ETC FINANCE LTD v. CHIU YIU NAM AND ANOTHER

HCMP 2144/2018

[2020] HKCFI 158

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2144 OF 2018

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DECISION

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1.  This is the Defendants’ application for leave to appeal out of time.

2.  On 11 September 2019, Master S.P. Yip granted an order against the Defendants (the “Order”).  The Order was filed and sealed on 2 October 2019.  The Defendants only filed their Notice of Appeal to Judge in Chambers on 29 October 2019.  Under Order 58, rule 1 of the Rules of High Court, Cap.4A, the Defendants should file their notice of appeal within 14 days.

3.  The Defendants have filed no affirmation evidence to explain why they filed their Notice of Appeal out of time.

4.  During the hearing, the 1^st Defendant submitted that the Defendants applied for legal aid and were waiting for the results of their legal aid application. As lay person, they did not know that they have to file notice of appeal within 14 days.  They thought that they would only need to file notice of appeal after they were notified of the result of their application for legal aid.  They were only informed later that they have to file a notice of appeal.  They immediately did so on 29 October 2019.

5.  It is established that in considering whether to extend time to appeal, the Court has to consider the following factors:

(1) The length of the delay;

(2) The reasons for the delay, in terms of firstly why the original time-limit was not complied with and, secondly, why the application for extension of time could not have been made earlier;

(3) The chance of the appeal succeeding if leave is given; and

(4) The prejudice to the other party if the application is granted.

See Hong Kong Civil Procedure 2020, Vol.1 §58/1/9.

6.  I have considered the Defendants’ submissions carefully. Whilst they might have legitimate grievances, this Court has to consider all the available evidence at the present stage objectively.  I am of the view that this is not a suitable case to grant leave to appeal out of time.  First, although the Defendants have no legal representation, they are subject to the same set of rules of the High Court.  They should ask themselves if they were to appeal, how soon they have to do it.  They cannot sensibly think that until the outcome of their application for legal aid is made known to them, they do not need to file a notice of appeal.  Hence, I do not think that the reasons for the delay are justifiable.

7.  In any event, on the existence evidence, I do not consider that the Defendants have bona fide defence to the Plaintiff’s claims.  The Plaintiff, qua mortgagee, is simply enforcing its right pursuant to Order 88 of the Rules of High Court, Cap.4A.  There are no disputes that the debts are presently due and the Defendants have defaulted in making repayments. The subject loan is repayable on demand.  The Plaintiff could have demanded the Defendants to repay the outstanding loans at any time.

8.  The Defendants’ only defence is that a staff of the Plaintiff, one Miss Chan Ying Chi (“Miss Chan”) had orally promised them that after the remortgage with the Plaintiff, the Plaintiff would make further advance to the Defendants on the basis that the subject property was worth HK$25,000,000.00.

9.  The 1^st Defendant fairly accepted that he has no documents to support such oral promise.  What he strongly submitted were that first, there was no reason for him to remortgage with the Plaintiff unless the promise was made as he was paying less interest with the original mortgagee and it was the Plaintiff who introduced the second mortgagee to the Defendants. Had the subject property not worth HK$25,000,000.00, the second mortgagee would not enter into the second mortgage with the Defendants.

10.  First, Mr Cheng for the Plaintiff drew this Court’s attention to a letter dated 27 July 2018 from the Defendants’ solicitors which, inter alia, stated that the Defendants had to repay HK$1,311,960.00 being the outstanding/unpaid 8^th to 33^rd instalments.  This clearly shows that the Defendants did default in making payments to their previous mortgagee.

11.  Secondly, Miss Chan denied having made such an oral promise.  She exhibited a valuation report of the subject property as at 25 June 2018.  As at the date of valuation, namely, 21 May 2018, the market value of the subject property was HK$19,684,000.00 and value for sale under repossession was HK$16,700,000.00.  The market value of the car parking space was HK$500,000 with a value for sale under repossession at HK$420,000.00.  As such it does not make any sense for her to make any representation or promise that the market value of the subject property was HK$25,000,000.00.

12.  The 1^st Defendant strongly contested that the market value of the subject property was indeed about HK$25,000,000.00 and it is impossible that the car parking space was only worth HK$500,000.00.  The 1^st Defendant further submitted that he has recently discussed with an experienced estate agent and the said estate agent opined that the current market value of the subject property is about HK$33,000,000.00.

