OCEAN ALLIED FINANCE LTD v. NGAN SHING YUE AND ANOTHER

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DECISION

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1.  By an Originating Summons filed on 25 April 2025 (“OS”), the Plaintiff applies under Orders 83A and 88 of the Rules of the District Court (“RDC”) under sections 2, 3 and 6 of the Partition Ordinance (Cap 352) (“PO”) for inter alia:

(1) an order for payment of all monies due and owing from the 1^st Defendant to the Plaintiff under the respective covenants contained in a loan agreement and a second legal charge both dated 5 July 2024 and made between the Plaintiff and the 1^st Defendant;

(2) an order for possession of Flat B, 13^th Floor, Harmony Court, No.127 Bonham Strand, Sheung Wan, Hong Kong (“Property”) against the 1^st and 2^nd Defendants in default of payment of such sum as may be adjudged to be due under the Second Legal Charge; and

(3) an order for sale of the Property.

2.  At the hearing on 2 March 2026, I reserved my decision which I now give.

Factual & Procedural Background

3.  The Plaintiff was at all material times and is a money lender licensed under the Money Lenders Ordinance (Cap.163) (“MLO”).

4.  The 2^nd Defendant was born in 1941 (“Mother”[1]) and is currently 85 years. Her husband NGAN Hung Lit was born in 1939 and is currently 87 years old (“Father”). They have 6 children:

(1) NGAN Yuk Ping, daughter, born in 1958;

(2) NGAN Yuk Ming, daughter, born in 1960;

(3) NGAN Yuk Hing, daughter, born in 1968 (“Hing”);

(4) NGAN Shing Yue, son, the 1^st Defendant, born in 1970;

(5) NGAN Yuk Chun, daughter, born in 1972; and

(6) NGAN Shing Fung, son, born in 1974 (“Fung”).

5.  The Property is a residential unit developed by The Hong Kong Housing Authority which was acquired in 1994 at the consideration of HK$4,576,000.00 and registered under the names of the 1^st and 2^nd Defendants as joint tenants. It is indisputable that the Father and Mother had lived in the Property with their children as their matrimonial home ever since.

6.  The purchase was financed by a mortgage entered into between the 1^st and 2^nd Defendants as mortgagor and Nanyang Commercial Bank Limited as mortgagee, with the 1^st Defendant and Hing as principal for the mortgage loan. (“NCB Mortgage”) The NCB Mortgage was discharged in December 1999.

7.  On 17 October 2023, a legal charge was registered against the Property in favour of Easy Money Limited (“First Legal Charge”).

8.  On 5 July 2024, the 1^st Defendant as the borrower entered into a loan agreement with the Plaintiff as the lender for a sum of HK$2,500,000.00 at the interest rate of 18% per annum (“Loan Agreement”). On the same day and by way of a Second Legal Charge, the 1^st Defendant’s interest in the Property was charged to the Plaintiff as security for due payment of all moneys owing to the Plaintiff by the 1^st Defendant together with interest thereon (“Second Legal Charge”).

9.  The First Legal Charge was subsequently discharged on 23 July 2024.

10.  Since February 2025, the 1^st Defendant failed to make repayments and continued to fail to repay despite written reminders and demand letter sent by the Plaintiff. By a letter dated 5 March 2025, the Plaintiff demanded repayment of the outstanding principal and accrued interests. Unbeknownst to the Plaintiff, the 1^st Defendant presented a bankruptcy petition against himself on 11 March 2025.

11.  On 14 April 2025, the Plaintiff’s solicitors issued letters of demand to the 1^st and 2^nd Defendant, which were served to the Property and 3 other addresses of the 1^st Defendant, demanding the full payment of the outstanding principal of HK$2,456,921.33 and accrued interests of HK$117,528.11. Not long after the said demand letters were issued, the 1^st Defendant was adjudicated bankrupt on his own petition on 22 April 2025.

12.  Three days later and on 25 April 2025, the Plaintiff commenced the present proceedings against the 1^st and 2^nd Defendants by way of an OS and the Affirmation of Li Wei Kiu John, director of the Plaintiff, was filed in support (“Plaintiff’s 1^st Affirmation”).

