HANG SENG BANK LIMITED v. YEUNG SAU MIN

HEAD NOTE

                    In a proper case the court will grant leave to discontinue a foreclosure action and set aside the order nisi notwithstanding that the defendant has not consented and the note in the White Hook to contrary effect. Stevens v. Theatres Ltd. (1903) 1 Ch 860 distinguished.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLENEOUS PROCEEDINGS

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BETWEEN

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JUDGMENT

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1. The Defendant mortgaged premises to the Plaintiff bank. Some considerable time ago, the bank, as mortgagee applied for and obtained an Order Nisi of foreclosure. That was at a time when because of the prevailing economic circumstances, it seemed inadvisable to the bank to exercise its power of sale under the Deed of Mortgage. Since then as a result of changes in market conditions, the bank has repented of its decision to foreclose and would prefer instead to sell. To that end it has applied to discontinue the foreclosure proceedings and have the Order Nisi discharged. The application was dismissed by the master on the basis of a note in the White Book at p.362 referring to a decision of Farwell J. in Stevens v. Theatres Ltd [1903] 1 Ch 860. The Plaintiff is in the difficulty that at no stage throughout any of the proceedings to which I have referred, has the Defendant either acknowledged service or intervened, as has also been the case on the hearing of this appeal.

2. There is no doubt on my reading of Stevens v. Theatres Ltd. that the bank could apply to the court in a particular case for leave to sell and the practical effect of that would be to bring the for closure proceedings to an end. The question is whether without presenting a case for sale to the court, the bank ought to be at liberty to discontinue its foreclosure proceeding and have the Order Nisi discharged.

3. Stevens' case is clear authority for the proposition that a mortgagee who has exercised its right to foreclose and has obtained judgment in the form of an Order Nisi cannot unilaterally discontinue those proceedings and sell to a third party without first obtaining the leave of the Court, because to do so, might be to act to the prejudice of the mortgagor who is also an interested party under the judgment and who, perhaps, has acquired "rights" under the Order. But I do not read Stevens v. Theatres as going as far as the White Book's attribution. In particular I do not find in Mr. Justice Farwell's judgment anything to say that a failure to obtain the consent of the mortgagor will deprive the court of the power to give leave to discontinue under Order 21, rule 3 and it seems to me that it would be strange indeed if the court should have the power acknowledged to exist as to the giving of leave for sale and not the power to give leave to discontinue the foreclosure proceedings in the absence of consent by the mortgagor. I hold that the court does have that power in a proper case. I hold, further, that this is a proper case and I give leave to the mortgagee to discontinue, and I think it is a necessary consequence of that Order or it is a corollary of it that the Order Nisi be set aside.

4. Now, there have been, I am told, another 29 or so of these applications in the past and the views of different Masters has not always coincided. To that extent, this may be called a test case. Unfortunately from the point of view of the bank, my decision does not relieve it in any particular case of the necessity of making an application on the merits for leave to discontinue.