Case Detail

DCMP 344/2022

[2024] HKDC 1000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 344 OF 2022

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	IN THE MATTER OF ALL THOSE 57 equal undivided 166,315^th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry as NEW KOWLOON INLAND LOT NO. 6600 (the “Land”) and of and in the messuages erections and buildings thereon known at the date hereof as HOI LOK COURT (凱樂苑) (the “Estate”) together with the sole and exclusive right to hold use occupy and enjoy ALL THAT FLAT 20 on the 23^rd FLOOR of BLOCK A of the Estate (“the Property”)
	and
	IN THE MATTER OF a Legal Charge dated 8^th May 2019 and registered in the Land Registry by Memorial No. 19053002040150 (“the Legal Charge”)
	and
	IN THE MATTER OF an application under Order 88, Rules of the District Court (Cap.336H)

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BETWEEN
	HANG SENG BANK LIMITED	Plaintiff
and
	CHENG YIN SHAN THERESA（鄭燕珊）	Defendant
	WONG YUE CHIU ROY	Intervener

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Before:

Deputy District Judge Tony Ko in Chambers

Dates of Hearing:	28 March 2024
Date of Judgment:	28 June 2024

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JUDGMENT

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Background

1. By way of a Legal Charge dated 8 May 2019 (“Legal Charge”), the Defendant as mortgagor charged to the Plaintiff as mortgagee the property known as Flat 20, 23^rd Floor, Block A of Hoi Lok Court (“Property”). The Legal Charge was to secure the loan facility agreement dated 15 April 2019 under which the Plaintiff advanced a mortgage loan in the sum of HK$2,416,585 (“Loan”) to the Defendant.

2. Since 8 October 2021, the Defendant has defaulted in making repayment of the Loan installments.

3. By Originating Summons issued on 21 January 2022 (“OS”), the plaintiff seeks monetary judgment and the delivery of vacant possession of the Property against the Defendant pursuant to Order 88 of the Rules of District Court (Cap 336H).

4. The Defendant was declared bankrupt on 22 February 2022. Leave was granted by Master Rita So on 14 April 2022 for the Plaintiff to proceed with the present action against the Defendant.

5. By the order of Master Isabella Chu dated 29 June 2022, the Defendant’s husband Wong Rue Chiu Roy (“Intervener”) joined as the intervener in these proceedings.

6. The Defendant was absent in both the present hearing and the hearing before Master Kirby Lau.

7. The Intervener objected to the OS. In gist, the Intervener’s case is that he is and was the sole beneficial owner of the Property based upon a common intention constructive trust and/or resulting trust. As the Intervener was not a Hong Kong permanent resident, it was agreed between the Intervener and the Defendant that the Property should be purchased and registered in the sole name of the Defendant, so as to avoid paying heavy stamp duty that might have been charged by the Inland Revenue Department. The Defendant filed two affirmations aligning her position with the Intervener’s position.

8. Having considered the evidence, Master Kirby Lau in his decision dated 27 July 2023 (“Decision”) entered a monetary judgment against the Defendant in respect of the outstanding principal and interest of the Loan, and ordered the Defendant to delivery of vacant possession of the Property to the Plaintiff.

9. This is the Intervener’s appeal from the Decision.

The Intervener’s application to file further evidence

10. Shortly before the present hearing, the Intervener filed a summons on 25 March 2024, seeking to adduce two affirmations:-

(a) The Intervener’s 7^th Affirmation dated 25 March 2024.
(b) The 2^nd Affirmation of Cheng Bo Shui (“Mr. Cheng”) dated 25 March 2024. Mr. Cheng is the Intervener’s father-in-law.

11. These two affirmations were sought to be filed to show Mr. Cheng’s willingness and ability to provide financial support for the redemption of the Property. The Intervener proposed to make a payment into Court of HK$100,000 within 3 days of the Court’s judgment, and to pay the outstanding principal sum and interest within 3 months of the Court’s judgment.

12. Upon the Court’s invitation, both the Plaintiff and the Intervener agreed that these two affirmations should be considered by the Court on a de bene esse basis.

13. For reasons to be elaborated below, I do not consider that the two affirmations will have any material impact on my decision, and I therefore refuse leave for them to be filed.

Analysis

The relevant legal principles

14. Under RDC Order 28, rule 8, the Court may make an order that the OS be continued as if begun by writ, where there can be shown on the available evidence genuine and/or substantial issues of fact.