13.  On 28 April 2025, the Plaintiff served the OS and the Plaintiff’s 1^st Affirmation on the Official Receiver, the 1^st and the 2^nd Defendants. The 1^st Defendant later replied to the Plaintiff’s solicitors to acknowledge receipt of the documents served but asked them to contact the Official Receiver on the matter.

14.  On 9 May 2025, Hing filed an Acknowledgement of Service purportedly on behalf of the 2^nd Defendant on the ground that the 2^nd Defendant was a mentally incapacitated person (“Purported AS”). Since Hing has not been appointed as the 2^nd Defendant’s guardian ad litem pursuant to Order 80 of the RDC, the Purported AS is therefore invalid.

15.  On 26 May, the Plaintiff filed the 2^nd Affirmation of Li Wei Kiu John exhibiting a valuation report prepared by Citiland Surveyors Limited dated 16 May 2025 (“Valuation Report”).

16.  A Notice of Appointment to hear the OS was issued with the first hearing fixed on 26 June 2025. On 30 May 2025, the Plaintiff filed a Certificate of No Acknowledgement of Service.

17.  On 6 June 2025, the Court appointed Hing and Fung to be the guardian ad litem of the 2^nd Defendant for the purpose of the present proceedings. On 16 June 2025, the 2^nd Defendant filed an Acknowledgement of Service of the OS.

18.  On 19 June 2025, and with the consent of the Official Receiver, the Plaintiff obtained from the Bankruptcy Master retrospective leave to commence and proceed with the present proceedings against the 1^st Defendant for possession and order for sale of the Property and for payment of all monies due to the Plaintiff under the Second Charge notwithstanding his bankruptcy subject to, inter alia, the condition that no judgment or order obtained by the Plaintiff (other than judgment or order for possession of the Property) shall be enforced against the 1^st Defendant without the leave of the Court[2].

19.  By reason of the neutral stance of the Official Receiver, it was ordered that his attendance at any further hearing of these proceedings be excused unless directed otherwise.[3] On 18 July, the joint and several trustees of bankruptcy of the 1^st Defendant were appointed.

20.  On 29 July 2025, an affirmation of Hing and Fung was filed on behalf of the 2^nd Defendant (“2^nd Defendant’s Affirmation”) and on 6 October 2025, the Plaintiff filed the 3^rd Affirmation of Li Wei Kiu John in reply (“Plaintiff’s 3^rd Affirmation”).

Service on the Director of Lands

21.  In his skeleton submission, Mr Lai, counsel for the 2^nd Defendant, took issue that there was no evidence to prove that the Director of Lands has been served as required under section 3 (2) of the PO. It was revealed only at the hearing that the affirmation of service verifying due service of documents on the Director of Lands was only filed after Mr Lai has filed his skeleton submissions.

22.  Mr Lai then submitted that the said affirmation of service filed on 27 February 2026 was without the leave of the Court and thus not in compliance of the order made by DDJ Vincent Lung on 25 June 2025[4]. I find that the argument is entirely misconceived. The purpose of the order, which is a standard term, is clearly to restrict further filing of new evidence without the scrutiny of the court. An affirmation of service is required to prove due service of documents at different stages of the proceedings and therefore falls outside the scope of the restriction. Hence, no retrospective leave is required for the Plaintiff’s filing of the said affirmation of service.

23.  Up to the date of the substantive hearing, there has been no reply from the Director of Lands indicating any comments on the Plaintiff’s claims against the Defendants.

The Stance of the Trustees in Bankruptcy

24.  By operation of law, the joint tenancy of the Property was severed and converted into a tenancy in common. The 1^st Defendant’s interest in the Property became vested initially in the Official Receiver and subsequently in the trustees of bankruptcy upon their appointment: (see Re Lau Hiu Tuen, bankrupt[5] and Re Lo Yau Shing (a bankrupt)[6])

25.  On 13 October 2025, the trustees in bankruptcy of the 1^st Defendant wrote to inform the Plaintiff that they maintained a neutral stance on the 2^nd Defendant’s claim that the 1^st Defendant is holding the Property on trust for the Father. They, however, did not make any comment regarding the Plaintiff’s claim for money judgment.

