KONEW CAPITAL INTERNATIONAL LTD v. CHAN CHI WING AND ANOTHER

DCMP 3524/2021

[2022] HKDC 771

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3524 OF 2021

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BETWEEN

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DECISION

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INTRODUCTION

1.  At the hearing on 19 July 2022, I granted an order in terms of the reliefs sought by the plaintiff. Here are my reasons.

Service on the 1^st defendant

2.  The originating summons was served on the 1^st defendant by insertion into the letter box of his usual and last known address on 16 September 2021.

3.  The notice of appointment to hear originating summons was served on the 1^st defendant by ordinary post at his usual and last known address on 23 June 2022.

4.  I am satisfied that the 1^st defendant has had due notice of these proceedings and hearing and he has chosen not to take any action.

Appearance of the 2^nd defendant

5.  The 2^nd defendant filed an acknowledgment of service on 23 September 2021 stating her intention to contest the proceedings.

6.  At the hearing on 19 July 2022, the 2^nd defendant appeared in person.

7.  I asked if she intended to contest the proceedings. If so, she would be given time to file an affidavit of opposition.

8.  After a short adjournment, the 2^nd defendant informed the court that she would not contest the proceedings.

The plaintiff’s case

9.  The plaintiff is a licensed money lender.

10.  The 1^st and 2^nd defendants are the registered owners as joint tenants of Flat F, 7^th Floor, Block 3 (Ashley Garden), Shatin Park Stage I, Nos 8-12 Sha Kok Street, Shatin, New Territories, Hong Kong (“the property”)

11.  By a Second Mortgage dated 18 February 2021 (“the 2^nd Mortgage”), the 1^st defendant as borrower of one part and the plaintiff as the lender of the other part, the 1^st defendant charged his interest in the property to the plaintiff to secure the repayment of the general credit facilities to the extent of HK$700,000.

12.  By a loan agreement dated 18 February 2021, the plaintiff lent the sum of HK$250,000 to the 1^st defendant at the interest rate of 38.4% per annum.

13.  The 1^st defendant made default in repaying the 4^th instalment due on 20 June 2021. The outstanding principal at the commencement of these proceedings is HK$239,698.93.

Money judgment

14.  The plaintiff’s case is not controverted and I accept it at its face value.

15.  I am satisfied that the plaintiff has in form and in substance complied with the requirements of a moneylender’s action under Order 83A. The plaintiff is entitled to recover the outstanding principal of $239,698.93 and interest.

Order for possession

16.  Clause 7.1 of the 2^nd Mortgage provides that the Lender shall be entitled to declare all or any part of the security immediately enforceable if the Borrower makes default in the payment on the due date and in accordance with the terms and conditions relating thereto of any principal or interest or other moneys outstanding and payable by the Borrower under any term loan account (whether demanded or not).

17.  Clause 8 of the 2^nd Mortgage provides that after the security has become enforceable, the Lender may appoint a Receiver who has the right to take possession of, collect and get in the property and to take the rents and profits thereof.

18.  I am satisfied that the requirements of Order 88 have been complied with.

19.  By reason of the default of the 1^st defendant, the plaintiff is entitled to an order for possession of the property.

Order of sale

20.  As the 1^st defendant had made default in payment, the plaintiff as mortgagee became a person holding an interest in the property under s 3 of the Partition Ordinance and may institute the present proceedings: see Maxcolm Finance Ltd v Cheng Chi Man and another [2019] HKCFI 2928 and Moneysq Ltd v Liu Kit Ling and another [2019] HKDC 860.

21.  The property is a residential flat in a multi-storey building with a saleable area of approximately 286 sq ft with only one entrance. I accept Mr Lau’s submission that it is impracticable to divide the property into two halves. Moreover, neither the 1^st nor the 2^nd defendant has tendered any reason by affidavit as to why an order for sale under the Partition Ordinance should not be granted; why it is not impracticable to physically partition the property into two halves; why a sale of the property would not be beneficial to all the parties or that significant hardship would be caused to the 2^nd defendant.

22.  In any event, the 2^nd defendant shall be entitled to half of the proceeds of sale.

23.  Accordingly, I am satisfied that an order for sale ought to be made and I so order.

Reserved price

24.  The plaintiff has produced a valuation report which opined that the value for sale of the property under repossession as at 16 June 2022 is in the order of HK$3,900,000.

25.  I accept the said valuation and direct that the property shall be sold with a reserved price of HK$3,900,000.

Costs

26.  By summary assessment, I order the 1^st Defendant to pay the plaintiff the costs of this action in the sum of HK$48,109.66.