LAI WAI YEE, the Administratrix of the estate of LAI CHUM CHUEN, deceased v. OCEAN ALLIED FINANCE LTD

HCA 1897/2016

[2021] HKCFI 597

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1897 OF 2016

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REASONS FOR DECISION

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1.  On 1 March 2021, I made an order broadly in terms of the consent summons submitted by the parties, making declarations to the effect that the loan and mortgage documentation apparently entered into between Mr Lai Chum Chuen (“Mr Lai”) and the defendant, Ocean Allied Finance Ltd, was not executed or signed by Mr Lai, and was not binding upon him or his estate after his death. The defendant’s counterclaim for repayment of the loan and possession of the property was dismissed. There was a consequential order for the registration of the relevant documents at the Land Registry to be vacated. As the consent summons involved declarations, it is appropriate that I give brief reasons for acceding to it.

2.  Mr Lai was the owner of a half share in a flat in Tung Chung, with the other half being owned by his wife.  His case was that on around 29 April 2015, he lost his wallet which contained, among other things, his Hong Kong Identity Card (“Identity Card”).  He made a report to the police of loss of property including his Identity Card.  He denied that he had ever attended the defendant’s office or the office of its solicitors, Alan Ho & Co, or executed various documents for the purpose of obtaining a loan of $2.2 million on the security of his half share in the property.  He also denied ever having received the net proceeds of the loan in the sum of $2,035,000.  He suspected that the person who went to the defendant’s office, produced the Identity Card and borrowed the loan was an impostor who had come into possession of the lost Identity Card.

3.  On 21 July 2016, Mr Lai brought the action herein against the defendant for declarations that he did not execute the loan and mortgage documents and for an order that the registration of the mortgage be vacated.  The defendant counterclaimed for repayment of all money due under the loan and delivery of vacant possession of the property.  Mr Lai unfortunately passed away in September 2020.  An order was made for his daughter and the administratrix of his estate, Madam Lai Wai Yee, to be substituted as the plaintiff. 

4.  While the court’s practice is generally not to grant declarations without a trial, the circumstances here in my view make this one of those special cases where the paramount duty of the court to do the fullest justice to the plaintiff to which she is entitled justifies the grant of declaratory relief by consent: Hong Kong Civil Procedure2021, para 15/16/2; Patten v Burke Publishing Co Ltd [1991] 1 WLR 541.  In this regard I take into account that the documentation declared not to have been executed by Mr Lai was in the nature of bilateral agreements not affecting third parties.  There is evidence from a handwriting expert that the signatures on the documents were probably not the genuine signatures of Mr Lai.  The declaratory relief sought is negative in nature, essentially to confirm that Mr Lai and his estate had no legal liability to the defendant and that the property was not encumbered by the mortgage.  From the entries at the Land Registry, it can be seen that there had not been any subsequent transactions relating to the property that could be affected by the declaratory relief sought.  On the other hand, in the absence of the appropriate declarations, questions may in future be raised about the title to the property to the detriment of the estate of Mr Lai.

5.  Accordingly I granted an order largely in terms of the consent summons.