26.  Since the trustees in bankruptcy have chosen not to step in to defend the Plaintiff’s claims, and with the leave granted by the Bankruptcy Master, I shall proceed to consider the Plaintiff’s claims against the 1^st Defendant under the covenants contained in the Second Legal Charge in his absence.

Applicable Principles

27.  In Bighand Ventures Limited v Regent National Enterprises[7], DHCJ Douglas Lam SC set out the applicable rules in an Order 88 application at §§34-37 which I respectfully adopt:

“MORTGAGE ACTIONS UNDER RHC ORDER 88

34. The use of the RHC Order 88 procedure in mortgage actions was summarised by Yuen J (as she then was) in International Bank of Asia Ltd v High Gay Co Ltd & Ors HCMP 1422/1998 (unreported, 4 March 1999) at pp 5 – 6:

“ … a mortgage action may, under O.88, be commenced either by writ or by originating summons. If a mortgage action is commenced by originating summons (as in this case), it goes, in the first instance, for a first hearing before a master.

A first hearing of an originating summons (whether before a judge or a master) is conducted in chambers. In accordance with O.28 r.3 and 4, if the judge/master decides that the matter can be dealt with summarily, then an order disposing of the entire proceeding can be made. This is akin to an application for summary judgment under O.14, but with the difference that the burden is not cast upon the defendant, as in O.14.

…

If it is shown at the first hearing that there are material factual issues which need to be resolved, the judge/master would order that the proceeding continue as if begun by writ, and give directions for the filing of pleadings. Alternatively, even if the affirmations show that there are factual issues, but they are insubstantial or are restricted in scope, the judge/master may order that there be cross-examination at the full hearing on those issues only.”

35. RHC Order 88, rule 5 sets out the evidential requirements of proceedings under the Order. In particular, the following sub-rules are relevant for present purposes:

“ (3) Where the plaintiff claims delivery of possession the affidavit must show the circumstances under which the right to possession arises and except where the Court in any case or class of case otherwise directs, the state of the account between the mortgagor and mortgagee with particulars of—

(a) the amount of the advance,

(b) the amount of the periodic payments required to be made,

(c) the amount of any interest or instalments in arrear at the date of the originating summons and at the date of the affidavit, and

(d) the amount remaining due under the mortgage.

…

(6) Where the plaintiff claims payment of money secured by the mortgage, the affidavit must prove that the money is due and payable and give the particulars mentioned in paragraph (3).

(7) Where the plaintiff’s claim includes a claim for interest to judgment, the affidavit must state the amount of a day’s interest.”

36. As to the burden of proof, the following observations by Ma J (as he then was) in Wing Hang Bank Limited v Liu Kam Ying & Ors [2002] 2 HKC 57 at paragraph 10 are instructive:

“ Unlike O 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, O 14.”

37. Further, it is noted that RHC Order 41, rule 5(1) applies with full force, that is, affidavits may only contain facts as the deponent is able of his own knowledge to prove. In other words, unlike in, say, Order 14 applications, they cannot contain statements of information or belief, even if the source is identified.”

28.  In Re Estate of Chiu Keung[8], Chu JA said at §§58-59:

“58. Under Order 28, rule 4(1) of the Rules of the High Court, the court has a wide discretion to dispose of the originating summons summarily where it is satisfied that there are no triable issues. Where there are genuine, substantial factual disputes that cannot be resolved on affidavit evidence, the court may either give direction under rule 4(3) for evidence to be taken orally, including cross-examination of deponents of the affidavits, or order under rule 8 that the proceedings be continued as if the cause or matter had been begun by writ.