15. For proceedings under RDC Order 88, it is trite that the Court would summarily determine the case where there is no triable issue. The burden of proof in an Order 88 application is on the Plaintiff. The plaintiff must justify its entitle to summary judgment, upon which the burden shifts to the defendant, where a viable defence must be shown in order to prevent a judgment from being entered against the defendant. See Wing Hang Bank Ltd v Liu Kam Ying & Ors[2002] 2 HKC 57 at 60H. In practice, there may be little difference between a summary determination under Order 88 and an application for summary judgment. See Joint Success (HK) Limited v Kamsh (PTC) Limited, HCMP 2/2022 (unreported, 30 June 2023).

16. It is trite that an appeal against a Master’s decision is a hearing de novo. The relevant principles have been summarised in Hong Kong Civil Procedure 2024 at note 58/1/2:-

“An appeal from the master to the judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time, save that the party appealing, even though the original application was not by him but against him, has the right as well as the obligation to open the appeal…The judge ‘will of course give the weight it deserves to the previous decision of the Master; but he is in no way bound by it”…The judge in chambers is in no way fettered by the previous exercise of the master’s discretion…”

The parties’ respective case

17. According to the Affirmations filed by the Intervener, he had contributed to all of the monetary payment in respect of the purchase of the Property and the payment of mortgage instalments. He provided direct contributions to the purchase by providing the payments to the Defendant in cash or via bank transfer, and some (although not all) of such transactions are supported by the relevant banks statements.

18. The Intervener further said that the Defendant had no personal means to finance the purchase as she did not have any steady income.

19. On the other hand, Mr. Chow for the Plaintiff submits that the Legal Charge is binding on the Intervener, even assuming that he is the sole or part beneficial owner of the Property.

20. In Mo Ying v Braille Development Limited & Anor [2015] 2 HKLRD 985, the Court of Appeal found that the plaintiff, who was the wife of the sole registered owner of the property, was estopped from asserting the sole beneficial ownership against a purchaser of the property, where she knew of the sale and purchase of the property but said nothing to the purchaser of her alleged beneficial interest.

21. In the present case, according to the Defendant’s own case, she knew that the Legal Charge had to be entered into in order to obtain the Loan from the Plaintiff, although the Defendant (in line with the Intervener’s affirmation) accepted that it was the Intervenor who funded the initial purchase price of the property and made repayments of the Loan.

22. This is analagous to the situation in Mo Ying. The Intervener had essentially deliberately remained silent as to his beneficial ownership in the Property, and the Plaintiff would suffer great prejudice if it is not entitled to enforce the Legal Charge against the Property.

23. Ms. Wong for the Intervener sensibly did not dispute that the Legal Charge is binding on the Intervener.

24. Ms. Wong, however, relied on the Court of Appeal judgment in Shanghai Commercial Bank Ltd v Lee Yau Tai (Bankrupt) & Anor CACV 576/2021 (unrep, 31 March 2023) and argued that if the Court finds the Intervener to have a beneficial interest in the Property, then he is entitled to exercise his right of redemption to fully pay off the outstanding Loan and interest.

25. Ms. Wong seeks an order for a payment into court to be made in respect of the full outstanding principal sum and interest as calculated by the Plaintiff, and that the Plaintiff’s claim to be continued as if begun by writ.

26. In Lee Yau Tai, similar to ours, the 1^st defendant (husband) was the sole legal owner of the property. The 1^st defendant has gone bankrupt, and the 2^nd defendant (wife) claimed that she had a beneficial interest in the property under a common intention constructive trust. Chow JA (giving judgment of the Court) allowed the 2^nd Defendant’s appeal and found there to be sufficient evidence to raise a triable issue as to whether the 2^nd defendant had a beneficial interest in the property.

