on 13 October 2016 and/or under the Judgment of HCA899/2012 dated 29 July 2022 both of which are under an appeal in CACV296/2022 dated 1 August 2022;
(4)  the Bank (Plaintiff)  delivers the title, legal interest of the Mortgage Property to the 1^st Defendant Wonggenos Enterprises Company Limited upon payment and settlement of the Mortgage Loan of HK$885,593.05 outstanding in 2018 when the case of DCMP878/2018 was caused;
(5)  the Bank delivers the title, legal interest and net sales proceeds of the Mortgage Property to the 1^st Defendant in any event including in an event of a mortgagee sale rather than depositing the net sales proceeds into court;
(6)  as a remedy, the 3^rd Defendant and Director of Legal Aid pay the 1^st and 2^nd Defendants the excess amount of Mortgage Loan plus interests, i.e. the current outstanding amount of Mortgage Loan minus HK$576,793.05 ($885,593.05 - $308,800 paid in June 2022)  charged at Default Interest Rate;
(7)  as a remedy, the 3^rd Defendant and Director of Legal Aid indemnity and compensate the 1^st and 2^nd Defendants with an amount to be assessed by the Court as the total amount of other indebtedness and/or incumbrances plus interests and costs including DCCJ 5267/2018 and DCCJ 5731/2018 caused or charged on the Mortgage Property;
(8)  the Writ of Possession and Fieri Facias Combined dated 29 December 2021, and Notice to Quit be stayed execution pending appeal results;
(9)  the 3^rd Defendant and Director of Legal Aid pay the legal costs of the Plaintiff, and the 1^st and 2^nd Defendants in DCMP878/2018 and CAMP36/2020;
(10)  further and/or other relief;
(11)  costs of this application be paid by the 3^rd Defendant and Director of Legal Aid to the Plaintiff and the 1^st and 2^nd Defendants.”

2. The hearing of the Summons is scheduled to take place on 20 October 2022.

3. By a letter dated 6 October 2022, the Company and Madam Wong seek an order that the hearing of the Summons be adjourned pending the outcome of CACV 296/2022. In the letter, the Company and Madam Wong have not informed the court the subject matter in that appeal.

4. On 7 October 2022, I directed the other parties to provide their respective comments on the adjournment proposal made by the Company and Madam Wong in their letter dated 6 October 2022. Subsequently, the Plaintiff (“the Bank”) and the 3^rd Defendant (“Mr Wong”) have provided their respective comments to the court. Both the Bank and Mr Wong have taken the view that there is no need to adjourn the hearing of the Summons. The Bank’s position is that all the matters stated in the Summons have been dealt with by the court previously. Mr Wong’s position is that the Summons is unmeritorious and ought to be struck out.

5. On 13 October 2022, I directed that the hearing of the Summons should take place as scheduled.

6. In the hearing today, after hearing submissions, I come to the conclusion that no adjournment is necessary and the Summons should be dismissed for the following reasons.

7. By a decision dated 3 September 2021[1], the Court of Appeal has dismissed the Company and Madam Wong’s application for leave to appeal against the judgment made by HHJ Winnie Tsui on 28 October 2019 in these proceedings (“the DC Judgment”). In the Court of Appeal’s decision, the Court of Appeal has summarized the procedural history of these proceedings.[2] The Court of Appeal said:

“1.  This is an application by the 1^st and 2^nd Defendants for leave to appeal against the judgment of Her Honour Judge Winnie Tsui (the “Judge”) dated 28 October 2019 (the “Judgment”)  whereby the Judge ordered, inter alia, (i)  the 1^st and 2^nd Defendants to pay an outstanding debt of HK$885,593.05 (plus interest thereon)  to the Plaintiff; and (ii)  the 1^st Defendant to deliver up vacant possession of the property known as Flat C, 25/F, St Louis Mansion, 20 MacDonnell Road, Hong Kong (the “Property”)  to the Plaintiff.
……
BACKGROUND FACTS
(i)  The 1^st, 2^nd and 3^rd Defendants
3.   The 1^st Defendant is a limited company incorporated in Hong Kong on 28 December 2006. The 2^nd Defendant is the sole director and shareholder of the 1^st Defendant. The 3^rd is the father of the 2^nd Defendant.
(ii)  The 1^st Defendant’s purchase and mortgage of the Property
4.  The 1^st Defendant entered into an agreement for the purchase of the Property on 25 January 2007.
5.  On 9 March 2007, the 1^st Defendant executed a mortgage (the “Mortgage”)  in respect of the Property for a loan granted by the Plaintiff. The amount of the mortgage loan was $2,112,500. The Property was assigned to the 1^st Defendant on the same day.
6.  The 2^nd Defendant executed a guarantee dated 8 March 2007 (the “Guarantee”)  in favour of the Plaintiff in respect of moneys and other liabilities owing by the 1^st Defendant to the Plaintiff, subject to a cap on the principal amount of the mortgage loan.
(iii)  The High Court Action
7.  The 3^rd Defendant commenced an action in the High Court in HCA 899/2012 (the “High Court Action”)  against the 1^st and 2^nd Defendants, alleging, inter alia, that the Property was held by the 1^st Defendant on constructive trust for him.
8.  After a contested trial, Recorder Lisa K Y Wong SC (as she then was)  (the “Recorder”)  gave a judgment dated 30 September 2016 (the “HC Judgment”)  in favour of the 3^rd Defendant holding, inter alia, that the Property was held by the 1^st Defendant on constructive trust for the 3^rd Defendant. The HC Judgment was registered at the Land Registry on 13 October 2016.
9.  On 28 February 2018, the Court of Appeal dismissed the 1^st and 2^nd Defendants’ applications for (i)  an extension of time to appeal against the HC Judgment, and (ii)  a stay of execution of the HC Judgment ([2018] HKCA 109, the “CA Judgment”).
(iv)  The Mortgagee Action
10.  The 1^st Defendant failed to make repayment to the Plaintiff under the Mortgage since December 2017. The outstanding sum owing to the Plaintiff was some HK$880,000 plus interest thereon.
11.  By an originating summons dated 23 March 2018 (amended on 4 December 2018), the Plaintiff commenced proceedings in the District Court in DCMP 878/2019 (the “Mortgagee Action”)  for payment of money due under the Mortgage and Guarantee by the 1^st and 2^nd Defendants respectively, and for delivery up of vacant possession of the Property by the 1^st Defendant. The action was originally against the 1^st and 2^nd Defendants only. However, upon discovery of the HC Judgment, the Plaintiff joined the 3^rd Defendant as a party to the proceedings on 3 December 2018, and sought declarations that the Plaintiff’s interest in the Property under the Mortgage ranked ahead of the beneficial interest of the 3^rd Defendant in the Property as found in the HC Judgment.
……
13.  The 3^rd Defendant did not oppose the relief sought by the Plaintiff. The 3^rd Defendant claimed that, in the event of a sale of the Property, the net sale proceeds after deduction of the expenses and indebtedness owing to the Plaintiff should be paid into court instead of being handed over to the 1^st Defendant.
14.  The Mortgagee Action came before the Judge on 28 October 2019. In the Judgment:
(1)  The Judge held that following the dismissal of the application for extension of time to appeal against the HC Judgment, there was no outstanding matter in the High Court Action that needed to be resolved, except for the enforcement of the HC Judgment.
(2)  The Judge noted that the 1^st and 2^nd Defendants did not dispute the validity of the Mortgage and the Guarantee with the Plaintiff. The contractual relationship between the Plaintiff and the 1^st and 2^nd Defendants was not altered by the HC Judgment and remained binding on the 1^st and 2^nd Defendants. The 1^st Defendant had failed to make mortgage repayment and the Plaintiff was entitled to enforce its rights under the Mortgage and the Guarantee.
15.  Accordingly, the Judge made, inter alia, the following orders:
(1)  The 1^st and 2^nd Defendants do pay the Plaintiff the sum of $885,593.05 together with interest thereon;
(2)  The 1^st Defendant do within 28 days after service upon it of the order deliver to the Plaintiff vacant possession of the Property;
(3)  A declaration that the Plaintiff’s legal interest in the Property by way of the Mortgage shall have priority over the 3^rd Defendant’s interest in the Property as found by the Recorder in the HC Judgment; and
(4)  A declaration that the Plaintiff’s legal interest in the Property would be entitled to priority and ranks ahead of the equitable interest of the 3^rd Defendant in the Property and that the Plaintiff shall take the legal estate free of the said equitable interest of the 3^rd Defendant.”