59. Counsel have referred us to a number of authorities: Bank of China (Hong Kong) Limited v Keen Lloyd Resources Limited CACV 1787/2001, 26 February 2002 at [18] to [22]; Ye Hong Ying v Chan Lup Ying [1996] 1 HKLR 255 at 258F-J; Shum Wah Ming v The Estate of Chen King Ngo, deceased & Anor CACV 21/1996, 10 July 1996 at [25], [50] to [53]; Cheney Communications Pte Ltd v Christopher Charles Cheney HCMP 2942/1992, 2 August 1993. In summary, these cases establish that there is no hard and fast rule as to what cases can properly be dealt with by the originating summons procedure. It is not the case that the existence of factual disputes will invariably render the originating summons procedure inappropriate, although it is a factor to be taken into account when exercising the discretion. Other relevant considerations include whether the procedural advantages of an action begun by writ, such as delivery of pleadings and discovery, justify the exercise of the power under Order 28 rule 8 and whether in so ordering the ultimate resolution of the dispute would be significantly delayed. If the issues of fact have been identified and can be properly resolved or the disputes of fact are not central to the court’s determination, the court is entitled to proceed to determine the action without converting it into a writ action. With regard to whether to hear the summons on oral evidence, what the court has to consider, as stipulated in Order 28 rule 4(3), is what is required for the just, expeditious or economical disposal of the proceedings.”

29.  With the above principles, I shall now deal with the Plaintiff’s claims.

Analysis

30.  The Second Legal Charge contains the following express terms:

(1) In consideration of the Plaintiff agreeing to make the Loan to the 1^st Defendant, the 1^st Defendant covenants to repay the Loan and interest thereon to the Plaintiff on demand (Clause 2); it shall be an event of default if the 1^st Defendant fails to pay on the due date or upon demand (Clause 7.01 (a));

(2) If an event of default has occurred, the Plaintiff may declare all loans and other monies secured to be immediately due and payable without further demand, notice or other legal formality of any kind (Clause 7.02 (a)); and

(3) The Plaintiff is entitled to recover possession and sell the Property in an event of default (Clause 8.05).

31.  There is no dispute that the 1^st Defendant was in default of making repayments to the Plaintiff since February 2025 thereby in breach of the Second Legal Charge.

(1) Money Judgment

32.  In the Plaintiff’s 1^st Affirmation, the state of account of the loan was set out with particulars. I am satisfied, and the 2^nd Defendant does not dispute, that the Plaintiff has complied with the requirements set out in Order 88 rule 5 and Order 83A of the RDC. The interest rate of 18% per annum charged under the Loan Agreement is neither extortionate nor illegal under sections 25(3) and 24(1) of the MLO respectively.

33.  Mr Lai submitted that the Plaintiff had engaged in questionable business practices by agreeing to advance the Loan to the 1^st Defendant without conducting any due diligence assessment regarding his risk of default or his overall financial condition. Mr Lai referred this as the “Ill-intention Issue” as he contended that it was the intention of the Plaintiff to “cause” the 1^st Defendant’s default and “to take the Property away”[9].

34.  Without specifying any legal basis to found such argument, Mr Lai submitted that the Second Legal Charge is liable to be set aside by reason of the alleged suspicious circumstances which was based entirely on the bare assertions made by Hing and Fung[10] who admittedly had no knowledge in any of the dealings between the Plaintiff and the 1^st Defendant. It was further argued that if the underlying loan transaction were to be set aside, the Plaintiff’s claim for possession and an order for sale would inevitably fail. I shall deal with this argument later.

35.  In my judgment, a commercial lender is entitled to assess its own commercial risks when entering into a financing arrangement. Even if a lender fails to conduct proper due diligence or acts imprudently in assessing a borrower’s financial health, such conduct does not, without more, vitiate the validity of the resulting legal charge. In the circumstances, I am not persuaded that there is any triable issue as to the validity of the underlying loan transaction.

36.  In the absence of any contradictory evidence, I accept that the 1^st Defendant has breached the Second Legal Charge by his failure to repay punctually and fully the monthly instalments. I am satisfied that money judgment should be entered in favour of the Plaintiff against the 1^st Defendant for the sum of HK$2,965,806.95 with interest on the sum of HK$2,965,806.95 at the rate of 18% per annum with a daily rate of HK$1,211.63 from 3 March 2026 to the date of payment in full.

37.  For the avoidance of doubt, the entry of this money judgment does not grant the Plaintiff any priority or execution rights over the 1^st Defendant’s estate outside the bankruptcy regime. It only establishes the liquidated amount of the debt owed to the Plaintiff.