27. Chow JA further said:-

“35. Mr Ho (for the 2^nd Defendant) does not dispute the proposition that the 2^nd Defendant’s beneficial interest in the Property is subject to the right of the Plaintiff as mortgagee of the Property in the present case. He submits, however, that the right to redeem is not confined to the mortgagor or those claiming under him, but is exercisable by any person who has an interest in the mortgaged property, and the mortgagee is bound to release the mortgage in favour of any person having an interest in the Property who exercises the right to redeem (Pearce v Morris (1869) 5 Ch App 227, at 230. Thus, the Plaintiff, as a beneficial owner of the Property, is entitled to exercise the right of redemption of the Mortgage by payment of the secured indebtedness. We consider this submission to be correct as a matter of principle.
…
38. As earlier mentioned, on 18 January 2023, the 2^nd Defendant issued a summons (“the 1^st Summons”) seeking leave to pay into Court the sum of HK$580,803.95 (the outstanding principal amount of the mortgage loan), such sum to be paid out to the Plaintiff in discharge of the indebtedness owed by the 1^st Defendant to the Plaintiff upon the appeal being allowed. Mr. Ho says that the proposed payment into court is for the “avoidance of doubt” and to reconfirm “actual tender” by the 2^nd Defendant so that the accrual of further interest shall cease.
39. On 20 February 2023, the 2^nd Defendant issued a further summons (the 2^nd Summons”) seeking leave to pay into Court the additional sum HK$419,196.05, such sum together with the aforesaid sum of HK$580,803.95 (making a total of HK$1,000,000) to be paid out to the Plaintiff in discharge of the indebtedness owed by the 1^st Defendant to the Plaintiff upon the appeal being allowed…The 2^nd Defendant offered to pay this additional sum into Court in light of the further information provided by the Plaintiff shortly before the hearing of the appeal (upon the Court’s direction) that the total indebtedness of the 1^st Defendant to the Plaintiff, inclusive of interest calculated up to 3 February 2023 but exclusive of costs, was HK$958,911.52.
40. With the proposed payments into court, the Plaintiff’s position should be reasonably secured.
41. The 2^nd Defendant’s appeal is allowed, and the order of Master Catherine Cheng dated 23 August 2019 and the order of the Judge dated 9 October 2020 are set aside.
42. The 2^nd Defendant shall pay into court the sums of HK$580,803.95 and HK$419,196.05 under the 1^st and 2^nd Summons within 7 days from the date of this judgment, with liberty to the parties to apply for payment out after judgment has been given in the Action or with the court’s leave. We do not consider those sums should be paid out to the Plaintiff at this stage, since the issue of whether the 2^nd Defendant is entitled to redeem the Mortgage has yet to be determined.
43. The Plaintiff shall pay the 2^nd Defendant the costs of the appeal…”

28. Thus, the question of whether there is a triable issue that the 2^nd Defendant is the sole or part beneficial owner of the Property is the critical issue to be resolved by this Court.

Whether there is a triable issue that the 2^nd Defendant is a beneficiary?

29. I have considered the evidence produced by the Intervener, including the bank account records showing many instances where amounts similar to the monthly repayment of the Loan was being withdrawn from the Intervener’s account and deposited into the Defendant’s account shortly before the Loan repayment was made from the Defendant’s account. The total of such mortgage repayments allegedly made by the Intervener amounted to $189,500 according to the Intervener’s Supplemental Submissions dated 25 March 2024 filed pursuant to the Court’s direction.

30. I have also considered the bank account records showing cash withdraws from the Intervener’s bank account, followed shortly by a similar amount being deposited into the Defendant’s bank account. Those sums deposited into the Defendant’s account (HK$294,045 according to the Intervener’s Supplemental Submissions dated 25 March 2024) were allegedly used to fund the drawing of the cashier orders used to pay for the initial purchase price.

31. It must be noted, however, that even taken to their highest, these payments fell short of supporting the Intervener’s evidence (which the Defendant adopted) that the Intervener paid for “100% for the deposit of purchasing the Property” and “monthly repayments for the instalment of the mortgage made…was fully contributed by [the intervener]”, and that the Defendant lacked any stable income to fund the purchase.

32. Indeed, in the mortgage loan application form dated 2 April 2019 submitted by the Defendant to the Plaintiff, it was stated that the Defendant was employed as a saleswoman with a monthly income of HK$20,000.

33. In the same mortgage loan application form, it was stated that the source of funds for down payment were from the Defendant’s own savings/deposit, and the option that the source of finds is a gift/borrowing form Third Party was not selected. This piece of contemporaneous document contradicts the Defendant’s and the Intervener’s case that it was the Intervener who had paid for the whole of the deposit and monthly repayments.

34. Further, the Defendant’s two Hang Seng Bank statements demonstrate that she had obtained substantial funds from different sources in her name, including a sum described as “SELL FCY/GOLD/INV FUND”.

35. All these contradict the Intervener’s factual case that the Defendant had no means to fund the purchase, and therefore he was the sole funder of the purchase of the Property. Once that fundamental basis of the Intervener’s factual case is gone, the Court cannot speculate what the Intervener’s case might have been if the Defendant did have a stable income, and both the Intervener and the Defendant had contributed to the purchase price of the Property.

36. On the evidence presented before the Court, I do not find there to be a triable issue regarding the Intervener’s case that he was the one who was solely responsible for paying the purchase price of the Property, and that he is a beneficial owner of the Property.

