CITIC KA WAH BANK LTD v. CHOW CHI LIT SIMON AND ANOTHER

HCMP533/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 533 OF 2005

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J U D G M E N T

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1.  The 1st and 2nd defendants are appealing against the order of the Master dated 11 July 2005 that the 1st and 2nd defendant do deliver vacant possession of the mortgaged property and payment of the sum due with interest.  The 1st and 2nd defendants are also seeking to review the gross sum taxation.

2.  The 1st defendant complained that he did not receive the hearing bundle and the skeleton argument of Mr Wong for the plaintiff for today’s hearing.  The 1st defendant had instructed the management office at his place of abode not to allow the process server to approach his flat.  The process server left the documents at the management office for the 1st defendant’s flat.  The plaintiff also left an extra set with my judicial clerk for the 1st defendant to pick up.  The judicial clerk tried to contact the 1st defendant by phone but there was no response.  The court was stood down for the 1st and 2nd defendants to peruse the documents before the hearing actually started this morning.

Background

3.  The 1st and 2nd defendants are husband and wife.  They are joint owners of the suit property.  They mortgaged the property to the plaintiff to finance the purchase, firstly an equitable mortgage on 5 August 1999, and then a legal charge on 10 July 2000 upon completion of the building.

4.  Since August 2004, the 1st and 2nd defendants defaulted in payment of the monthly instalments.  Upon their request, the loan was restructured.  The interest rate and the monthly instalments were reduced on 8 December 2004, but the 1st and 2nd defendants still failed to pay the monthly instalment for January 2005.  On 16 March 2005, the plaintiff took out an Originating Summons under Order 88 of the Rules of the High Court, Cap. 4A.

Defendant’s case

5.  The 1st and 2nd defendants’ arguments can be summarized as follows:

(1)	no Statement of Claim was endorsed on the Originating Summons;
(2)	the plaintiff’s solicitor posted the Originating Summons at the door of the property, and had shown the Originating Summons to the caretakers, violating the Personal Data (Privacy) Ordinance, Cap. 486;
(3)	misrepresentation and undue influence on the part of the plaintiff in that the mortgage document was not explained in details by Messrs Lo & Lo, solicitors for the mortgagors and the mortgagee, and the 1st and 2nd defendant did not know that: (a) it was a legally binding document; and (b) the plaintiff could take action upon default of only two instalments;
(4)	the plaintiff exerted undue inference by giving the impression that the 1st and 2nd defendant had to restructure the loan in order to avoid bankruptcy;
(5)	the plaintiff never communicated with the 2nd defendant about the default of payment;
(6)	the plaintiff chose to take action when the property market was rising as opposed to falling;
(7)	on 31 March 2005 Master Hui only allowed the 1st and 2nd defendants 7 days to file an affirmation in opposition instead of the 14 days requested, causing the 1st and 2nd defendants prejudice in the seeking of legal advice;
(8)	on 7 July 2005, Registrar Chan refused to adjourn the hearing of the Originating Summons on 8 July 2005 in order that the 1st defendant had to attend to another case in the District Court, but only arranged for the standing down of the case in the District Court, whereby the hearing on 8 July 2005 had to go part-heard and the 1st and 2nd defendants had to hurry between two courts;
(9)	on 8 July 2005, Master Ho never investigated into the matter by, say, requiring Messrs Lo & Lo, solicitors for the mortgagors and mortgagee, to file an affirmation explaining the interpretation and explanation of the terms of the mortgage deed.

Consideration

6.  There is nothing in the point that the Statement of Claim was not being endorsed on the Originating Summons, as the action is not begun by writ, and in all the circumstances there is no occasion for the action to proceed as if begun by writ.

7.  The posting of a copy of the Originating Summons to some conspicuous part of the premises or land is the standard practice for recovery of land under Order 10, rule 4, of the Rules of the High Court.  The Personal Data (Privacy) Ordinance has no application to such legal proceedings.

8.  In the first affirmation dated 21 July 2005, the 1st and 2nd defendants alleged that the solicitor did not explain the terms of the mortgagee and just asked them to sign.  Later in the affirmation dated 25 July 2005, the 1st and 2nd defendants alleged that there were many owners in the same room in the solicitor’s office and the solicitor had not explained the terms in details.