(2) Order for Possession and Order for Sale

A. Family Trust

38.  The 2^nd Defendant’s primary contention was that it was the Father who paid for the purchase of the Property solely. It was submitted that the 1^st Defendant had no beneficial interest in the Property and was merely a trustee holding his share of the Property for the Father and Mother. If the 1^st Defendant had no beneficial interest in the Property and was a mere trustee for the Father and Mother, the Plaintiff’s claim for possession and order for sale must fail.

39.  The relevant principles on resulting trust and presumption of advancement are helpfully summarised by Au-Yeung J in Re: Yip Yam Yu Alex [11]at §§35 to 41:

“Resulting Trust and Presumption of Advancement

35. A rebuttable presumption of resulting trust arises where a person voluntarily transfers property to another for no consideration. In particular, where A pays (wholly or in part) for the purchase of a property which is vested in B alone or in the joint names of A and B, there is a rebuttable presumption that the property is held in trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B, in shares proportionate to their contributions. See Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 708A-B per Lord Browne-Wilkinson.

36. The presumption may be rebutted in two ways. First, it may be rebutted by extraneous and/or direct evidence of A's intention to make a gift or outright transfer. The burden of proving a gift is on the party claiming that there is a gift. Second, it may be rebutted by the counter presumption of advancement, if the transferor is the parent of the transferee. The presumption of advancement may itself be rebutted by extraneous evidence that the transferor did not intend a gift. The burden is on the transferor to prove that he did not intend a gift. See Westdeutsche Landesbank, at 708B; Lewin on Trusts (19^th ed) §9-003.

37. The court puts itself in the position of a jury and considers all the circumstances of the case so as to arrive at the purchaser's true intention. It is only where there is no evidence to contradict it that the presumption of a resulting trust or advancement will prevail: Personal Representative of Lee Cheun Kin, deceased v Lee Chak Sam, HCA 2684/1995, unreported, 18 March 1999 at §19, per Burrell J; Lavelle v Lavelle [2004] EWCA Civ 223 at §14.

38. The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration. Subsequent acts and declarations may only be admissible as evidence against the party who made them, and not in his favour. See Shephard v Cartwright [1955] AC 431 at 445 per Viscount Simonds.

39. The presumption of advancement is a rather weak concept these days which can be rebutted on comparatively slight evidence. It is even weaker where the child was over 18 years of age and managed his/her own affairs at the time of the transaction. Suen Shu Tai v Tam Fung Tai [2014] 4 HKLRD 436, §10.17, Cheung JA; citing Laskar v Laskar [2008] 1 WLR 2695……

41. On the other hand, Snell suggests that the presumption can apply even where the child is no longer a minor, since the rationale of the presumption is no longer confined to cases where the parent has a duty to provide for the child. Even aside from the formal presumption, the inference would be readily drawn that a gift or a contribution to the child’s maintenance was intended, even when the child was an adult. It would be particularly strong where a widowed mother was providing for her child. See Snell’s Equity, 33^rd ed §25-009.”

40.  As to common intention constructive trust, the Court of Appeal held in Primecredit Ltd v Yeung Chun Pang Barry[12] that the modern approach to constructive trusts was to assess the common intention of the parties by holistic approach having regard to the context. In a domestic context, particularly in relation to a matrimonial home, the court was not constrained in that exercise by pure direct money contributions to the purchase price. In a Chinese setting, especially for the older generations where explicit discussions on property rights within the family was not that common, the court had to pay more regard to circumstantial matters.

41.  I shall now consider the case put forward by the 2^nd Defendant as contained in the affirmation by Hing and Fung, the elder sister and younger brother of the 1^st Defendant respectively, which could be summarised as follows:

(1) The Father, with the help of the Mother, ran a frozen meat shop in Sheung Wan and the family used to live in a small unit in Central;

(2) To improve the living quality of the family, the Father purchased the Property which was developed by The Hong Kong Housing Authority in 1994 at the price of HK$4,576,000.00 which was financed by the NCB Mortgage;

(3) The down payment for the purchase, decoration, fitting and fixture were all paid by the Father;

(4) At the time when the Property was acquired, the Father did not want the Property to be registered under his name for fearing that his business might somehow turn bad or he might die earlier than the Mother;