8. The appeal lodged by the Company and Madam Wong in CACV 296/2022 is an appeal against the judgment given by Master Kent Yee on 29 July 2022 (“the Accounts Judgment”) in the High Court Action.

9. In the HC Judgment, the Recorder held that, inter alia:

(1)  Madam Wong shall account for the sale proceeds of a flat and a car parking space in Kam Fai Mansion, 68A MacDonnell Road, Hong Kong (“Kam Fai Proceeds”);
(2)  The Company and Madam Wong shall account for the sale proceeds of Flat D, 1/F, St Louis Mansion, 20 MacDonnell Road, Hong Kong (“St Louis Flat 1D Proceeds”);
(3)  The Company and Madam Wong do pay to Mr Wong the sums found to be due on the taking of the said accounts; and
(4)  The Company do transfer the Property to Mr Wong.

10. The accounts ordered by the Recorder took place before Master Kent Yee on 16 to 17 May 2022, and 2 June 2022.

11. The Accounts Judgment was given on 29 July 2022. In that judgment, the Master held that:

(1) Madam Wong owed Mr Wong HK$1,896,765.21 for the Kam Fai Proceeds.
(2) The Company and Madam Wong owed Mr Wong HK$3,014,200 for the St Louis Flat 1D Proceeds.

12. By a Notice of Appeal filed on 1 August 2022, the Company and Madam Wong lodged an appeal against the Accounts Judgment. This is CACV 296/2022.

13. One can immediately see that the order sought by the Company and Madam Wong by the Summons is unrelated to the matters determined in the Accounts Judgment. That being the case, there is no need to adjourn the hearing of the Summons pending the outcome of CACV 296/2022.

14. Further, in my judgment, the Summons is an abuse of the process of the court. By the Summons, the Company and Madam Wong are in fact seeking an order to challenge and to overturn the ruling made in the DC Judgment and the ruling made in the HC Judgment. These are impermissible. Both the DC Judgment and HC Judgment are binding upon the Company and Madam Wong. Leave to lodge an appeal against the DC Judgment has been refused by the Court of Appeal. Leave to lodge an appeal against the HC Judgment out of time has also been refused by the Court of Appeal. The appeal channels against these judgments have been exhausted. The Company and Madam Wong are now trying to launch a collateral attack against the DC Judgment and the HC Judgment by the Summons. This is an abuse of the process of the court and cannot be allowed.

15. I dismiss the Summons.

16. Costs of the Summons should follow the event. Since the Summons is an abuse of process of the court, the Company and Madam Wong have to pay indemnity costs to the Bank and Mr Wong. I make the following costs order:

(1)  Costs of the Summons be paid by the 1^st and the 2^nd Defendants to the Plaintiff and to the 3^rd Defendant forthwith on an indemnity basis.
(2)  Costs payable by the 1^st and the 2^nd Defendants to the Plaintiff are summarily assessed at HK$10,000.
(3)  Costs payable by the 1^st and the 2^nd Defendants to the 3^rd Defendant are to be taxed on an indemnity basis if not agreed. The 3^rd Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations.

	( MK Liu )
	District Judge

Mr C. Hsia of Gallant, for the plaintiff

The 1^st defendant represented by its director Ms Wong Po Ling, appeared in person

The 2^nd defendant appeared in person

Mr Vincent Lam of Cedric & Co., assigned by the Director of Legal Aid, for the 3^rd defendant

[1] [2021] HKCA 1254

[2] For ease of reference, unless otherwise indicated, the abbreviations used by the Court of Appeal in [2021] HKCA 1254 are adopted herein.

DCMP 878/2018

[2022] HKDC 534

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 878 OF 2018

--------------------

	IN THE MATTER OF the Property comprised in a Mortgage dated 9^th March 2007 and registered in the Land Registry by Memorial No. 07032800250249, namely Flat C on 25^th Floor, St. Louis Mansion, No.20 Macdonnell Road, Hong Kong
	and
	IN THE MATTER OF a Guarantee dated 8^th March 2007
	and
	IN THE MATTER OF Order 88 rule 1 and Order 28 of the Rules of the District Court, Cap 336H

--------------------

BETWEEN

	STANDARD CHARTERED BANK (HONG KONG) LIMITED	Plaintiff
and
	WONGGENOS ENTERPRISES COMPANY LIMITED (黃振諾企業有限公司)	1st Defendant
	WONG PO LING (黃寶齡)	2nd Defendant
	WONG YUK TUNG (黃煜東)	3rd Defendant

---------------------

Before: Deputy District Judge Joseph Vaughan in Chambers

Date of Hearing: 27 May 2022

Date of Reasons for Judgment: 17 June 2022

-----------------------------------------

REASONS FOR JUDGMENT

-----------------------------------------

Background

1. This is the 2^nd Defendant’s appeal[1] against the decision of Master B Mak made on 25 April 2022 dismissing her application by summons dated 17 January 2022 for a stay of execution of the Writ of Possession and Fieri Facias Combined issued on 29 December 2021 in respect of the property situate at Flat C on 25^th Floor, St. Louis Mansion, No 20 Macdonnell Road, Hong Kong (“the Property”), being the property forming the subject of this mortgage action.

2. The Property was purchased in 2007 in the name of the 1^st Defendant, who executed a mortgage dated 9 March 2007 (“the Mortgage”) over the Property in favour of the Plaintiff to secure a loan of HK$2,112,500. At around the same time, the 2^nd Defendant executed a guarantee dated 8 March 2007 in favour of the Plaintiff as additional security for the money owing by the 1^st Defendant to the Plaintiff (“the Guarantee”).

