HANG SENG BANK LTD v. HUNG KAR YAN KARIN

HCMP 873/2023

[2024] HKCFI 373

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 873 OF 2023

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BETWEEN

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REASONS FOR DECISION

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1.  By a Notice of Appeal dated 4 December 2023, the Defendant is appealing the Order of Master Yee given on 21 November 2023 (“Revised Order”) varying his previous Order dated 4 October 2023 (“Previous Order”).

2.  I dismissed the appeal at the hearing, and I now give my reasons.

Background

3.  This is a mortgagee action under Order 88 of the Rules of the High Court (Cap. 4A). The Plaintiff is the mortgagee bank and the Defendant the mortgagor debtor. The debt was in arrears. The Plaintiff applied by Originating Summons dated 6 June 2023 for payment of HK$8,209,579.22 and order for possession of the mortgaged property. Judgment was granted by Master Yee on 4 October 2023.

4.  There was an issue as to the terms of the order because the Defendant was subject to a Restraint Order granted by Campell-Moffat J dated 3 July 2023 under section 15 of the Organized and Serious Crimes Ordinance (Cap. 455) (“OSCO”), and is prohibited from dealing with or disposing of her property (including her property and monies at bank).

5.  There are provisions for variation of the Restraint Order under OSCO as well as in the order itself:

“14. The Respondent or anyone affected by this Order, may apply to the Court at any time to vary or discharge this Order (or so much of its affects that person), but anyone wishing to do so should give not less than 3 clear day’s notice before the date fixed for the application to the Secretary of Justice.”

6.  Out of abundance of caution, Master Yee included in the Previous Order the proviso that repayment and yielding of possession of the mortgaged property was subject to obtaining by the Plaintiff a variation of the Restraint Order (“Variation Order”).

7.  On 6 November 2023, the Plaintiff took out a summons to vary the Previous Order under O.20, r.11, RHC (“slip rule”) to change the party by whom the application for the Variation Order was to be made from the Plaintiff to the Defendant, and to delete the order of possession being subject to service of the Variation Order. The Previous Order was so varied by Master Yee.

8.  The ground of appeal is that the Revised Order was beyond the scope of the slip rule.

Legal principles

9.  O.20, r.11, RHC provides that:

“Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without an appeal.”

10.  The principles applicable to the slip rule was summarised by Lam J (as he then was) in Lo Yuen Chong v IWS Environmental Technologies Ltd [2021] HKCA 89, [18]–[19]:

“18. The jurisdiction of the court to correct mistakes under the slip rule or its inherent jurisdiction has been described by Godfrey JA in Skink Ltd (in liquidation) v Comtowell Ltd [1998] 1 HKLRD 542 at 543G as follows:

‘The court has an inherent power to vary its own orders so as to carry out its own meaning and to make that meaning plain; and an express power (under R.H.C. (Cap. 4 Sub. Leg.) O.20 r.11) to correct any error in any order resulting from an accidental slip or omission. But these powers extend only to the correction of errors in expressing the court’s intention. The court has no power to correct mistakes of its own; even where it is satisfied that it has indeed made such a mistake.’

19. To be capable of being corrected in this way, the error or omission must be an error in expressing the manifest intention of the court: Li Tze Cho v Ching Hua Co (H.K.) Ltd (No. 3) [1961] HKLR 201, 205.”

11.  The slip rule is not meant to vary an order in a significant nature (Lo Ka Chun v Lo To & Anor (CACV 44/1985) 2 January 1987 per Roberts CJ, Cons VP and Faud JA).

12.  In The Yin Nin Savings Mortgage Loan & Land Investment Company Limited & anor v Chan Wai Ming & Ors [2022] HKCA 613, the Court of Appeal confirmed the jurisdiction under the “slip rule” as follows:-

“38. It is trite that the slip rule jurisdiction under Order 20 rule 11 of the RHC can only be invoked to correct errors in expressing the manifest intention of the Court (Hong Kong Civil Procedure 2022, volume 1, at 20/11/1). The purpose is to enable the Court to amend a formal order which through accident or error does not reflect the actual decision of the Court.”

Defendant’s case

13.  Mr Chin, for the Defendant, submitted the Revised Order is beyond the jurisdiction of the slip rule.

14.  At the first hearing before the Master, Mr Chin submitted that he was worried that an order for repayment and possession might be in conflict with the Restraint Order, hence, the proviso in the Previous Order.

15.  Mr Chin pointed out that the Revised Order is substantially different from the Previous Order. And that was not the understanding at the hearing on 4 October 2023, and it did not seem to be Master Yee’s intention manifestly at the time of making the Previous Order.