(5) Among the children, he chose the 1^st Defendant, being the only son having an income, to hold the title, together with the Mother, on his behalf intending that he would continue to make mortgage repayment if needs be such that the whole family, in particular the Mother, could live in the Property during their lifetime;

(6) The Father did not choose any of the daughters because he did not want the Property to pass to their husbands eventually;

(7) the 1^st Defendant was only 24 years old and did not contribute to the purchase;

(8) The Father was responsible for all subsequent mortgage repayments;

(9) In 1999, the business was closed down and the Father and Mother retired; also in the same year, the NCB Mortgage was fully repaid and discharged;

(10) Since the Property was purchased, all family members resided there; except for Hing, all children moved out when they got married at different times in around 1999 or 2000;

(11) The Father, Mother and Hing continued to and still live at the Property until now, i.e. for over 30 years; and

(12) The 1^st Defendant never paid for the management fee or any household expenses while he was living there or after he had moved out; it was Hing who paid and still pays for those expenses and the living expenses of the parents while Fung would contribute to pay for the 2 domestic helpers who take care of the parents.

42.  Having considered the above, I come to the view that the 2^nd Defendant has raised an arguable case that it was the Father who paid for the purchase of the Property and that the presumption of resulting result is not rebutted by any evidence that it was intended to be a gift. Further, the beneficial interest of the Father, or the parents, could also be asserted under common intention constructive trust.

43.  Firstly, at the time when the Property was acquired, the Father and Mother ran a small business whereas the eldest of the six children was aged 36 with the youngest aged 20. There is nothing incredible that the Property was purchased by Father, and perhaps also the Mother, as the home for the whole family. The 1^st Defendant was only 24 years old and just graduated from university who worked as a sales representative. It would be inherently improbable to suggest that it was the 1^st Defendant who paid any part of the down payment as well as the mortgage loan which was repaid in full in just five years.

44.  Secondly, the Father and the Mother, and Hing, continued to live at the Property as their home for over 30 years. As to the 1^st Defendant, like his other siblings, he moved out in 1999 or 2000 when he got married. I find this to be entirely consistent with the common practice of children moving out of the home owned by their parents when getting married. Conversely, it would be highly improbable for the 1^st Defendant to have moved out if he had indeed funded the purchase of the Property. In fact, he has not returned to live in the Property ever since.

45.  Thirdly, Hing and Fung deposed in their affirmation that the 1^st Defendant has never contributed to any expenses of the Property which is plainly inconsistent with him having any beneficial interest in the Property.

46.  I find that it would not be likely that the Father intended to make an immediate gift to the 1^st Defendant. At that time, the Father was aged 58 and the Mother aged 53, both could reasonably look forward to a number of years ahead, and as it turns out that it is more than 2 decades that they have lived and until now. Even allowing for the Chinese traditional thinking of leaving real property to the male descendent, this would likely happen on the demise of the Father as observed by Kwan JA in Primecredit Ltd v Yeung Chun Pang Barry[13]. I find that it is not probable that the Father would wish to give the 1^st Defendant the gift at that time.

47.  Ms Lee criticized that the 2^nd Defendant has failed to produce any payment records to prove Father’s contribution. Given that any relevant record would be from over 26 years ago, it would be unrealistic to expect that they are still being kept and that the Father and Mother, who are now mentally incapacitated, which is not disputed by the Plaintiff, are capable of retrieving them. I therefore do not find the 2^nd Defendant’s case to be any less believable by reason of the lack of documentary proof.

48.  By reason of the above, I am persuaded that that the 2^nd Defendant has raised a serious issue to be tried on the Family Trust issue which are matters for trial.

49.  Ms Lee submitted that in the event that the Court is not prepared to grant the orders sought summarily, directions should be given for cross-examination on affidavit. I do not agree. In my view, this is a case where pleadings should be filed as it is important for the 2^nd Defendant to formulate her case clearly to facilitate the conduct of the trial. In particular, whether the 1^st Defendant is holding the 50% interest in the Property on trust for the Father or for both the Father and the Mother, and whether there was an express trust as argued by Mr Lai, should be clearly stated on the pleadings.

