SUN HUNG KAI CREDIT LTD v. WONG PO LING

HCA 2282/2018

[2020] HKCFI 2422

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2282 OF 2018

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REASONS FOR DECISION

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Introduction

1.  This is the Defendant’s appeal against the order of Master Hui dated 10 July 2019, dismissing her summons for stay of execution of the possession order, pursuant to Order 58 rule 1 of the Rules of the High Court.

2.  The Plaintiff is a licensed money lender.  The Defendant is the Plaintiff’s customer and borrower and the registered owner of a property in St Louis Mansion, in No. 20 Macdonnel Road (the “Property”).  She executed a second mortgage over the Property in favour of the Plaintiff (the “Second Mortgage”) and a loan agreement (the “Loan Agreement”) for a personal loan of $1.5 million (the “Loan”).  

3.  The Defendant defaulted in making instalment payments.  On 28 September 2018, the Plaintiff commenced mortgage action against her seeking possession of the Property and repayment of the Loan under the Second Mortgage and the Loan Agreement, pursuant to Order 83A and Order 88 of the Rules of the High Court.  A defence was filed by the Defendant but was struck out pursuant to the Order of Master Lui dated 12 June 2019.  On 3 September 2019, the Plaintiff took out an inter partes summons seeking default judgment against her.

4.  At the adjourned hearing of the inter partes summons on 24 October 2019 before Master Yip, the only ground in opposition advanced by the Defendant was her father’s wrongfully enforcing a judgment against her in relation to some other properties.  After the Master had explained to her that her ground in opposition was without merits, the Defendant asked for time to deliver vacant possession of the Property.  She was granted 42 days instead of the usual 28 days upon service of the order.

5.  On 5 November 2019, the Defendant filed a notice of appeal against the order of Master Yip seeking, inter alia, that “the vacant possession order be set aside/suspended or stayed executed”.  Her appeal was dismissed by K Yeung J on 23 January 2020.

6.  Pursuant to the possession order made by Master Yip, the Plaintiff issued a Writ of Possession and Fieri Combined on 5 June 2020.  A notice to quit was also posted up at the Property with the assistance of the bailiff on 26 June 2020.

7.  On 3 July 2000, the Defendant took out a summons seeking “the vacant possession of the Property be stayed for three months in preparation for settlement and cost saving”.  That summons was dismissed by Master Hui on 10 July 2019.  The Defendant now seeks to appeal the aforesaid order of Master Hui.

Legal principles applicable to mortgage action

8.  Unless the mortgage deed provides otherwise, the ordinary rule applicable to a mortgage action under Order 88 is that a mortgagee is entitled as of right to possession of the mortgaged property, and the court has no power to adjourn an application for possession or to make a suspended order, except for a short adjournment to afford the borrower a chance of paying off the mortgage in full: see Hong Kong Civil Procedure 2020[1]. This exception could only be invoked if there is a reasonable prospect that such payment is forthcoming.

Discussion

9.  The relief sought in this appeal is the same as that sought in the previous appeal against the order of Master Yip dismissed by K Yeung J on 23 January 2020.  The present appeal is a blatant impeachment of the judgment and order made by K Yeung J on precisely the same subject matter, when the time for appealing the said judgment to the Court of Appeal has expired.  The Defendant’s action in applying for stay before Master Hui when the Plaintiff was in the course of executing the possession order by issuing the Writ of Possession as well as in appealing the order of Master Hui were obviously taken for the purpose of delaying the Plaintiff from obtaining possession of the Property, which it is entitled to pursuant to the order of Master Yip which had been upheld by K Yeung J on appeal.  It is the fruit of its litigation.  Those actions are clear abuses of the legal process of the court.  On this ground alone, her appeal ought to be dismissed.

10.  The judgment debt is $1,640,232.29 plus interest accruing at the rate of 16.5% per annum since 29 September 2018 and costs.  Except for two payments made on 14 and 22 July 2020 in partial satisfaction of the judgment debt, the Defendant failed to make any payments to diminish the outstanding balance of judgment debt.

11.  In her second affirmation filed in support of this appeal on 3 July 2020, the Defendant repeated what she told K Yeung J at the previous appeal. She referred to her application to The Bank of East Asia for refinancing in May 2020.  That was three months ago.  Obviously, no refinancing has been approved.

12.  In her third affirmation filed on 23 July 2020, the Defendant said she was awaiting approval of a loan in an amount of $1 million and that she will settle the balance with income from her business as soon as overdue remittances arrive within this period of time.  That was a month ago.  The refinancing has not yet been approved.  She put the blame on the coronavirus epidemic.  Even if her application were approved, she would still be short of more than $600,000 to settle the judgment debt.  She would still have to wait for the uncertainty of the arrival of the remittances.  They never arrived.  There is no prospect if they ever will, not to mention that there is no evidence to support such pending remittances.

13.  Ten months have lapsed since the possession order of Master Yip.  Time has shown that the Defendant has no ability to pay the judgment debt.  There is also no prospect that it would be paid within any short time.  There is no reason why the ordinary rule in mortgage actions should not apply.  There is absolutely no merit in this appeal. 

Conclusion

14.  The appeal is an obvious abuse of legal process.  Besides, the Plaintiff has clearly demonstrated her lack of means to pay the judgment debt.  For these reasons, the appeal is dismissed with costs on indemnity basis as provided for by clause 22(ii) of the Second Mortgage.  I summarily assessed the costs of this Appeal in the sum of $19,000.

HCA 2282/2018

[2020] HKCFI 211

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2282 OF 2018

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BETWEEN

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DECISION

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1.  This is the appeal of the Defendant (acting in person) against the Order dated 24 October 2019 made by Master S P Yip (the “Order”) for repayment by the Defendant of a loan (the “Loan”) and delivery of vacant possession of the property known as Flat A on 24^th Floor, St Louis Mansion, No 20 MacDonnell Road, Hong Kong (the “Property”) which the Defendant had mortgaged to the Plaintiff as security for the Loan.