Conclusion

37. In view of the above, I shall dismiss the Intervener’s appeal. I shall also make a costs order nisi (which shall become absolute in the absence of an application to vary the same within 14 days)that the Intervener shall pay the Plaintiff’s costs to be summarily assessed. The Plaintiff shall lodge its skeleton bill of costs for summary assessment within 3 days, and the Intervener shall lodge its objection within 3 days thereafter.

38. I think Mr. Chow and Ms. Wong for their assistance rendered to the Court.

( Tony Ko )
Deputy District Judge

Mr Tony Chow, instructed by P. C. Woo & Co., for the Plaintiff

The Defendant is acting in person and did not appear

Ms Hilda Wong, instructed by Jal. N. Karbhari & Co., for the Intervener

DCMP 344/2022

[2023] HKDC 833

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 344 OF 2022

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	IN THE MATTER OF ALL THOSE 57 equal undivided 166,315^th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry as NEW KOWLOON INLAND LOT NO. 6600 (the “Land”) and of and in the messuages erections and buildings thereon known at the date hereof as HOI LOK COURT (凱樂苑) (the “Estate”) together with the sole and exclusive right to hold use occupy and enjoy ALL THAT FLAT 20 on the 23^rd FLOOR of BLOCK A of the Estate (“the Property”)
	and
	IN THE MATTER OF a Legal Charge dated 8^th may 2019 and registered in the Land Registry by Memorial No. 19053002040150 (“the Legal Charge”)
	and
	IN THE MATTER OF an application under Order 88, Rules of the District Court (Cap.336H)

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BETWEEN
	HANG SENG BANK LIMITED	Plaintiff
	and
	CHENG YIN SHAN THERESA (鄭燕珊)	Defendant
	and
	WONG YUE CHIU ROY	Intervener

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Before:

Master Kerby Lau in Chambers (Open to Public)

Date of Hearing:	29 May 2023
Date of Decision:	27 July 2023

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DECISION

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I. Overview

1. By Originating Summons issued on 21 January 2022 (the “OS”), the plaintiff seeks monetary judgment and delivery of vacant possession against the defendant pursuant to Order 88 of the Rules of the District Court (Cap 336H).

2. Pursuant to a Legal Charge dated 8 May 2019 (the “Legal Charge”), the plaintiff was and is the mortgagee, and the defendant was and is the mortgagor, in respect of the property known as Flat 20, 23^rd Floor, Block A of Hoi Lok Court (“Property”). The Property was and is held under the sole name of the defendant.

3. By the order of Master Isabella Chu dated 29 June 2022, the defendant’s husband Wong Yue Chiu Roy (“Intervener”) was joined as intervener in these proceedings.

4. This is the substantive hearing of the OS. At issue is whether the reliefs sought should be granted (as proposed by the plaintiff), or whether an order should be made for the OS to continue as if begun by writ, with consequential directions (as proposed by the intervener).

II. Background

5. The plaintiff entered into a loan facility agreement with the defendant dated 15 April 2019 (the “Loan Agreement”) for P to advance a mortgage loan in the sum of HK$2,416,585.00 (“Mortgage Loan”) to be drawn on or before 31 July 2019. The Mortgage Loan was secured by the Legal Charge.

6. The terms of the Loan Agreement provided, inter alia:

6.1. Interest rate for the Mortgage Loan shall be 2.3750% per annum on the basis of the ‘Best Lending Rate’ – 2.7500% whereby the ‘Best Lending Rate’ shall be as quoted by P from time to time (Clause 2).
6.2. The Mortgage Loan shall be repaid by 300 monthly installments (Clause 3).

7. On 8 May 2019, the defendant signed and executed an assignment for purchase of the Property in her sole name from the Hong Kong House Authority.

8. On the same day, the plaintiff entered into the Legal Charge with the defendant whereby the Property was charged by the defendant to the plaintiff as security for due payment of the sums owing under the Facility Agreement.

9. The terms of the Legal Charge provided, inter alia:

9.1. The defendant covenants with the plaintiff to repay the Mortgage Loan by 300 succeeding instalments of HK$10,689.80 each, the first to be paid on 8 June 2019 and thereafter on the 8^th day of each month failing which D shall pay to P on demand the whole of the Mortgage Loan (Clause 1(a)).
9.2. In consideration of the Mortgage Loan and as security for repayment thereof and of all sums payable, D as beneficial owner of the Property charges the Property to P (Clause 4(a)).

10. Pursuant to the Loan Agreement, the plaintiff duly advanced the Mortgage Loan proceeds to the defendant who used the sum to pay for the balance of the purchase price in respect of the Property.

