KONEW CAPITAL INTERNATIONAL LTD v. LEUNG KAM SHING KITVAN AND ANOTHER

DCMP 215/2022

[2022] HKDC 682

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 215 OF 2022

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DECISION

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Introduction

1.  At the hearing on 23 June 2022, I granted an order in terms of the reliefs sought by the plaintiff. Here are my reasons.

Service

2.  The originating summons was served on the 1^st and 2^nd defendants by insertion into the letter box of their usual and last known address on 20 January 2022.

3.  The notice of appointment to hear originating summons was served on the 1^st and 2^nd defendants by ordinary post at their usual and last known address on 20 April 2022.

4.  I am satisfied that the 1^st and 2^nd defendants have due notice of these proceedings and hearing and they have chosen not to take any action.

The plaintiff’s case

5.  The plaintiff is a licensed money lender.

6.  The 1^st and 2^nd defendants are the registered owners as joint tenants of Flat 5, 18^th Floor, Block B (Golden Beauty Court), Golden Lion Garden Stage I, Nos 5-7 Chui Tin Street, Shatin, New Territories, Hong Kong (“the property”)

7.  By a mortgage dated 3 May 2019 (“the Mortgage”), a second mortgage dated 30 December 2020 (“the 2^nd Mortgage”), the 1^st defendant as borrower of one part and the plaintiff as the lender of the other part, the 1^st defendant charged his interest in the property to the plaintiff to secure the repayment of the general credit facilities to the extent of HK$1,500,000 and HK$600,000 respectively.

8.  By a loan agreement dated 1 April 2021, the plaintiff lent the sum of HK$1,736,072 to the 1^st defendant at the interest rate of 24% per annum.

9.  The 1^st defendant made default since 1 June 2021. The outstanding principal at the commencement of these proceedings is HK$1,731,794.

Money judgment

10.  The plaintiff’s case is not controverted and I accept it at its face value.

11.  I am satisfied that the plaintiff has in form and in substance complied with the requirements of a moneylender’s action under Order 83A. The plaintiff is entitled to recover the outstanding principal of $1,731,794 and interest.

Order for possession

12.  Clause 5.01(b) of the Mortgage provides that:-

“(b) the Borrower makes default in the payment on the due date and in accordance with the terms and conditions relating thereto of any principal or interest or other moneys outstanding and payable by the Borrower under and (sic) term loan account (whether demanded or not)”

constitutes an Event of Default.

13.  Clause 6.01 of the Mortgage provides that:-

“If any Event of Default shall have occurred then it shall be lawful for the Lender at any time thereafter without any consent on the part of the Borrower or of any person to:-

(a) enter into and upon and take possession of the Property and for that purpose to take any legal proceedings and thenceforth to hold, possess and enjoy the Property and to receive the rents and profits thereof without any lawful interruption or disturbance by the Borrower or any other person”

14.  Clause 7.1 of the 2^nd Mortgage provides that the lender shall be entitled to declare all or any part of the security immediately enforceable if the borrower makes default in the payment on the due date and in accordance with the terms and conditions relating thereto of any principal or interest or other moneys outstanding and payable by the borrower under any term loan account (whether demanded or not).

15.  Clause 8 of the 2^nd Mortgage provides that after the security has become enforceable, the lender may appoint a receiver who has the right to take possession of, collect and get in the property and to take the rents and profits thereof.

16.  I am satisfied that the requirements of Order 88 have been complied.

17.  By reason of the default of the 1^st defendant, the plaintiff is entitled to an order for possession of the property.

Order of sale

18.  As the 1^st defendant had made default in payment, the plaintiff as mortgagee became a person holding an interest in the property under s 3 of the Partition Ordinance and may institute the present proceedings: see Maxcolm Finance Ltd v Cheng Chi Man and another [2019] HKCFI 2928 and Moneysq Ltd v Liu Kit Ling and another [2019] HKDC 860.

19.  The property is a residential flat in a multi-storey building with a saleable area of approximately 270 sq ft. I accept Mr Lo’s submission that it is impracticable to divide the property into two halves. Moreover, neither the 1^st nor the 2^nd defendants has tendered any reason by affidavit as to why an order for sale under the Partition Ordinance should not be granted; why it is not impracticable to physically partition the property into two halves; why a sale of the property would not be beneficial to all the parties or that significant hardship would be caused to the 2^nd defendant.

20.  In any event, the 2^nd defendant shall be entitled to half of the proceeds of sale.

21.  Accordingly, I am satisfied that an order of sale ought to be made and I so order.

Reserved price

22.  The plaintiff has produced a valuation report which opined that the value for the sale of the property under repossession as at 21 January 2022 is in the order of HK$3,740,000.

23.  I accept the said valuation and direct that the property shall be sold with a reserved price of HK$3,740,000.

Costs

24.  By summary assessment, I order the 1^st defendant to pay the plaintiff the costs of this action in the sum of HK$70,596.