50.  In light of my views above, I would only deal with the other arguments briefly.

Equitable interest Issue

51.  In his skeleton submissions, Mr Lai raised a new point, which was not mentioned in the 2^nd Defendant’s affirmation, that because the Plaintiff conducted an inspection and had actual notice of the parents’ occupation in the Property prior to the execution of the Second Legal Charge, the Plaintiff is bound by the parents’ equitable right to live there for life under the principles of Wong Chim Ying Cheng Kam Wing[14]. I cannot accept this submission.

52.  The principles in Wong Chim Ying operate to fix a purchaser with constructive notice of an occupier’s existing equitable rights; it does not create any substantive right when none exists. For the Father to assert an overriding interest, he must establish his equitable interest of the alleged life tenancy failing which the occupation amounts to nothing more than a personal family arrangement.

53.  Insofar as the inspection is concerned, I noted that it was admitted in the Plaintiff’s 3^rd Affirmation that the 1^st Defendant had informed the Plaintiff’s staff during the inspection that the Father, the Mother and Hing were the family members residing at the Property. I find that whether the Plaintiff had conducted any or any proper inquiry of the Father, to say the least, as to his interest in the Property such that the Plaintiff would be fixed with constructive notice of his rights in the Property is a serious issue for trial.

54.  However, I do not find that the issue of proper inquiry would assist the 2^nd Defendant in developing any argument based on the alleged ill-intention on the part of the Plaintiff as submitted by Mr Lai. I agree with Ms Lee that it is not a relevant consideration in the court’s exercise of discretion in making an order for sale at the end of day.

Hardship Issue

55.  Given my views above, it is not necessary for me to decide whether the 2^nd Defendant has shown very great hardship which would be a matter for the trial judge. I would only add that the mental incapacities, the advance ages (aged 87 and 85 respectively) and medical conditions of both the Father and the Mother are relevant considerations to be taken into account if it is necessary to consider whether an order for sale should be made. In the words of Mimmie Chan J in Re Leung Wang Fai, bankrupt[15], at §28:

“… To require an elderly and ailing couple to move out of their already modest home of over 20 years would, in my view, create very great hardship to [the respondent]. The alternative of their moving into a home for the aged with appear to be harsh in this case and would constitute a real detriment to them.”

Conclusion

56.  By reason of the above, I shall make the following orders:

(1) Judgment be entered in favour of the Plaintiff against the 1^st Defendant for the sum of HK$2,965,806.95 with interest on the sum of HK$2,965,806.95 at the rate of 18% per annum with a daily rate of HK$1,211.63 from 3 March 2026 to the date of payment in full; with costs to the Plaintiff to be taxed if not agreed;

(2) Pursuant to Order 28 Rule 8 of the RDC, the Plaintiff's remaining claims for an order for possession and an order for sale against the 1^st and 2^nd Defendants be continued as if the cause had been begun by writ from the date of the Order;

(3) The Plaintiff do file and serve the Statement of Claim within 28 days from the date of the Order;

(4) The 2^nd Defendant do file and serve her Defence (and Counterclaim if any) within 28 days thereafter; and

(5) The Plaintiff do file and serve its Reply (and Defence to Counterclaim if any) within 28 days thereafter.

57.  As to costs, I am of the view that the Plaintiff was entitled to commence the action by OS. At the hearing, Mr Lai drew the Court’s attention to two letters written by the 2^nd Defendant’s solicitors to the Plaintiff. These letters outlined why the Plaintiff’s claims should not be summarily determined. Instead of proposing the matter to be continued as if begun by writ, the 2^nd Defendant’s solicitors demanded the Plaintiff to discontinue the present proceedings. Having considered the matter in the round and in the exercise of my discretion, I make a costs order nisi that as between the Plaintiff and the 2^nd Defendant, the costs of the Plaintiff’s application including costs of the hearing and all costs reserved be costs in the cause, with certificate for counsel for the hearing on 2 March 2026.

58.  Any party who seeks to vary the costs order nisi shall file and serve its written submissions within 14 days from the date of the Order. The other party shall file its written submissions in reply within 14 days thereafter. The application would be dealt with by this Court by paper disposal.