11. Since 8 October 2021, the defendant has defaulted in repaying the Mortgage Loan installments, in breach of the Loan Agreement.

12. By a demand letter dated 24 December 2021, the plaintiff demanded the defendant to effect payment of the then outstanding sum due as at 22 December 2021.

13. The amount remaining due under the Legal Charge as at the date of the OS is HK$2,269,252.03 (“Outstanding Sum”).

14. The Property is a domestic property occupied by the defendant.

III. Legal Principles

15. For proceedings commenced by originating summons (including a mortgage action under RHC Order 88), it is trite that the court would summarily determine the case where the court is satisfied that there are no triable issue.

16. Under RHC Order 28, rule 8, the court may make an order that an originating summons be continued as if begun by writ, where “there can be shown on the available evidence genuine and/or substantial issues of fact”. For such inquiry, it is “necessary to consider whether there were significant factual issues requiring determination”: Li Fung Kai v Fung Sau Lin, HCMP 919/2013 (unrep, 9/9/2013), §41.

17. In this regard, “[w]hen faced with conflicting affidavits from both parties, the court will be failing in its duty if it should take the assertions in the affidavits on their face value in isolation and jump to the conclusion that there is a triable issue without first considering whether the assertions in the affidavits are believable… [T]he test… whether the assertions are believable is a question to be answered not by taking the assertions in isolation but by taking them in the context of so much of the background as was either undisputed or beyond reasonable dispute”: Li Fung Kai (ibid), §44.

18. “In an originating summons procedure, it is only when the court is satisfied after having undertaken that exercise that factual disputes could not be resolved on affidavit evidence that oral evidence or trial should be considered”: Li Fung Kai (ibid), §44

19. The burden of proof for an Order 88 application is on the plaintiff. The plaintiff must justify its entitlement to summary judgment. Only when this is made out does the burden shift to the defendant, where they must show they have a defence to the claim: Wing Hang Bank Ltd v Liu Kam Ying & Ors [2002] 2 HKC 57 at 60H (per Ma J as his Lordship then was). In practice there may be little difference between an application for summary judgment in originating summonses and an application for summary judgment under Order 14: Joint Success (HK) Limited v Kamsh (PTC) Limited, HCMP 2/2022 (unrep, 30/6/2023) at §19.

IV. The Parties’ case

20. The plaintiff has established a prima facie case to judgment. It is not disputed that the defendant failed to make any repayment since 8 October 2021.

21. On that basis, the plaintiff claims for the following:

21.1. Repayment of the Outstanding Sum, together with interest on the principal sum of the Mortgage Loan (ie, HK$2,244,761.49) at the contractual default rate of 0.5% over the ‘Best Lending Rate’ per annum up to the date of judgment and thereafter at judgment rate until full payment;
21.2. Delivery of vacant possession of the Property.

22. The defendant, who has been declared bankrupt on 22 February 2022, has not appeared at the substantive hearing. Leave was granted by Master Rita So on 14 April 2022 for the plaintiff to proceed with the present proceedings against the defendant.

23. On the other hand, the intervener has filed 5 affirmations in opposition to the plaintiff’s claim, and submissions have been submitted on its behalf. The defendant has also filed 2 affirmations adopting and agreeing with what was set out in the intervener’s affirmations.

24. In gist, the intervener’s case is as follows:

24.1.  The intervener was the breadwinner of the family who was also the sole financial contributor to the purchase price and payment of mortgage instalments.
24.2.  The intervener was and is the sole true beneficial owner of the Property based upon common intention constructive trust and/or resulting trust, and that the defendant was only holding the Property on trust for him. On the other hand, the defendant had no personal means to finance the purchase of the Property.
24.3.  The intervener’s case is that since the intervener was and am not a Hong Kong permanent resident, it was agreed between the intervener and the defendant that the Property shall be purchased and registered in the sole name of the defendant so as to avoid paying heavy stamp duty for acquisition of the Property.
24.4.  The OS should be dismissed. Alternatively, the present Originating Summons should be continued as if the matter had been begun by writ given the genuine or at least substantial issues of facts would need to be adjudicated.

V. The issue in the present case

25. The issues to be determined at this hearing are as follows:

25.1. Whether the OS can and should be determined summarily without trial, or whether it ought to be continued as if begun by Writ, with consequential directions (“Issue 1”).
25.2. If the OS is to be determined summarily, what substantive reliefs are the plaintiff entitled to (“Issue 2”).