3. The 3^rd Defendant, the father of the 2^nd Defendant, commenced an action in the High Court in HCA 899 of 2012 (“HCA899”) against the 1^st and 2^nd Defendants claiming that the Property was held by the 1^st Defendant on constructive trust for him. By a judgment dated 30 September 2016[2], Recorder Lisa KY Wong SC (as she then was) ruled in favour of the 3^rd Defendant. The 1^st and 2^nd Defendants then sought an extension of time to appeal against the judgment, and for a stay of execution. The applications were dismissed by the Court of Appeal on 28 February 2018.

4. Subsequent to the judgment in HCA 899, the 1^st Defendant had defaulted in repayment of the loan since December 2017. This mortgage action was then commenced by the Plaintiff by Originating Summons dated 23 March 2018 for recovery of the outstanding amount under the Mortgage.

5. By the judgment given by Her Honour Judge Winnie Tsui in this action on 28 October 2019[3] (“the Judgment”), the learned judge ordered, inter alia, that (i) the 1^st and 2^nd Defendants do pay to the Plaintiff the outstanding amount of HK$885,593.05, together with interest thereon, and (ii) the 1^st Defendant do deliver up vacant possession of the Property to the Plaintiff.

6. Insofar as the 3^rd Defendant is concerned, he was joined in the present action for the purpose of seeking declarations to the effect that the Plaintiff’s legal interest in the Property has priority over, and would rank ahead of the 3^rd Defendant’s beneficial interest. The Plaintiff’s claim was not opposed by the 3^rd Defendant. Based on her findings, the judge also made the declarations sought. The Plaintiff would thus take the legal estate free of the equitable interest of the 3^rd Defendant^{^[4]}.

7. Upon the granting of the Judgment, the Plaintiff also undertook that in the event it exercises its power of sale, insofar as there will be any net amount after the sale of the Property and payment of the outstanding indebtedness and expenses owed by the 1^st and 2^nd Defendants to the Plaintiff, the Plaintiff will pay into court the net sale proceeds[5].

8. Subsequently the 1^st and 2^nd Defendants’ application for leave to appeal against the Judgment was dismissed by the judge on 24 January 2020[6], and a further application for leave to appeal was also dismissed by the Court of Appeal on 3 September 2021[7].

9. Following the disposal of the appeal, the Plaintiff proceeded with the enforcement of the Judgment to recover the outstanding debts, and for taking possession of the Property. The Writ of Possession and Fieri Facias Combined was eventually applied for and issued on 29 December 2021.

The present appeal

10. On 17 January 2022, the 2^nd Defendant applied for a stay of execution of the Writ of Possession and Fieri Facias Combined. The application was dismissed by Master B Mak. By a Notice of Appeal dated 26 April 2022, the 2^nd Defendant lodged the present appeal against that decision.

11. The appeal came before me on 27 May 2022. After hearing the parties, I dismissed the appeal and indicated that I would provide the reasons for my judgment, which I now do.

The 2^nd Defendant’s arguments

12. The 2^nd Defendant filed further evidence for this appeal, updating information concerning her means, or expected means, and consolidating her position. The plaintiff has not objected to the filing of such further evidence, and I proceeded to consider the same under Order 58 rule 1(4) of the Rules of the District Court, Cap 336H (“RDC”) for the purposes of this appeal, which is dealt with by way of a re-hearing (see Hong Kong Civil Procedure 2022, Vol.1, para.58/1/2).

13. According to the 2^nd Defendant, she is currently residing at the Property and has no other housing option available. The place is also her major workplace during the pandemic. She has written to the Plaintiff to inform them that as a guarantor of the mortgage loan, she intends to pay off the amount due from the 1^st Defendant to the Plaintiff. On 5 January 2022, she did repay an amount of HK$8,800. In the circumstances, she asked for a stay of execution until the end of June 2022 for her to “pay off and settle the outstanding mortgage loan amount and the sums stated in the Writ [of execution] dated 29 December 2021 by 30 June 2022”[8]. In her 2^nd Affirmation filed on 14 April 2022 in support of her application for a stay of execution, she proposed the following repayment schedule:-

“i. as a guarantor of the mortgage loan, the 2^nd Defendant would pay off HK$300,000 of the mortgage loan on or before 30^th May 2022. A copy of the cheque…is enclosed here, although it is post-dated. The 2^nd Defendant would deposit this cheque into the Bank’s designated bank account on or before 30 May 2022.
ii. the 2^nd Defendant would pay off another batch of HK$300,000 of the mortgage loan on or before 30^th August 2022, unless a new wave of Omicron variant breaks out hindering activities, and that the government institutes a shut-down of business, a restriction of people’s mobility or other stringent measures.
iii. the 2^nd Defendant to pay off the remaining sum of the mortgage loan by installment, or if the Bank wishes by 30 November 2022 except that a new wave of Omicron variant breaks out hindering activities, and that the government institutes a shut-down of business, a restriction of people’s mobility or other stringent measures not foreseeable.
iv. the 2^nd Defendant expects to pay off the legal costs of DCMP878/2018 and CAMP36/2020 as soon as possible when the 1^st and the 2^nd Defendants have obtained a hearing decision and an order of the account taking of HCA899/2012 fixed on 16-18 May 2022. The 1^st and 2^nd Defendants expect to fully settle all legal costs on or before 30 December 2022, and finish this matter with the Bank.”

14. In her 3^rd Affirmation filed on 26 April 2022, the 2^nd Defendant indicated that the 1^st and 2^nd Defendants were preparing for an account-taking hearing in May 2022 in the High Court concerning monetary contributions paid by them in relation to certain properties including the Property in the present case, and that they were expecting a return of some HK$1.19 million to them as “legal cost charged as an Absolute Charging Order in the sale of Unit 24A…within 7 days in the account taking hearing on 16-18 May 2022”. On such claim, the 2^nd Defendant asked for a stay of execution until 30 July 2022, or at least 30 June 2022, for her and the 1^st Defendant to fully settle the outstanding sum under the Mortgage.

15. By her 4^th Affirmation filed on 18 May 2022, the 2^nd Defendant provided a further update of her position, indicating to the court that closings submissions will be heard at the account-taking hearing in HCA 899 fixed on 2 June 2022. It is said that the 1^st and 2^nd Defendants have the intention and ability to settle the outstanding amounts due to the Plaintiff as soon as the Master has made a decision in the High Court.

16. The 2^nd Defendant also indicated that she would be able to repay HK$300,000 to the Plaintiff first as soon as her bank approves a business loan for her company, Newstrak Intl Company Limited (“Newstrak”). According to her, the loan was applied for in early April 2022 and is expected to be forthcoming by the end of May 2022. She also submitted at the hearing a copy of a “Revised repayment schedule” dated 5 May 2022 issued by HSBC to Newstrak being a schedule showing repayable monthly amounts from 28 May 2022 to 28 August 2025 for the outstanding balance of HK$96,799.08 of a loan due from Newstrak to HSBC. I asked the 2^nd Defendant at the hearing as to the significance of this repayment schedule, and was given to understand that this is the loan account that was used to apply for a top-up loan from the HSBC, and the amount of the top-up loan expected to be forthcoming is in the region of HK$325,000. I further asked the 2^nd Defendant whether the loan has been formally approved yet, and whether she has produced the loan application documents she or her company has submitted, to which she responded by stating that the loan application has not yet been approved, and she has not arranged for a copy of the application to be made at the time, so that no such copy was available. She then asked for an adjournment of the hearing to allow her to liaise with HSBC to obtain a copy of the loan application. I did not accede to the application for adjournment, bearing in mind that (i) it is up to a party as to the manner in which the evidence for a hearing is to be compiled well before the hearing, and (ii) the loan application in question was, according to the 2^nd Defendant, made in early April 2022, and she has had ample time to obtain a copy of the application and produce it for the purpose of both the hearing before the Master, and this appeal. That was not done. I therefore disallowed her ad hoc application for an adjournment made in the middle of the hearing.