16.  Since the Plaintiff was represented before the Master on 4 October 2023, they would have objected to the Previous Order there and then if it did not reflect the Master’s intention.

17.  Mr Chin submitted that Master Yee was in fact making a different order rather than correcting a slip, hence, not within the slip rule. The proper procedure was to appeal against the Previous Order.

18.  Mr Chin submitted that the Master had no jurisdiction to compel the Defendant to seek variation of the Restraint Order. Further, the Defendant is currently out of Hong Kong, and had not given instructions to apply for the Variation Order.

19.  Mr Chin also pointed out that the Plaintiff was entitled to apply for the Variation Order, and had already liaised with the Department of Justice. It shows the Plaintiff has takin steps under the Previous Order.

20.  Hence, it should be the Plaintiff who is to apply for the Variation Order.

Plaintiff’s case

21.  Mr Cheng, for the Plaintiff, submitted that the substantive rights between the parties were not in dispute, and the Plaintiff was entitled to judgment for all the arrears and an order for possession.

22.  During the hearing on 4 October 2023, the Defendant submitted that a variation order should be obtained before judgment be entered. The Plaintiff then submitted that a restraint order under OSCO ranked as an equitable charge, and the first mortgagee (being a legal charge) had priority over a restraint order (Bank of China (Hong Kong) Ltd v The Secretary for Justice & anor [2015] HKCU 2999). Hence, judgment for repayment and possession could be granted to the Plaintiff.

23.  Out of abundance of caution, in order to avoid any breach of the Restraint Order, the provision of application for the Variation Order was added by Master Yee. There was no intention to impose any condition of substantive rights between the Plaintiff and the Defendant (“Manifest Intention”).

24.  With the benefit of hindsight, Mr Cheng submitted the added wording might likely not reflect the Manifest Intention of the Master. Out of abundance of caution, the Plaintiff took out a summons for the Revised Order.

25.  During the hearing on 21 November 2023, Master Yee confirmed that his manifest intention was that he was prepared to grant judgment for the Plaintiff. The Master allowed the Revised Order under the slip rule.

Analysis

26.  The issue before me was only by whom the application for the Variation Order was to be made. There was no argument on the priority between the mortgage and the Restraint Order, nor whether the order of possession was subject to the Variation Order.

27.  Mr Chin submitted that the slip rule is not meant to vary an order in a significant nature (Lo Ka Chun v Lo To cited above). However, significant different or even diametric obverse wording by itself will not necessarily bring it outside the slip rule. Suppose someone with innate directional dyslexia did say the left hand while he meant to say right hand. One would have to look at the intended meaning to see if the actual wording were a slip.

28.  There was no written decision by the Master at the hearing on the Revised Order. Mr Chin was trying to recall what the Master had said. As both parties could not agree on what had transpired before the Master, nor any objective reason why the “Plaintiff” was changed to “Defendant”, I asked to see the transcript. Mr Chin said the transcript had been applied for but not ready. The question why the “Plaintiff” was changed to “Defendant” was not answered say apparently it was under the slip rule.

29.  In such circumstance, I cannot lightly flout the Revised Order that was not the Master’s original intended decision, and it was not a proper use of the slip rule.

30.  Further, as to whether the Defendant could be ordered to apply for the Variation Order, the mortgage deed do contain the following terms:

“8. Your obligations relating to the Property

Unless we otherwise agree in writing, you agree at all times and at your own cost:

(v) to keep the Mortgage and the Facility Agreement valid and in force, to maintain the value of the Property and to enable us and the Receiver to exercise our respective rights and powers under the Mortgage;

(w) to maintain all necessary approvals for the-validity of the Mortgage and the Facility Agreement and the performance of your obligations under them;

(x) to sign any document and to do any thing necessary to keep valid and in force all the approvals obtained for the signing or the validity of the Mortgage and the Facility Agreement or the performance of your obligations under them;

(y) …

(z) at our request at any time to sign and execute all documents (including a legal charge if your equitable interest in the Property becomes a legal interest) and do whatever acts and things as we may reasonably require for perfecting the security intended to be created under the Mortgage;”

(underline added)

31.  As such, there is nothing inherently wrong with ordering the Defendant to apply for the Variation Order.

32.  In the event, the appeal was dismissed.

Costs

33.  Mr Cheng asked for costs to follow the event. There was no argument on the principle. However, I have summarily assessed the lower sum of $5,000.

34.  Mr Cheng did not appear before Master Yee but his colleague did. When asked about what transpired before the Master, he said he could assist the Court on that. Perhaps he could have found it out from his colleague.

35.  Gauging from Mr Cheng’s efforts in preparing for the appeal, I made the gross sum assessment at $5,000 only.