VI. Issue 1: Analysis

26. The plaintiff claims damages for 2 periods:

A. Whether the Mortgage Loan and the Legal Charge are binding on the defendant

27. At the hearing, Mr Chow for the plaintiff submits that even assuming the intervener was the sole or part beneficial owner of the Property, this does not avail the defendant or the intervener of any defence, since the Mortgage Loan and the Legal Charge will still be binding on the intervener. In this regard, Mr Chow relies on the doctrine of estoppel as set out in Mo Ying v Brillex Development Limited & Anor [2015] 2 HKLRD 985[1].

28. In this regard, there is no dispute by the Intervener that (i) the Mortgage Loan and the Legal Charge were valid; (ii) he was aware of the Mortgage Loan being obtained from the plaintiff (and the Legal Charge being granted) in order to purchase the Property, and that he did not raise any opposition to it. After all, the intervener’s case was that it was he who paid the monthly mortgage instalment repayments all along. Further, in his 1^st Affirmation, he states that he is willing to continue making the mortgage instalment payments.

29. At the hearing, Ms Wong for the intervener very fairly confirmed that the intervener does not dispute that the Legal Charge would bind the Property even if the intervener was the beneficial owner.

30. Having considered the evidence and submissions of both parties, I am of the view that even if the defendant can prove that he was the sole or joint beneficial owner of the Property, the monetary obligations pursuant to the Mortgage Loan would still be binding, and the Property would still be subject to the Legal Charge:

30.1.  In Mo Ying v Brillex Development Limited & Anor [2015] 2 HKLRD 985, the Court of Appeal found that the plaintiff (who was the wife of the sole registered owner of the property) was estopped from asserting sole beneficial ownership against a purchaser of the property, where she knew of the sale and purchase of the property but said nothing to the purchaser of her alleged beneficial interest.
30.2.  At §8.7, Cheung JA observed as follows:
“In my view the wife must have a duty to speak up once she realized that the husband had agreed to sell the property to the purchaser and further agreed with the purchaser to lease back the property. As a result of her silence the purchaser had completed the sale. The purchaser must have been prejudiced by the wife’s conduct when they could have sought to rescind the sale if the wife had informed it of her interest.”
30.3.  At §11.9, Yuen JA similarly noted:
“The evidence in the present case was that the wife had been informed of the husband’s sale of the property some four weeks before completion. Yet she had stood by and let her husband complete the sale and receive the proceeds from a third party who had parted with the purchase money in good faith. Her explanation was that she had wanted to save her marriage; in other words, she chose to go along with the husband’s decision to sell the property and in return (to comply with her wish to continue living in North Point) he rented the property back for her to continue living there. That was a course that the wife chose with knowledge that the sale had not yet been completed and despite her belief that she had a beneficial interest in the property.”
30.4.  The same reasoning applies in the present case. The intervener in this case had a duty to speak up if he did not consent to the mortgage as soon as he knew that the defendant was taking up the mortgage. He did not do so, and is now therefore estopped from asserting any interest contrary to the plaintiff’s right as mortgagee.

31. At the hearing, Ms Wong drew the court’s attention to the case of Shanghai Commercial Bank Ltd v Lee Yau Tak (Bankrupt) & Anor CACV 576/2021 (unrep, 31/3/2023). She submits that in that case, the Court of Appeal held, based on what Ms Wong submits are similar facts and arguments raised in the present case, that there was a reasonably arguable case of common intention constructive trust, such that the issue ought to be determined in a full trial instead of being determined summarily: at §§28 to 30 therein.

32. Having considered the case in detail, I agree with Mr Chow that the Shanghai Commercial Bank Ltd case is distinguishable from the present case:

32.1.  In that case, the main issue was whether the 2^nd defendant in that case was entitled to exercise the right of redemption for the property. On the evidence the 2^nd defendant was willing to repay the entire outstanding mortgage loan and interest in one go. Further, the evidence suggests that the 2^nd defendant had the means and ability to redeem the property, by issuing 2 summonses seeking to pay the entire outstanding amount owed to the plaintiff on the mortgage loan: see §§38 to 40.
32.2.  The Court of Appeal found that the Judge erred in holding that even if the 2^nd defendant had a beneficial interest in the Property and thus had a right to redeem the Mortgage, the outcome of the case would inevitably be the same: at §33. In other words, the issue of whether the 2^nd defendant had beneficial interest in the property in that case would have affected the results directly.
32.3.  It is trite that to exercise the right of redemption and discharge the mortgage debt, a mortgagor must tender to the mortgagee the full amount that is due, including principal and interest and all proper costs: at Halsbury’s Laws of Hong Kong, Vol 35 at §230.745, §230.751. In the present case, there is no suggestion by the intervener in the numerous affirmations he filed that he was willing or able to exercise the equity of redemption by repaying all the outstanding liabilities on the Mortgage Loan in one go. At the hearing, Ms Wong very fairly did not suggest that the intervener was ready or willing to exercise the right of redemption.
32.4.  Unlike in the case of Shanghai Commercial Bank Ltd, in the present case, in light of my findings set out above, even if the intervener does prove that he is sole or joint beneficial owner of the Property, this would not affect the plaintiff’s rights against the Property and/or for repayment of the Mortgage Loan.