The plaintiff’s submissions

17. Ms Hung for the Plaintiff submitted that since the Judgment was granted on 28 October 2019, the Defendants have only repaid a meagre amount of HK$8,800, whereas the total outstanding sum currently stands at over HK$1.2 million, with interest accruing on a continuous basis. Even if the 2^nd Defendant is able to procure repayment of what she described as the first batch of HK$300,000 by the end of May 2022, it is only a part of the outstanding amount. Any further delay in the execution process would be tantamount to an unjust curtailment of the Plaintiff’s right to have the fruits of the litigation, being the successful party who is entitled to enforce the Judgment (see e.g. China Citic Bank International Limited v Durrant Patrick Michael [2014] HKCU 1694; CACV 127 of 2014, 21 July 2014, Chu JA).

18. In relation to HCA 899, it is submitted on behalf of the Plaintiff that that is strictly a dispute of the 1^st and 2^nd Defendants with the 3^rd Defendant, and that by the Judgment the court has already made a declaration that the Plaintiff’s interest shall have priority over the 3^rd Defendant’s interest in the Property. As such, the outcome of HCA 899 is irrelevant to the present proceedings for the enforcement of the Judgment.

19. It was further submitted by the Plaintiff that the 3^rd Defendant may also have an interest in the proceeds of sale of the Property as a result of the judgment in HCA 899. As such, any further delay in execution in the present case would also have an impact on his interest at large.

The applicable principles

20. Order 45 rule 11 of the RDC provides:

“Without prejudice to Order 47, rule 1, a party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief on the ground of matters which have occurred since the date of the judgment or order, and the Court may by order grant such relief, and on such terms, as it thinks just.”

21. Order 47 rule 1(1), which is only applicable to writs of fieri facias, provides:

“(1) Where a judgment is given or an order made for the payment by any person of money, and the Court is satisfied, on an application made at the time of the judgment or order, or at any time thereafter, by the judgment debtor or other party liable to execution—
(a) that there are special circumstances which render it inexpedient to enforce the judgment or order; or
(b) that the applicant is unable from any cause to pay the money,
then, notwithstanding anything in rule 3, the Court may by order stay the execution of the judgment or order by writ of fieri facias either absolutely or for such period and subject to such conditions as the Court thinks fit.”

22. The reference in Order 45 rule 11 to “matters which have occurred since the date of the judgment” is a reference to “matters which went to the validity of the judgment and which, if established before the Court, might justify the Court in saying that this was a judgment which on the material now before it, it would not allow to be executed” – see the judgment of Hunter J in Tam Ho Man v Wong Kwok Tai, HCA 4736 of 1985, 20 October 1986, at paragraph 3.

23. Tam Ho Man v Wong Kwok Tai was referred to in Credit Lyonnais v SK Global Hong Kong Ltd, CACV 167 of 2003, 30 July 2003 where Ma CJHC (as he then was) gave a useful exposition on the exercise by the court of its jurisdiction to stay execution under Order 45, rule 11, Order 47, rule 1 and Order 59, rule 13, being the corresponding rules in the High Court:

“4. Where, as in the present case, a party (the judgment creditor) has obtained a judgment against another party (the judgment debtor), the starting (and often, finishing) point is that the judgment creditor should be able to take all legitimate measures to enforce that judgment. That is, after all, his right. The various ways of enforcing a judgment, are of course set out in RHC O.45.
5. Exceptionally, however, the judgment creditor may be prevented from levying execution. I emphasize the exceptional nature of this, for the court is in these circumstances being asked to deprive a successful party of the fruits of the judgment he has obtained. The exercise by the court of its jurisdiction to stay execution under O.45, r.11, O.47, r.1 and O.59, r.13 demonstrates this. Thus, a stay of execution may be granted where:-
(1) New evidence emerges after the relevant judgment, showing that it was not valid: - see Tam Ho Man v Wong Kwok Tai, unreported, 20 October 1986 [1986] HKLY 705. This case dealt with the court's jurisdiction under RHC O.45, r.11.
(2) In certain circumstances, the judgment debtor has a claim against the judgment creditor yet to be determined. This may even include situations in which the corporate veil should be pierced: - see Burnet v Francis Industries Plc [1987] 1 WLR 802 (a case dealing with the UK equivalent of RHC O.47, r.1).”

24. Further, the court preserves an inherent jurisdiction to order a stay of execution in suitable cases quite irrespective of the express rules of the court. Whilst the list is not exhaustive, in order for the jurisdiction to be activated and a stay ordered, the circumstances must be that an injustice would otherwise be caused, or that a stay would prevent abuse, preserve the dignity of the court or facilitate the administration of justice[9].

25. Bearing the above principles governing the exercise of the court’s jurisdiction in mind, I would proceed to consider the 2^nd Defendant’s contentions.

Discussion

26. In HCA 899, judgment has already been granted in favour of the 3^rd Defendant (being the plaintiff in that case) for, inter alia, the transfer of the Property by the 1^st Defendant to him, who has been held to be the beneficial owner under a constructive trust[10]. As mentioned at the outset, the 3^rd Defendant was subsequently joined in the present action to cater for his interest. The taking of accounts described by the 2^nd Defendant is apparently related to two other properties the subject of HCA 899 that have been held to be beneficially owned by the 3^rd Defendant, and referred to in the relevant judgments in HCA 899 as the “Kam Fai Flat” and “St Louis Flat 1D”, the proceeds of which are to be accounted for by the 1^st and 2^nd Defendants[11]. For present purposes, it is uncertain as to the amount, if any at all, the 2^nd Defendant allegedly claims she would be entitled to have returned to her as her “contributions to the Mortgage Loan”[12], upon the taking of such accounts. It is not a matter for this court to decide on, suffice for me to say that there are no materials before this court to substantiate her allegation. In fact, I note that the relevant order made by the court in HCA 899 was that “[the 1^st and 2^nd Defendants] should pay [the 3^rd Defendant] the sums found to be due on the taking of such accounts”[13].

27. The 2^nd Defendant also referred in her written submissions to a sum of HK$1,195,441.21 being the amount of a cheque drawn in favour of the Director of Legal Aid (who was acting for the 3^rd Defendant) in HCA 899, said to be out of the proceeds of sale of “Unit 24A”. That would appear to me to be a reference to the proceeds derived from the sale of a property owned by the 2^nd Defendant, referred to in the judgment in HCA 899 as the “St Louis Flat 24A” (i.e. Flat A, 24/F St Louis Mansion[14]), under a Charging Order Absolute dated 9 April 2019. The Charging Order Absolute was made as a result of the 2^nd Defendant’s failure to pay the assessed costs of the 3^rd Defendant in HCA 899 of 2012[15]. However, it has not been clearly pointed out by the 2^nd Defendant as to what the amount drawn under the cheque mentioned above in favour of the Director of Legal Aid represents, and whether the Director of Legal Aid is to return the amount, or any part of it, to the 2^nd Defendant. It is not for me to make any conjecture in this regard.