13.  Nonetheless, the current market valuation (as at 6 June 2019) provided by Centaline Property Agency shows that the market value of the subject property is HK$21,000,000.00.

14.  First, I find it unconvincing that if the representation to make further advance is so important to the Defendants, there is no even one documentary proof to support the same.  It goes without saying that in resisting an application for summary determination, a defendant has a positive duty to file an affidavit and the said affidavit must condescend upon particulars and should as far as possible deal specifically with the plaintiff’s claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied upon to support it.

15.  Secondly, in terms of documentary evidence, there is nothing to support the Defendants’ case that the subject property was worth HK$25,000,000.00 at the material time. It is the Defendants’ duty to make good such allegation by producing credible evidence.  There is none.

16.  Thirdly, the Plaintiff issued its demand letter on 12  November 2018.  There is no reply from the Defendants.  The Defendants did not then and there state that there was a breach of an oral promise on the part of the Plaintiff to make further advance at that stage.  Mr Cheng for the Plaintiff submitted that instead the Defendants thereafter paid a sum of HK$470,350.00 as part settlement of the outstanding loan.  After the demand letter was issued, the Defendants made two partial repayments:

(1) HK$117,500.00 on 21 November 2018; and

(2) HK$117,500.00 on 6 December 2018.

17.  Fourthly, on 8 October 2018, the Defendants obtained an “All Sums of Money” third mortgage from one Gain Hero Finance Limited.  During the hearing, the 1^st Defendant informed the Court that the amount he borrowed on the third mortgage was HK$650,000.00.  I agree that this does show that instead of complaining against the Plaintiff for failing to fulfill its promise of a further advance, in October 2018, the Defendants obtained further advance by way of a third mortgage.

18.  Fifthly, Mr Cheng for the Plaintiff pointed to the incredibility of the Defendants’ allegations.  For example, the 1^st Defendant alleges that he was introduced to the Plaintiff’s Miss Chan in July 2018 through an accountant Mr Cheng but in fact he was introduced to the Plaintiff through Free Mortgage Referral Brokerage Limited as shown by the various documents signed by the Defendants.  The 1^st Defendant, in response, submitted that when he went to the office of the Plaintiff, he was first accompanied by the accountant and then someone from Free Mortgage Referral Brokerage Limited appeared.  However, Mr Cheng for the Plaintiff does have a point that the loan application form dated 24 May 2018 shows that the Defendants already applied to the Plaintiff for a HK$14.1 million loan on 24 May 2018.  Hence, the 1^st Defendant’s allegation that he was introduced to the Plaintiff in July 2018 through the accountant does not make much sense.

19.  Sixthly, Mr Cheng for the Plaintiff also submitted that given the Defendants’ credit history, the frequency they missed payments, it did not make commercial sense for the Plaintiff to grant any further advance to the Defendants.

20.  The Plaintiff also relied on Clause 16.01 of the Mortgage which states that a certificate in writing signed by the duly authorized officer of the lender stating the amount at any particular time due and payable to the lender under loan documents should be conclusive evidence against the Defendants.  I am not sure this helps the Plaintiff because the Defendants’ case is one of fraudulent misrepresentation and one natural consequence is to have the Mortgage set aside.

21.  However, as a matter of analysis, I am of the view that the key issue is that the Defendants have not produced any credible evidence to demonstrate that they have a bona fide defence.  There is a total absence of documentary evidence in support of their case.  Instead, the existing documentary evidence supports the Plaintiff’s case.

22.  Finally and importantly, even if the Defendants are right to which there is no evidence other than allegations, this Court is not informed as to why they do not need to repay the outstanding mortgage loans to the Plaintiff as and when demanded.  They might have a claim for damages for the failure to make further advance, but the Defendants have not specified the quantum of damages.  It is also not clear to this Court as to whether the Defendants seek to rescind the mortgage with the Plaintiff.

23.  For all the reasons stated above, the application for leave to appeal out of time is dismissed.

24.  The Plaintiff asks for costs to be assessed on an indemnity basis according to clause 21 of the terms of the Mortgage.  I summarily assess the Plaintiff’s costs on gross sum basis at HK$44,000.

25.  Finally, it remains for me to thank Mr Cheng for the Plaintiff and the Defendants for their assistance.