BANK OF INDIA v. SUJANANI PREM KISHINCHAND

HCMP 22/2023

[2023] HKCFI 2031

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 22 OF 2023

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REASONS FOR DECISION

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INTRODUCTION

1.  In this Mortgage Action, by Amended Originating Summons filed on 20 February 2023 (“the Amended OS”), the plaintiff asked for the following orders from the Court:

(1)  Delivery of vacant possession by the defendant to the plaintiff of the mortgaged properties as set out in the Schedule to the Amended OS;

(2)  Payment of all money due under the subject mortgage together with interest; and

(3)  Costs on solicitor and client basis.

2.  This was a call-over hearing of the Amended OS.

ABSENCE OF THE DEFENDANT

3.  The defendant did not appear at the hearing. 

4.  On the day before the hearing, the defendant’s son sent a letter to the Court together with a letter dated 31 July 2023 from a Dr Alvin Cheng, and applied to have the hearing adjourned.  At the hearing, the defendant’s son further explained to the Court that the defendant’s health has been badly affected since he contracted COVID-19 last year, and he is now very weak physically, having lost a lot of weight.  Further blood test had to be done so as to find out his exact health problem.  The defendant was therefore unable to come to the Court.  Furthermore, it was said that further time was needed for them to seek legal advice on the plaintiff’s claim.

5.  Having considered the whole circumstances, the adjournment application was rejected for the following reasons:

(1)  Dr Cheng’s letter is in fact a referral letter issued to the A&E Department of the Prince of Wales Hospital, in which it was only stated that the defendant had “↓ general sleep” and “↓ appetite / body weight”.  There was no preliminary diagnosis stated.  Most importantly, the doctor did not even see fit to issue any sick leave certificate, certifying that the defendant was not fit enough to attend court hearings;

(2)  Master Dick Ho had already warned the defendant’s son once on 19 April 2023 that the defendant had to appear in court hearings in person otherwise he would be treated as absent from such hearings, despite the fact that his son was present.  Indeed, the defendant had attended a subsequent hearing before Master J Wong on 31 May 2023 personally. Therefore, there is no doubt that the defendant has had full knowledge as to what the possible consequence would be if he did not attend court personally;

(3)  While the defendant’s son alleged that he planned to have the defendant admitted into a hospital after the hearing, the fact that the defendant was still not so admitted by the time of the hearing meant that he should be able to come to the Court if he wanted;

(4)  The defendant’s son had informed Master J Wong on 31 May 2023 that he was going to seek legal advice.   If the defendant and his son were really minded to engage solicitors for the purpose of the present case, they had had sufficient time to do so before this hearing.  The defendant’s son explained that they had a lack of cash flow.  While the defendant understandably was in financial difficulty, that is not a reason for adjourning the matter indefinitely, which would be very unfair to the plaintiff.

6.  I had also made it clear to the defendant’s son that he would not be allowed to make submissions on the substantive matter on behalf of the defendant at the hearing.

THE PLAINTIFF’S APPLICATION FOR SUMMARY DISPOSAL

7.  Having considered the evidence filed by the defendant, Mr Liu for the plaintiff submitted that the matter is suitable to be summarily disposed of without a full trial, because the defendant has failed to show that there is any triable defence.

8.  A similar application has been made in Wing Hang Bank Limited v Liu Kam Ying [2002] 2 HKC 57, in which Ma J (as his Lordship then was) explained that:

“7. While normally the substantive hearing of an originating summons should be in open court (see Hong Kong Civil Procedure 2002 at para.28/9/2), where, as in the present case, the plaintiff seeks a summary determination of the matter (akin to an application for summary judgment), the hearing can take place in chambers : see RHC, Order 28, rules 4(1), 9(1); International Bank of Asia Limited v. Kewpaisal Warranuch, unreported, 4 March 1999, HCMP1421/1998, Yuen J. The difference between an application for summary judgment under the originating summons procedure and an application for summary judgment under RHC, Order 14 is that the burden is not on the defendant in the case of the former : see International Bank of Asia Limited at pp.5S to 6A.

[…]

10. Unlike Order 14 applications where the defendant is obliged to provide sufficient grounds to justify the action continuing to trial, the burden in summary judgment applications under the originating summons procedure is on the plaintiff to justify its entitlement to summary judgment.  However, once this is prima facie demonstrated on the evidence, it is then up to the defendant to show that he does have a defence or defences to the claim.  In this way, there may in practice be little difference between an application for summary judgment in originating summonses and an application for summary judgment under RHC, Order 14.”