28. In relation to the 2^nd Defendant’s contention that she is in the process of an application for a business loan through her company, Newstrak, and once the loan comes through, she would be able to repay an amount of HK$300,000 first to the Plaintiff, I am not with the 2^nd Defendant. The lack of clarity as to the likelihood of success of the loan application, as well as the amount that would be approved apart, the 1^st or the 2^nd Defendant has obviously not sought to take the step to make any loan applications for the entire time after the date of the Judgment until April this year. Whatever the reason, the inaction on the part of the 1^st and 2^nd Defendants was not conducive to relief from their situation.

29. In short, there is nothing to suggest that there have been any circumstances or evidence emerging after the Judgment that would suggest that the Judgment is invalid, or that the 1^st or 2^nd Defendant has any claim against the Plaintiff that is yet to be determined. Any alleged amount due to be returned to the 1^st or 2^nd Defendant, which is unrelated to the Plaintiff’s claim for recovery of the mortgage debt here, would not constitute a special circumstance to justify a stay (see Hong Kong Civil Procedure 2022, Vol.1, at paragraph 47/1/1; Yu Michael Tse Lim v Ngai Tik Yu, DCCJ 3211 of 2007, 31 December 2007, HH Judge Au (as he then was)).

30. Further, the 2^nd Defendant has put forward her submissions in a way that she has or will shortly have, together with the 1^st Defendant, the ability to repay the adjudged amount. But even if her application had been on the ground of an inability to pay pursuant to Order 47 rule 1(3), she has not provided the required evidence disclosing her income, the nature and value of any of her property, and the amount of any other liabilities of hers, in compliance with rule 1(3). On the materials before me, and on the analysis of the factors stated above, I am unable to conduct any realistic assessment of a stay of execution of the writ of fieri facias[16] on condition of any payment by instalments or the repayment schedule proposed by the 2^nd Defendant. Thus, to the extent that the 2^nd Defendant’s application is based on Order 47 rule 1(3) on the ground of inability to pay, she has not succeeded either.

31. Lastly, insofar as the inherent jurisdiction of the court is concerned, nothing can be discerned in the circumstances of this case that a stay would prevent a potential abuse of the process of the court, preserve the dignity of the court, or that the administration of justice would otherwise call for a stay.

Conclusion

32. For the reasons stated above, I accept the Plaintiff’s submissions, and reject the contentions of the 2^nd Defendant. The appeal is therefore dismissed.

33. In relation to costs, I ordered that the 2^nd Defendant shall pay the Plaintiff’s costs of this appeal on an indemnity basis pursuant to the terms contained in Clause 1(c) of the Guarantee, which provides for the recovery of legal costs on an agreed indemnity basis. The Plaintiff’s costs were summarily assessed at $11,000.

34. As the 3^rd Defendant has not participated in this appeal, no costs order has been made as between him and the 2^nd Defendant or the Plaintiff.

	( Joseph Vaughan )
	Deputy District Judge

Ms B Hung, of Gallant for the Plaintiff

The 1^st Defendant was represented by Ms Wong Po Ling

The 2^nd Defendant was not represented and appeared in person

The 3^rd Defendant was not represented and was absent

[1] By Notice of Appeal taken out in her name on 26 April 2022.

[2] Wong Yuk Tung v. Wong Po Ling and Another, HCA899/2012, 30 September 2016.

[3] [2019] HKDC 1466

[4] See paragraph 37 of the Judgment.

[5] See paragraph 38 of the Judgment.

[6] [2020] HKDC 108.

[7] CAMP 36/2020; [2021] HKCA 1254.

[8] Affirmation of Wong Po Ling dated 17 January 2022, paragraph 10.

[9] Credit Lyonnais v SK Global Hong Kong Ltd at paragraph2.

[10] Judgment of Recorder Lisa Wong SC dated 30 September 2016, at paragraph 96.

[11] See, e.g. the Decision of Lisa Wong J dated 27 June 2018, [2018] HKCFI 1482; and the Decision of Lisa Wong J dated 5 May 2021, [2021] HKCFI 1267.

[12] Page 2 of the “Skeleton Submission of the 1^st and 2^nd Defendants” dated 24 May 2022.

[13] Judgment of Recorder Lisa Wong SC dated 30 September 2016, at paragraph 96.

[14] Which is in the same building where the Property is.

[15] See the Decision of DHCJ Leung dated 8 August 2019, [2019] HKCFI 1947.

[16] Order 47 rule 1 only applies to execution by writs of fieri facias.

DCMP 878/2018

[2020] HKDC 108

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 878 OF 2018

-------------------------

	IN THE MATTER OF the Property comprised in a Mortgage dated 9^th March 2007 and registered in the Land Registry by Memorial No. 07032800250249, namely, Flat C on 25^th Floor, St. Louis Mansion, No. 20 Macdonnell Road, Hong Kong
	and
	IN THE MATTER OF a Guarantee dated 8^th March 2007
	and
	IN THE MATTER OF Order 88 rule 1 and Order 28 of the Rules of the District Court, Cap. 336H

-------------------------

BETWEEN
	STANDARD CHARTERED BANK (HONG KONG) LIMITED	Plaintiff
and
	WONGGENOS ENTERPRISES COMPANY LIMITED （黃振諾企業有限公司）	1^st Defendant
	WONG PO LING（黃寶齡）	2^nd Defendant
	WONG YUK TUNG（黃煜東）	3^rd Defendant

-------------------------

Before: Her Honour Judge Winnie Tsui in Chambers

Dates of Written Submissions: 16 December 2019, 2, 6, 14 January 2020

Date of Decision: 24 January 2020

---------------------

DECISION

----------------------

1. On 28 October 2019, I delivered judgment in this action, ordering, among other things, the 1^st and 2^nd defendants to pay the sums outstanding under a mortgage made with the plaintiff, and delivering vacant possession of the property concerned to the plaintiff.

2. By summons dated 20 November 2019, the 1^st and 2^nd defendants apply for leave to appeal against the judgment. In the supporting affirmation made by the 2^nd defendant, the 1^st and 2^nd defendants also ask for stay of execution of the order to deliver vacant possession pending the appeal.

3. Following the guidance laid down by the Court of Appeal in Tsang Wing Kwai v Tsang Wing Fai [2018] 5 HKLRD 350, [2018] HKCA 759 at para 24, I gave directions for the lodging of written submissions. Having read the submissions, I am satisfied that an oral hearing is not necessary and the summons is suitable for disposal on paper only.

4. I shall adopt below the defined terms in the judgment.

5. In their skeleton submissions, the 1^st and 2^nd defendants set out their proposed grounds of appeal in paras 3(i) to (x) and 4 to 6.