33. In light of the aforementioned, on this ground alone, I find that the OS ought to be summarily determined in favour of the plaintiff, and that there is no need for trial.

B. Whether the defendant’s evidence was sufficient to raise a triable issue

34. In case I am wrong above, I shall now go on to consider whether the affirmations filed by the intervener raise any triable issues.

35. The intervener’s case is that the understanding between the defendant and himself was that since he would be, and was in fact, the one who “contributed 100% for the deposit of purchasing the Property”, and the “monthly payments for the installment of the mortgage made at the plaintiff was fully contributed by [the intervener]”, in return he would be the sole beneficial owner of the Property. However, having considered the evidence and submissions of parties, I agree with the plaintiff that such a claim is incredible and contrary to the cotemporaneous evidence.

36. The starting point is the document titled “Hang Seng HOS/BRO/TPS Mortgage Loan Application Form” (the “Application Form”) executed and submitted by the defendant to the plaintiff dated 2 April 2019, based upon which the plaintiff granted the Mortgage Loan to the defendant:

36.1.  Under the heading “D. Source of Funds for Downpayment”, the defendant declared that the funds for downpayment were from her savings/deposit and left section (I) “if the source of funds is a gift/borrowing from Third Party” blank;
36.2.  Under the heading “E. Source of Loan Repayment for Hang Seng Bank Autopay Account”, the defendant declared that the source of repayment was her “Payroll in Hang Seng Bank”; and
36.3.  The defendant stated she was employed as a saleswoman by “友富鮮果” with a monthly income of HK$20,000. She was therefore in a position to contribute to the deposit and/or the mortgage payments, which casts further doubt as to whether the intervener contributed 100% to the Property.

37. At the hearing, Ms Wong for the defendant very fairly and sensibly confirmed that the intervener does not go so far as to say that the defendant was lying on the Application Form; the intervener’s case at the highest was that no contemporaneous supporting evidence for the statements made in the Application Form by the defendant had been adduced, such that the matter ought to be further explored at trial after full discovery.

38. I reject such a suggestion. The statements and representations made on the Application Form are made by the defendant. Any supporting evidence ought to have been produced by the defendant and/or the intervener, bearing in mind that the defendant has essentially adopted the intervener’s case herein. No meaningful discovery as to the income of the defendant or payment arrangements between the defendant and intervener could be obtained as against the plaintiff.

39. Further, the defendant has also produced two Hang Seng Bank statements in respect of her account no 288-205800-668 (“D’s 1^st Account”) and 777-406448-888 (“D’s 2^nd Account”) demonstrate she obtained substantial funds from different sources in her name (apart from the fact she also had stable income as stated in the Application Form):

39.1. At least four substantial deposits into D’s 1^st Account in the sum of HK$70,000.00 on 27 March 2019, HK$50,000.00 on 28 March 2019, HK$49,850 on 28 August 2019, and HK$80,000 on 2 September 2020 which were described to be transfers from “Promise (HK) C”, “LOAN DRAWDOWN”, “CASHING PRO LIMITED” and “FINANCEONE LIMITED” respectively;
39.2. Two deposits into D’s 2^nd Account in the sum of HK$103,115.71 and HK$53,375.00 on 2 April 2019 and 23 May 2019 which were described to be transfers from “SELL FCY/GLOD/INV FUND” and “HSB RES BONUS PEN MTG BONUS” respectively.

40. The intervener has also adduced various bank statements. On proper analysis however, the bank statements do not support the intervener’s case:

40.1.  In his 5^th Affirmation, the intervener claimed that he withdrew RMB 90,000.00 on 31 March 2019 and RMB 80,000.00 on 7 April 2019, both purportedly to hand to the defendant for the payment of the deposit. These were the only 2 transactions referred to specifically by the intervener.
40.2.  The only material the intervener produced as ‘evidence’ of his contribution to the deposit is the statements of his PRC bank account. However, there is no contemporaneous evidence of matching deposits of those sums paid into the defendant’s bank accounts.
40.3.  According to the statements, shortly before the first withdrawal on 31 March 2019, the PRC bank account was only put into funds by two transfers of RMB 50,000.00 each on 29 March 2019. Before that, the bank account only had a balance of RMB 296.54.
40.4.  Shortly before the second withdrawal on 7 April 2019, the account was only put into funds by a transfer of RMB 97,000.00 on 2 April 2019. Before that, the bank account only had a balance of RMB 2,008.61.
40.5.  The deposit of the Property was HK$412,045.00. The evidence shows that exchange rate of RMB to HKD was around RMB 1 = HK$1.15 in April 2019. Even if the intervener’s evidence were to be taken to the highest, the RMB 170,000 withdrawn (≈HK$195,500) could have only contributed to less than half of the deposit.

41. Further, the intervener has produced no direct income proof and/or any other evidence of substance to begin to make out his contention that he was the sole source of funds to those mortgage repayments. On the contrary, the Average Daily Relationship Balance (ADRB) of the intervener account no 015-267-88-10881-0 with the Bank of East Asia from around 1 March 2019 to 31 May 2019, which was around the time the Property was purchased, ranged only from HK$1,367.87 to HK$2,844.76.

42. In addition, there is evidence that showed that contrary to the intervener’s assertion, the defendant paid the deposit. The following are three clear examples:

42.1. The defendant’s bank account no 288-205800-668 (“D’s 1^st Account”) was put into funds by a transfer of HK$70,000.00 on 27 March 2019 and a loan drawdown of HK$50,000.00 on 28 March 2019. These transfers/loan drawdowns enabled the defendant to draw from D’s 1^st Account on 2 April 2019, the sum of HK$118,000.00 to pay for “CASHIER ORDER 377527”, which was one of the cashier orders used to pay the deposit.
42.2. The defendant’s bank account no 777-406448-888 (“D’s 2^nd Account”) was put into funds by a cash deposit of HK$60,000.00 and a transaction marked “SELL FCY/GLOD/INV FUND” of HK$103,115.71 both on 2 April 2019. On the same day, HK$156,440.00 was drawn from D’s 2^nd Account to pay for “CASHIER ORDER 377532”, which was the other cashier order used to pay the deposit.

43. In the premises, even if I am wrong to find that the OS ought to be summarily determined taking the intervener’s case at its highest, I find that the intervener has not adduced sufficiently credible evidence to support his assertion that he was the one who was solely responsible for paying the purchase price of the Property.

C. Other matters

44. In light of my findings above, it is unnecessary for me to proceed to deal with the other arguments raised by the plaintiff or the intervener, including in particular the doctrine of illegality relied upon by the plaintiff.

VII. Issue 2: Analysis

45. There is no dispute that the Outstanding Sum is due and owed to the plaintiff. There is also no dispute as to the outstanding interest due as calculated by the plaintiff.

46. At the end of the hearing, the plaintiff submitted a draft order for the court’s consideration. Ms Wong confirmed that in the event I rule in favour of the plaintiff, she has no comments or objections in relation to the terms of the draft order proposed by the plaintiff.

VIII. Costs

47. I see no reason why costs should not follow the event, and I shall therefore make an order accordingly.

IX. Disposition and Orders

48. I therefore make the following orders:

48.1.  The defendant do pay to the plaintiff:
(a)  the outstanding principal sum of $2,304,430.03;
(b)  interest on the principal sum of $2,244,761.49 calculated as per the draft order handed up to the court by the plaintiff on 29 May 2023.
48.2.  The defendant do within 28 days after service upon her of this Order deliver to the plaintiff vacant possession of the Property.
48.3.  Upon the defendant paying to the plaintiff the moneys hereby ordered to be paid and all other moneys, if any, secured to the plaintiff by the Legal Charge, the plaintiff (subject and without prejudice to the due exercise of any power of sale for the time vested in it) do re-deliver to the defendant possession of the charged Property and release to the defendant the security constituted by the Legal Charge.
48.4.  An order nisi that costs of and occasioned by these proceedings (including all costs reserved) be paid by the defendant and the intervener to the plaintiff, to be taxed if not agreed.

49. I thank both Mr Chow and Ms Wong for their helpful assistance rendered to this court.

( Kerby Lau )
Master, District Court

Mr Tony Chow, instructed by PC Woo & Co, for the plaintiff

Ms Wong Hiu Tung Hilda, instructed by Jal N Karbhari & Co, for the intervener

The defendant was not represented and did not appear

[1] Leave to appeal refused by the Court of Final Appeal: [2017] 4 HKC 1

HANG SENG BANK LTD v. CHENG YIN SHAN THERESA

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