9.  I therefore proceeded with the hearing in Chambers, and considered the plaintiff’s application accordingly.

THE PARTIES’ RESPECTIVE CASES

10.  The plaintiff’s case is very straight forward. The plaintiff bank as mortgagee has entered into a mortgage dated 15 August 2018 (“the Mortgage”) with the defendant as mortgagor and Oriental Shylan (a business registered as to be owned by the defendant’s son) (“the Borrower”) as borrower, under which the defendant mortgaged the subject property to the plaintiff.  It was alleged that as at 31 December 2022, the total amount due from the defendant to the plaintiff was in the sum of $5,093,876.15.  Interest continued to accrue on a monthly compound basis from 1 January 2023 onwards at the rate of prime rate plus 2% per annum.  While the defendant did repay $500,000 to the plaintiff on 7 February 2023, the balance of the outstanding sum remains unpaid.

11.  Both the defendant and his son have filed affirmations in opposition herein.  They are identical in substance.  In a gist, while it seems that they had no dispute that the defendant owed the plaintiff money, it was alleged that they had reached an agreement with a manager of the plaintiff bank under which it was agreed that, on the condition that the defendant would repay $500,000 towards the subject loan, the plaintiff would extend the repayment date of the loan and the legal proceedings herein would be “halted”.  In the own words of the defendant’s son:

“10. The Plaintiff’s Bank Manager Mr Pravin Kumar of Bank of India, told us that if we could raise HKD500,000 towards the loan, he could talk to head office in India to hold back the legal proceedings and extend the loan till the end of the year. Although the loan was agreed to be extended to the end of the year, it was agreed that if I managed to sell the antiques before then, the loan would be repaid earlier. The Bank needed some funds to show head office in India that there was a continual effort to repay the loan. We were told by Mr Kumar that if he could raise and deposit HK$500,000, that the legal proceedings would be halted. Raising the HKD500,000 was very difficult considering the current economic climate and we had to pay high the interest rates to procure the HKD500,000.

11. Mr Kumar of Bank of India had told us misinformation which we completely relied on, and raised the HKD500,000 on the 7^th of February 2023.  Only after 2-3 days the summons and setting a court hearing.  In breach of their promises and representations to us, which we relied on and acted to our detriment, in raising the HKD500,000 at high interest rates.”

DELIBERATION

12.  I agree with Mr Liu that the defendant has failed to raise any triable defence for the following reasons.

13.  First, given there is no doubt that the plaintiff has demonstrated that he has a prima facie case on the evidence, the defendant has simply failed to condescend to give particulars of his defence.  He had failed to state clearly when the alleged oral agreement was reached with the plaintiff’s bank manager.  Neither did he state where and under what circumstances was the oral agreement made.  More importantly, he did not say up to which particular date did the plaintiff agree to withhold the present proceedings.  In my view, even on the defendant’s own case, there is simply insufficient certainty to found the existence of a contract which binds the parties.  It is further noted that the allegation about this oral agreement is not supported by any document.

14.  Second, even if the alleged oral agreement had indeed been made, as a matter of law, it could not constitute a binding contract, because it is not supported by consideration, as the defendant has been under an existing contractual obligation to make such repayment of $500,000: Bank of China (Hong Kong) Limited v Cosan Limited (CACV 331/2006, unreported, 11 May 2007), at [25] – [27].

15.  Third, when one party to a contract in the absence of fresh consideration agrees not to enforce his rights, an equity will be raised in favour of the other party.  However, this equity is subject to the following qualifications:

(1)  That the other party has altered his position;

(2)  That the promisor can resile from his promises on giving reasonable notice, which needs not be a formal notice, giving a reasonable opportunity of resuming his position;

(3)  The promise only becomes final and irrevocable if the promise cannot resume his position.[1]

16.  In the circumstances of the present case, the equity created would at best suspend the plaintiff bank’s right to proceed with the present action.  Such a right may be exercised again upon reasonable notice.  In the present case, the plaintiff has caused the Amended OS to be served on the defendant on 21 February 2023.  I am of the view that, even if the plaintiff had given the defendant any impression that these proceedings would not be further proceeded with for a period of time, the service of the Amended OS would be sufficient in showing the defendant that that position was no longer valid, otherwise the plaintiff would not have served the defendant further court documents in the present case (particularly, when the Amended OS shows that the plaintiff was still proceeding with the case by applying for leave to amend on 17 February 2023, which was 10 days after the defendant’s payment of $500,000).  If that is not enough, then the “Notice to Occupants” and “Notice of Appointment to hear Originating Summons”, both dated 16 March 2023 and served on the defendant on even date, must have been enough.

17.  By the time of the hearing, it was already at least more than four months since the plaintiff had unequivocally indicated to the defendant that it was intended to continue its pursuit of the relief claimed in the Amended OS.  In my view, that must amount to reasonable notice, if such notice was required.

CONCLUSION

18.  For reasons of the aforesaid, I had made an order in terms of the draft order submitted to the Court at the hearing.

19.  The plaintiff’s costs of the action had been summarily assessed on solicitor and own client basis[2] at $233,316, which shall be paid on or before 16 August 2023.