Legal principles

6. The principles governing the threshold for granting leave to appeal are well-established. The applicant needs to show that the appeal has a “reasonable prospect of success” or there is some other reason in the interests of justice why the appeal should be heard: section 63A(2) of the District Court Ordinance, Cap 336.

7. An applicant is required to show more than just an arguable case. What is needed is an appeal that has merits and ought to be heard, although the applicant does not have to demonstrate that the appeal will probably succeed: Wynn Resorts (Macau) SA v Mong Henry [2009] 5 HKC 515 at para 19, per Chu J. A “reasonable prospect of success” means an appeal with prospects that are more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 at para 17, per Le Pichon JA.

Proposed grounds of appeal

8. In essence, under the proposed grounds of appeal, the 1^st and 2^nd defendants seek to establish that they have all along been the 100% beneficial owner of the Property and the 3^rd defendant has never had any equitable interest in it. In other words, it is another attempt by the 1^st and 2^nd defendants to overturn the Judgment in the High Court action numbered HCA 899/2012. See, eg, paras 3(ii) and (iii) of the submissions:

“(ii) D1 and D2 have a 100% interest in Unit 25C.
(iii) D3’s equitable interest in Unit 25C is zero.”

9. In support of this position, the 1^st and 2^nd defendants refer to some of the factual allegations and disputes which arose in the High Court action. For example, see the references to the shortfall of the loan owed to Den Norske Bank (para 3(v)), the 35% downpayment for Unit 24A (para 3(vi)), the real property transaction in 1997 (paras 3(vii), (viii) and (ix), 5 and 6).

10. It is unnecessary to spell out these grounds in more detail. It is plain what the 1^st and 2^nd defendants wish to achieve by pursuing the proposed appeal. They want the Court of Appeal to revisit the findings made in the High Court action. Or, at least, with regard to the beneficial ownership of the Property, they want the Court of Appeal to take into account the mortgage payments made by them since the Property was acquired in 2007 and up until December 2017, which they say the trial judge ought to have done but had failed to do.

11. The 1^st and 2^nd defendants’ present submissions are in effect a re-run of their argument raised at the trial in the present action. They were raised in support of their position that this case should be set aside or transferred to the High Court – see para 23 of my judgment.

12. I have already ruled that the issue of beneficial ownership of the Property has been disposed of in the High Court action and the Judgment is binding on me. Furthermore, there does not appear to be any room for it to be set aside either at the first instance level or at the Court of Appeal – see paras 27 to 29 of my judgment. Accordingly, both in substance and in form, an appeal from my judgment in the present case is a wrong avenue for the 1^st and 2^nd defendants to achieve what they want.

13. Their proposed appeal therefore has no reasonable prospect of success.

14. There being no other reason why the appeal should be heard, I refuse to grant leave to appeal to the 1^st and 2^nd defendants.

15. I should add that in any event, as pointed out in paras 32 to 34 of my judgment, irrespective of whether the High Court Judgment can be overturned, the mortgage and the guarantee are binding on the 1^st and 2^nd defendants respectively. They are in default. The plaintiff is therefore entitled to the reliefs sought, which are in accordance with the terms of the contractual documents. This remains to be the case whether or not the 1^st defendant is the beneficial owner of the Property.

Stay application

16. I have concluded that the proposed grounds of appeal have no reasonable prospect of success. The minimum requirement for a stay application is not even met. Applying Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, para 9(6), per Ma J, I refuse the stay application.

Conclusion

17. I dismiss the 1^st and 2^nd defendants’ summons.

18. Costs should follow the event. The plaintiff and the 3^rd defendant do have costs of the summons. I grant a certificate for counsel. The plaintiff’s costs be summarily assessed in the sum of $48,000, payable by the 1^st and 2^nd defendants within 21 days of the handing down of this decision. The 3^rd defendant’s costs of the summons be taxed if not agreed, and his own costs be taxed in accordance with the Legal Aid Regulations.

( Winnie Tsui )
District Judge

Mr Adrian Leung, instructed by Gallant, for the plaintiff

The 1^st defendant acted in person and was represented by its director Ms Wong Po Ling, the 2^nd defendant

The 2^nd defendant acted in person

Mr Paul HM Leung, instructed by Edmund Cheung & Co, assigned by the Director of Legal Aid, for the 3^rd defendant

DCMP 878/2018

[2019] HKDC 1466

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 878 OF 2018

-------------------------

	IN THE MATTER OF the Property comprised in a Mortgage dated 9^th March 2007 and registered in the Land Registry by Memorial No. 07032800250249, namely, Flat C on 25^th Floor, St. Louis Mansion, No. 20 Macdonnell Road, Hong Kong
	and
	IN THE MATTER OF a Guarantee dated 8^th March 2007
	and
	IN THE MATTER OF Order 88 rule 1 and Order 28 of the Rules of the District Court, Cap. 336H

-------------------------

BETWEEN
	STANDARD CHARTERED BANK
	(HONG KONG) LIMITED	Plaintiff
and
	WONGGENOS ENTERPRISES COMPANY LIMITED	1st Defendant
	（黃振諾企業有限公司）
	WONG PO LING（黃寶齡）	2nd Defendant
	WONG YUK TUNG（黃煜東）	3rd Defendant

-------------------------

Before:

Her Honour Judge Winnie Tsui in Court

Date of Hearing:	28 October 2019
Date of Judgment:	28 October 2019

---------------------

JUDGMENT

----------------------

Introduction

1. This is a mortgage action brought by the plaintiff, a licensed bank, under Order 88 of the Rules of the District Court. The mortgage in question was executed by the 1^st defendant and dated 9 March 2007 in respect of Flat C, 25^th Floor, St Louis Mansion, No 20 MacDonnell Road, Hong Kong (“the Property”). The amount advanced under the mortgage loan was $2,112,500.

2. The 1^st defendant is a limited company in Hong Kong. The 2^nd defendant is its sole director and shareholder. The 2^nd defendant executed a guarantee dated 8 March 2007 in favour of the plaintiff in respect of moneys and other liabilities owing by the 1^st defendant to the plaintiff, subject to a cap on the principal sum.

3. The 2^nd and 3^rd defendants are daughter and father. They, together with the 1^st defendant, were parties to the High Court action numbered HCA 899/2012. In that action, the 3^rd defendant claimed against the 1^st and 2^nd defendants, alleging that the proceeds of sale of two properties, also located at MacDonnell Road, and the Property are held on constructive trust by the 1^st defendant and/or the 2^nd defendant for him. After trial, the court found in the 3^rd defendant’s favour. Judgment was handed down by Recorder Lisa K Y Wong SC (as she then was) on 30 September 2016 (“the Judgment”). It was registered at the Land Registry on 13 October 2016.

4. Relevantly for present purposes, it was held that the Property was held by the 1^st defendant on constructive trust for the 3^rd defendant. This was based on the finding that the money (in the form of down payment) used to purchase the Property was subject to constructive trusts held by the 1^st defendant and/or the 2^nd defendant for the 3^rd defendant. See the recount of the parties’ cases in this regard in paras 43 to 52 and the ruling in paras 94 and 95 of the Judgment.