9.  The 1st defendant is the holder of a Bachelor of Commerce degree in accounting from an Australian university by distant learning.  The 2nd defendant is a matriculant and holder of a lower certificate in accounting.  The 1st defendant said in 1999 he had not yet graduated, and at any rate he could not be expected to understand legalese in English.  He pointed out that there is no evidence from Messrs Lo & Lo that the mortgage deed was explained in details and that he was advised it was a legally binding document.  The 1st defendant said that he thought he was just signing some general banking documents, some kind of ordinary contract.  He said if he had known that he could be deprived of ownership of the property, he would not have signed the mortgage in the first place.  At some stage, the 1st defendant said that he knew it was a mortgage, but later he changed his version in saying that he did not know it was a mortgage and thought it was only a loan document.

10.  Mr Wong submitted that there is no evidence of any actual misrepresentation or undue inference.  The 1st and 2nd defendants had signed at the interpretation clause of the mortgage deed, and acknowledged that they were advised that they could seek independent legal advice, as the solicitors were acting for both the mortgagors and mortgagee.  Mr Wong submitted that the 1st and 2nd defendants had enjoyed the mortgage loan, made repayment until default, and at no stage did they raise any complaint to the plaintiff. 

11.  I find that it is unbelievable and inconceivable that people of the 1st and 2nd defendants’ background did not know that they were signing a legally binding mortgage.  In Bank of China (Hong Kong) Ltd v Fung Chin Kan & Anor [2003] 1 HKLRD 181, Litton MPJ said at paragraph 51:

“……generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.”

12.  The 2nd defendant said that she did not know about the default until the restructure of the loan, but she admitted that at all material times and up to now she had no means to repay the arrears.

13.  The Originating Summons was originally fixed for a hearing on 31 May 2005.  On 31 May 2005, the 1st defendant complained to Master Hui that he did not receive the affirmation in support four clear days before the hearing.  Mr Wong pointed out that on 22 April 2005 Master Lung had already granted leave to the 1st and 2nd defendants to file an affirmation in opposition and refused to adjourn the 31 May hearing, and that tended to show that the plaintiff’s affirmation was already served.  Be that as it may, the hearing on 31 May 2005 was adjourned to 7 June 2005 and further to 8 July 2005.  The 1st defendant said that Master Hui only gave him seven days to file an affirmation in opposition and he did not have enough time to seek legal advice.  However, he only filed the affirmation in opposition on 21 June 2005, and he had all the time to seek whatever legal advice he needed.  Further, looking at the repetition in the subsequent affirmations filed by the 1st and 2nd defendants after that date, I fail to see any prejudice to them whatsoever.

14.  I fail to see any relevance on the other points raised.  The 1st defendant conceded the remoteness of relevance but nevertheless made his submissions to demonstrate that the Court acted generally in aid of the wealthy to oppress the poor.  On the contrary, the Court will do justice according to the merits of the case.  Our legal system is adversarial and not inquisitorial.  There is no duty on the Court to investigate into any matter.  It is incumbent on the party raising any allegation to lead the evidence on it.  The 1st and 2nd defendants have failed to demonstrate any bona fide defence except to deploy delaying tactics.

The Review on Taxation

15.  The 1st and 2nd defendants asked me to review the gross sum taxation by the Master on 11 July 2005.  It was pointed out to the 1st defendant that under Order 62, rules 33 and 34 of the Rules of the High Court, the review should be made to the original taxing master.  No further submission has been made.  Hence, there is no jurisdiction for me to entertain the matter.

Stay of Execution

16.  The Master ordered that the plaintiff do recover possession of the property after 38 days from the date of the order.  Mr Wong submitted that was already more generous than usual. 

17.  The 1st and 2nd defendants did not file any affidavit of means or on any other matters to support the application on stay of execution. Upon inquiry as to the grounds, the 1st defendant merely reiterated the failure on the part of the Court to investigate into the matter.  Hence, the application for stay of execution is refused.

The Costs

18.  The plaintiff asked for costs of the appeal on an indemnity basis.  The 1st and 2nd defendants objected on the same basis that they did not understand the terms of the mortgage deed as providing for indemnity taxation.  It is obvious from what I have said that this objection must be overruled.

19.  I order that the 1st and 2nd defendants do pay the costs of appeal to the plaintiff on an indemnity basis, to be taxed if not agreed, with certificate for counsel.