2.  Having heard parties, and having dismissed for reasons set out below the Defendant’s application to file an affirmation in support of her appeal, I reserved my decision on the appeal, which I now hand down.

3.  The Defendant is the registered owner of the Property.

4.  The Plaintiff is a licensed money lender.  By a loan agreement dated 20 October 2017 (the “Loan Agreement”), the Plaintiff advanced to the Defendant the Loan.  It was in the sum of HK$1,500,000.  It was secured by a charge over the Property.  That charge was created by a Second Mortgage dated 23 January 2017 (the “Second Mortgage”) signed by the Defendant as mortgagor and the Plaintiff as lender as security for inter alia “all other moneys due or to become due from the [Defendant] to the [Plaintiff] ”.

5.  The Defendant has failed to repay the Loan.

6.  On 28 September 2018, the Plaintiff issued the Writ herein for repayment of the Loan and delivery of vacant possession of the Property pursuant to the terms of the Second Mortgage.

7.  On 19 November 2018, the Defendant filed her Defence.

8.  On 12 June 2019, Master Lui, upon application by the Plaintiff, struck out the Defence.  There has been no appeal by the Defendant against that order.  No further defence has been filed.

9.  On 3 September 2019, the Plaintiff issued its summons for judgment against the Defendant (the “Summons”).

10.  The first hearing of the Summons took place on 11 October 2019 before Master Lai.  The Defendant was absent.  Having given some directions on the further conduct of the application, Master Lai adjourned the matter to 24 October 2019. 

11.  On 24 October 2019, the hearing of the Summons resumed before Master S P Yip.  The Order shows that the Defendant was absent.  I have however been informed by Ms Yu, solicitor appearing for the Plaintiff, that the Defendant in fact did appear and opposed the application.  Having heard parties, Master S P Yip made the Order.

12.  On 5 November 2019, the Defendant filed her Notice of Appeal.  In it she asks for an Order that “the Charging Order on Unit 24A be set aside / removed, the Vacant Possession Order be set aside / suspended or stay executed if attached a Charging Order”.

13.  Whilst I note from the land search records of the Property that a number of subsequent Charging Orders have been registered against the Property, none of them were obtained by the Plaintiff.  Neither the Order nor this appeal has or can have anything to do with those Charging Orders.  In any event, on 11 October 2019 before Master Lai adjourned the Summons, he directed that notice of the Plaintiff’s application for judgment be given to all subsequent chargees.  That has been done.  None of them appeared before Master S P Yip when the hearing was resumed.

14.  The Defendant has failed to file any submissions prior to the hearing of the appeal. 

15.  The Defendant appeared in person before me and made submissions in support of her appeal.  She did not seek to dispute the Loan, nor the fact that she had defaulted in its repayment.  She made two requests, namely discharge of the Charging Orders, and suspension of the Order.

16.  In respect of the Charging Orders, the Defendant orally gave me certain details which she said led to their issue.  She also submitted that their existence could affect the distribution of any sale proceeds of the Property which the Plaintiff may obtain as a result of any sale which it may conduct.

17.  In my view, the existence of those Charging Orders, which are subsequent to the Second Mortgage, has no relevance to this Appeal.  They were not obtained by the Plaintiff.  The parties who obtained them are not before this Court.  This Court in the context of this present Appeal has neither jurisdiction nor basis to discharge them.

18.  In respect of the suspension of the Order, I note §88/5/11 of Hong Kong Civil Procedure 2020 Vol 1, wherein it is commented that:

“ The ordinary rule is that a mortgagee is entitled as of right (unless the mortgage deed provides otherwise) to possession of the mortgaged premises, and the court has no power to adjourn an application for possession or to make a suspended order, with the exception of an adjournment for a short time to afford to the borrower a chance of paying off the mortgage in full, which should only be granted if there is a reasonable prospect of such payment occurring…”

19.  The Defendant has placed before this Court no evidence to show that she has any “reasonable prospect” of paying off the Loan or the Second Mortgage.

20.  In the course of her submissions, the Defendant orally informed me that she had approached a bank for a loan to finance the repayment of the Loan.  She told me that she had been informed by that bank that she would be given an answer to her application in March 2020.  The Defendant sought from me leave to file an affirmation to that effect.

21.  I refused the Defendant leave to file any affirmation in that regard.  The reason, which I explained to the Defendant in court, was this.  What she told me in court, put at highest, was that she would be given an answer by the bank to her application in March 2020.  The Defendant frankly told me that she did not know what that answer was going to be.  Her application could be refused by the bank.  Hence, even if I were to grant her leave to file an affirmation on those facts, she would not have been able to show any “reasonable prospect” of repaying the Loan.  Granting her leave would therefore have been a futile exercise.  On that basis, I refused her leave to do so.

22.  In the circumstances, I have come to the same conclusion as the learned Master had in respect of the Summons, and see neither reason nor basis to upset the Order.  I dismiss the appeal with costs on an indemnity basis (as provided in §22(ii) of the Second Mortgage and §17.2 of the Loan Agreement).

23.  Ms Yu has supplied to the Defendant and this Court a Statement of Costs.  The total amount of the costs of this Appeal, assessed on an indemnity basis, is HK$21,490.67.  I have considered the same.  I am of the view that that sum is a reasonable one.  I summarily assess the costs of this Appeal to be such, and order that that sum of HK$21,490.67 be paid by the Defendant to the Plaintiff within 42 days from the date hereof.  

Ms Yu On Ying, of Foo and Li, Solicitors, for the Plaintiff

The Defendant appeared in person