5. The plaintiff now says that when the mortgage was executed, there was no publicly available information showing that the Property was not beneficially owned by the 1^st defendant. It was not aware of the High Court action and only learnt of it when the 1^st and 2^nd defendants filed their opposing affirmations in the present action in May 2018.

6. The plaintiff’s case here is that the 1^st defendant has failed to make the instalment payment since December 2017. Notwithstanding demand letters sent on 1 March 2018, the 1^st and 2^nd defendants have to date failed to pay the sums due under the mortgage and the guarantee respectively.

7. Accordingly, the plaintiff claims payment by the 1^st defendant of all sums due under the mortgage, payment by the 2^nd defendant of all sums due under the guarantee, vacant possession of the Property and declarations to the effect that the plaintiff’s legal interest in the Property has priority over and ranks ahead of the 3^rd defendant’s equitable interest.

Procedural history

8. The plaintiff commenced the present action by originating summons on 23 March 2018. At that time, the claim was made against the 1^st and 2^nd defendants only, for payment and vacant possession.

9. After discovery of the High Court action, the plaintiff applied to join the 3^rd defendant as a party and to amend the originating summons seeking declaratory relief against him. Leave was granted on 3 December 2018.

10. In this action, the 1^st and 2^nd defendants acted in person. They filed affirmations opposing the plaintiff’s claim in May 2018 and January 2019.

11. The 3^rd defendant is legally aided. While he indicated that he intended to contest the proceedings when he lodged his acknowledgment of service, he made clear in his affirmation filed in January 2019 that he does not oppose the reliefs sought in the amended originating summons, save the issue of costs.

12. The plaintiff now claims an outstanding sum of $883,340.02 (as at the date of the demand letter) together with interest. The rateable value of the Property in the year of 2018/2019 was $173,640. I am therefore satisfied that the present claim falls within the jurisdiction of the District Court under sections 32 and 35 of the District Court Ordinance.

13. I am also satisfied that the requirements set out in Order 88, rule 5 concerning the plaintiff’s supporting affidavits are complied with.

The claim and the defence

14. The plaintiff’s claim is a straightforward claim by a mortgagee to seek redress upon default by the mortgagor and its guarantor. The mortgage incorporated “The Mortgage Conditions (Two-party Version) (2003 Edition)”.

15. As the 1^st defendant has failed to make the instalment payment since December 2017, the outstanding principal became immediately due and payable pursuant to the terms of the mortgage.

16. As set out in the affirmation in support, the plaintiff claims that the following sums are due from the 1^st defendant under the terms of the mortgage:-

Outstanding principal as at 1 March 2018,
ie the date of demand $883,340.02

Overdue interest as at 9 March 2018 $516.82

Late charge together with administrative
fee for payment $394.53

Interest from 9 March 2018 to 23 March 2018 $439.03

Further interest on the principal sum of
$883,340.02 at the rate of 1.3814% pa
from 24 March 2018 Accruing

17. The plaintiff further claims that under the terms of the guarantee, the 2^nd defendant is liable to pay to the plaintiff money owed by the 1^st defendant to the plaintiff, subject to the pre-set cap.

18. Furthermore, pursuant to the terms of the mortgage, the plaintiff seeks delivery of vacant possession of the Property. To the best of the plaintiff’s knowledge, it has not been let out and the 1^st defendant is in possession and control. The 2^nd defendant confirmed at today’s hearing that she resides at the Property.

19. As confirmed in his affirmation, the 3^rd defendant has no objection to the above reliefs sought against the 1^st and 2^nd defendants. In addition, he has no objection to the declaratory reliefs sought by the plaintiff against him.

20. In the High Court action, it was ordered, amongst others, that the 1^st defendant do transfer the Property to the 3^rd defendant. To date, the 1^st defendant has not complied with that order. The 3^rd defendant took out an application seeking an order that the 1^st defendant do execute an assignment of the Property to him absolutely within 28 days. On 27 June 2018, the application came before Lisa Wong J. In light of the present action, that application was adjourned sine die. See paras 4 to 7 of the decision at [2018] HKCFI 1482.

21. The 3^rd defendant’s present position is this. In the event of a sale of the Property, which is currently valued at about $8.6 million, any net sale proceeds after deduction of expenses and indebtedness owed to the plaintiff should be paid into court, instead of being handed over to the 1^st defendant.

22. The plaintiff confirms that it has no objection to this.

Defence of the 1^st and 2^nd defendants

23. As revealed in their opposing affirmations and in their written submissions, the 1^st and 2^nd defendants’ defence is, in essence, that the judge had reached the wrong decision in the High Court action and they are in the process of seeking an appeal from the decision. For that reason, the present action should “be set aside until the Court of Appeal has a hearing” or, alternatively, it should be transferred to the High Court “to be dealt with all in one”. In her latest affirmation filed in January 2019, the 2^nd defendant goes further and asks this court to declare that the 1^st and 2^nd defendants are the beneficial owner of the Property.

24. In her oral submissions this morning, the 2^nd defendant argued that the 1^st defendant was in fact not in default under the mortgage. In a normal situation, the 1^st defendant would be considered as being in default when it stopped servicing the mortgage repayments. However, here, it is now ruled that the 1^st defendant has no interest in the Property, but only holds its title. The 1^st and 2^nd defendants therefore had to make the difficult choice of halting mortgage repayments, given that the 1^st defendant no longer owns the property and therefore has no further role insofar as the mortgage is concerned. As such, the 1^st and 2^nd defendants, they contend, are not in default.

Discussion

25. The defence put forward by the 1^st and 2^nd defendants has no merit.

26. The following chronology relating to the High Court action is relevant:-

(1)  The Judgment was handed down on 30 September 2016.
(2)  On 17 March 2017, the 1^st and 2^nd defendants took out a summons seeking an extension of time to lodge an appeal and a stay of the Judgment.
(3)  The Court of Appeal dismissed the summons on 28 February 2018. See the judgment at [2018] HKCA 109.
(4)  On 6 March 2018, the 1^st and 2^nd defendants issued a summons for a “reconsideration” of the Court of Appeal’s judgment at an oral hearing inter partes.
(5)  The Court of Appeal dismissed that application on 11 September 2018. See the decision at [2018] HKCA 597.
(6)  Lastly, the 2^nd defendant issued an application to set aside and impeach the Judgment in July 2019. That application came before Deputy High Court Judge Leung, and was dismissed by the judge on 8 August 2019. See the decision at [2019] HKCFI 1947.

27. It is plain and clear that as regards the dispute over the Property between the 1^st and 2^nd defendants on the one hand and the 3^rd defendant on the other, it has been disposed of in the High Court action.

28. The Court of Appeal has refused to extend time for the 1^st and 2^nd defendants to lodge an appeal. This means that there will not be a substantive appeal hearing of the Judgment.

29. As things presently stand, the Judgment is binding on the 1^st, 2^nd and 3^rd defendants. On the materials before me, there does not appear to be any room for it to be set aside either at the first instance level or at the Court of Appeal. There is also no reason why the present action should be transferred to the High Court, so that it can be dealt with together with the High Court action. There is no outstanding matter there save for the enforcement of the judge’s ruling.

30. In sum, as things stand, the 3^rd defendant is the beneficial owner of the Property. And he does not oppose to the reliefs sought by the plaintiff in this action.

31. However, even taking the 1^st and 2^nd defendants’ case at its theoretical highest, and assuming that the Judgment can be overturned, that does not assist the 1^st and 2^nd defendants in any way to resist the plaintiff’s present mortgage action. Even if the 1^st defendant owns the Property beneficially, the 1^st and 2^nd defendants have not attempted to dispute the validity of the mortgage and the guarantee, the fact that there has been a default and that sums remain outstanding and owing and due by the 1^st and 2^nd defendants, and the legal entitlement of the plaintiff in such event. All these have been proved by the affirmation evidence put forward by the plaintiff.

32. Lastly, the contention that the 1^st and 2^nd defendants are not in default is also without merit. From the perspective of the plaintiff, notwithstanding the High Court ruling, the 1^st defendant remains the borrower of the mortgage loan and the 2^nd defendant the guarantor of the loan. This contractual relationship, as agreed by the parties in the mortgage documents, is not altered by the High Court ruling that the 3^rd defendant is in fact the beneficial owner of the Property all along.

33. The obligation to pay on the part of the 1^st and 2^nd defendants remains binding. Hence, they are in default.

34. In the circumstances, the plaintiff is entitled to the reliefs as sought pursuant to the terms of the mortgage and the guarantee.

35. The plaintiff proposes that vacant possession be delivered within 28 days. The 1^st and 2^nd defendants ask for around three months to do so, because there may be room for them to discuss with the plaintiff regarding the repayments and the 2^nd defendant also mentioned that she would have to deal with the year-end audit of her own business.

36. The period of 28 days is fairly standard. Given that the Property is a residential flat at the Mid-Levels, it is a reasonable period. The 1^st and 2^nd defendants have not put forward any good reason for a lengthier period. If they wish to make any alternative arrangement with the bank, it is open to them to do so expeditiously within the period.

Order

37. For the above reasons, I make the following orders:-

(1) The 1^st defendant do pay the plaintiff the sum of $885,593.05 together with interest on the principal sum of $883,340.02 at the rate of 1.3814% per annum (ie $33.43 pay day) from 20 April 2018 to the date hereof and thereafter at judgment rate until full payment;
(2) The 2^nd defendant do pay the plaintiff the said sum of $885,593.05 together with interest on the said principal sum of $883,340.02 at the rate of 2.8814% per annum (ie $69.73 pay day) from 20 April 2018 to the date hereof and thereafter at judgment rate until full payment;

(3) The 1^st defendant do within 28 days after service upon it of this order deliver to the plaintiff vacant possession of the Property;

(4)  Upon the 1^st and 2^nd defendants paying to the plaintiff the money ordered to be paid and all other moneys (if any) secured to the plaintiff by the mortgage, the plaintiff (subject and without prejudice to the due exercise of any power of sale for the time being vested in it) do redeliver to the 1^st defendant possession of the Property and release to the 1^st defendant the security constituted by the mortgage as the 1^st defendant may agree or the court may direct;
(5)  A declaration that the plaintiff's legal interest in the Property by way of the mortgage shall have priority over the 3^rd defendant’s interest under the Judgment;
(6)  A declaration that the plaintiff’s legal interest in the Property would be entitled to priority and ranks ahead of the equitable interest of the 3^rd defendant in the Property and that the plaintiff shall take the legal estate, ie the Property, free of the said equitable interest of the 3^rd defendant; and
(7)  There be liberty to apply.

38. That is based on the undertaking that in the event the plaintiff exercises its power of sale, insofar as there will be any net sale proceeds after the sale of the Property and payment of the outstanding indebtedness and expenses owed by the 1^st and 2^nd defendants to the plaintiff, the plaintiff do pay into court the net sale proceeds of the Property.

Costs

39. As for costs, the starting point here is, as always, that costs should follow the event.

40. In respect of the plaintiff’s costs incurred as against the 1^st and 2^nd defendants, the position is straightforward. The plaintiff should have its costs.

41. As regards the basis for taxation or assessment, the mortgage does not expressly provide that the plaintiff’s legal costs be granted on an indemnity basis whereas the guarantee does. It is in theory possible to award the plaintiff costs against the 1^st and 2^nd defendants on a party and party basis and on an indemnity basis, respectively. However, taking an overall and pragmatic view of the matter, the present action being a composite action against the defendants and a substantive part of the relief being vacant possession against the 1^st defendant, I would award the costs on a party and party basis.

42. In respect of the plaintiff’s costs incurred as against the 3^rd defendant, the latter’s position is that no order should be made on these costs as he is not the wrongdoer here and if anything he is as much a victim as the plaintiff.

43. In my view, one (again) needs to take an overall and practical approach on the issue of costs. The plaintiff commenced the present mortgage action to recover the debts owed by the 1^st and 2^nd defendants and enforce its security rights against the Property. When the mortgage was executed in 2007, the plaintiff was not aware of the 3^rd defendant’s right in it. On the other hand, it was the 3^rd defendant’s case in the High Court action that the 2^nd defendant acquired the Property in the 1^st defendant’s name after consulting him and obtaining his agreement and he was apparently aware that a mortgage would be required to complete the purchase – see paras 43 and 50 of the Judgment.

44. While the High Court action was in progress, the plaintiff was in the dark about it and the 3^rd defendant’s efforts to assert his right in the Property.

45. Upon learning of the ruling, the plaintiff took step to join the 3^rd defendant as a party in the present action. It was clearly proper and reasonable for the plaintiff to do so in order to protect its interest in the Property. In the end, the plaintiff successfully obtains declarations that its rights rank prior to the 3^rd defendant’s.

46. As between the plaintiff and the 3^rd defendant, there is no reason why the plaintiff should not have its costs. After all, to secure its interest in the Property vis-à-vis the 3^rd defendant is a necessary step to enforce its security interest in the circumstances of the present case. The 3^rd defendant being its beneficial owner, I fail to see how he can escape the consequence of bearing such of the plaintiff’s costs.

47. For the above reasons, I order that the 1^st, 2^nd and 3^rd defendants do pay to the plaintiff its costs of the action. I grant a certificate for counsel.

48. The 3^rd defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

[Submissions on quantum of costs]

49. The plaintiff’s costs be summarily assessed in the sum of $160,000.

	( Winnie Tsui )
	District Judge

Mr Adrian Leung, instructed by Gallant, for the plaintiff

The 1^st defendant appeared in person and was represented by its director Ms Wong Po Ling, the 2^nd defendant

The 2^nd defendant appeared in person

Mr Paul HM Leung, instructed by Edmund Cheung & Co, assigned by the Director of Legal Aid, for the 3^rd defendant

STANDARD CHARTERED BANK (HONG KONG) LTD v. WONGGENOS ENTERPRISES CO LTD AND OTHERS

Related cases with same parties

Files (4)

Outstanding principal as at 1 March 2018,
ie the date of demand	$883,340.02

Overdue interest as at 9 March 2018	$516.82

Late charge together with administrative
fee for payment	$394.53

Interest from 9 March 2018 to 23 March 2018	$439.03

Further interest on the principal sum of
$883,340.02 at the rate of 1.3814% pa
from 24 March 2018	Accruing