JANET ELIZABETH NICHOL v. LEE SIK PO KELVIN

HCA 2254/2013

[2019] HKCFI 1022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2254 OF 2013

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DECISION

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1.  The plaintiff (“P”) claimed the defendant (“D”) served as her estate agent for several property transactions for which he received commission from her. P claimed that in April 2010 she appointed D to act and D agreed to act as her agent to acquire certain land in Yuen Long (“Land”) and to erect a 3-storey building thereon (“Building”) for sale as 3 separate flats (“Flats”) for profit, and she paid a total sum of $2,000,000 for her purchase of the Land and building materials for erecting the Building. P instructed D to have a contractor to erect the Building. In/about early 2011, D told P the Building was completed and he would sell the Flats for her. On 16 March 2011, D deposited $65,950 in cash into P’s bank account saying it was the 10% initial deposit received upon sale of the G/F Flat. P later lost contact with D, and claimed D failed in his duties to her and made report to the police.

2.  On 20 November 2013, P commenced the present action against D to claim for (a) the sum of $1,934,050 as money had and received by D to P’s use, (b) alternatively damages for breach of duty / trust, or (c) alternatively a declaration that D held the sum of $1,934,050 or the Land or the sale proceeds thereof on trust for P together with an order that D do return to P $1,934,050 or the Land or the sale proceeds thereof together with interest and costs.

3.  On 30 January 2014, upon abandoning the reliefs in paragraph 2(b)-(c) above, P entered final judgment against D (“Judgment”) for $1,934,050 with interest thereon at 8%pa from 20 November 2013 to the date of judgment and thereafter at judgment rate until payment together with $11,045 fixed costs (“Judgment Sum”).

4.  On 18 February 2014, a charging order nisi was granted over D’s interest in Room 1804, Heng Yue House, Fu Heng Estate, Tai Po, New Territories (“D’s Address”) for payment of the Judgment Sum (“Charging Order Nisi”). On 17 March 2014, P secured a charging order absolute over D’s interest in D’s Address (“Charging Order Absolute”) for payment of the Judgment Sum together with costs of the application summarily assessed at $7,000.

5.  On 7 January 2016, pursuant to the Charging Order Absolute, P commenced HCMP 31/2016 against D inter alia for the sale of D’s Address for payment of the Judgment Sum with consequential reliefs. On 11 March 2016, DHCJ Paul Lam SC granted inter alia an order for sale of D’s Address and an order for D to deliver up vacant possession of D’s Address within 28 days with consequential reliefs (“11/3/16 Order”).

6.  On 4 July 2016, D by his solicitors filed a summons in the present action to set aside the Judgment and Charging Order Absolute on the ground that the writ of summons had not been duly served on D and to seek consequential reliefs (“Summons”).

7.  On 26 September 2017, this court handed down written decision in respect of such summons (“Decision”), and granted the following orders and consequential costs orders (“26/9/17 Order”):

(a)   the Judgment, Charging Order Nisi and Charging Order Absolute be set aside on condition that D would pay 75% of the Judgment Sum (“Condition Sum”) into court within 35 days from the date of the order (see paragraph 103(a) of the Decision, “Setting Aside / Payment In Order”);

(b)   upon compliance with (a) above, leave was granted to D (i) to file his acknowledgment of service within 14 days thereafter, and (ii) to file/serve his Defence within 28 days thereafter;

(c)   upon non-compliance with (a) above within the prescribed time and subject to there being no order as to costs of and occasioned by the hearing before Master Hui on 16 May 2017, there be a costs order nisi that D do pay P costs of and occasioned by the Summons.

8.  For convenience, I shall adopt the abbreviations in the Decision. Further, this decision should be read together with the Decision.

9.  On 23 October 2017, D filed Notice to Act in Person, a summons for (a) extension of time to comply with and (b) stay of execution of the Setting Aside / Payment In Order (“23/10/17 Summons”), and D’s affirmation in support of the 23/10/17 Summons (“D 3^rd Aff”). In the D 3^rd Aff, D claimed his family operated Chinese restaurant business in Shantou, Mainland China, but as a result of the Criminal Case which happened whilst one of the restaurants was under decoration, he could not leave Hong Kong to oversee the restaurant business which eventually led to closure of such business. D claimed he was financially unable to comply with the Setting Aside / Payment In Order to pay the Condition Sum into court. D explained he was in Mainland China when he was notified of the Decision, and due to the National Day holidays he was unable to arrange transport to Hong Kong until 10 October 2007, but on the following day D’s solicitors explained the Decision to him. D claimed this explained his delay in taking out the 23/10/17 Summons. D also exhibited to the D 3^rd Aff tenancies and other documents in relation to his restaurant business.

10.  At the hearing of the 23/10/17 Summons on 31 October 2017, D claimed he wished to sell D’s Address and utilise the surplus  proceeds of sale to pay the Condition Sum into court, and P was prepared to give time for such sale to be effected if possible. Thus, at the hearing on 31 October 2017, I granted the following orders (“31/10/17 Order”):

“1.   在不損害雙方於該傳票的立場的前提下雙方於本命令起計的63 天內，聯合嘗試達成共識及作出有關出售香港新界大埔富亨邨亨裕樓1804 室的物業 (“該物業”)的安排。然後若然合適的話，共同向法庭作出申請，尋求合適的指示來容許或協助將該物業出售，以便將出售物業後淨收益存入法庭，以符合法庭於2017年9月26日所頒下的命令中提及被告人須把裁決款項的75%及有關利息存入法庭。

2.   許可被告人就該傳票於本命令起計的77 天向法庭存檔進一步誓章及送達對方。

3.   許可原告人於隨後14 天內將反對誓章存入法庭及送達對方。

4.   許可被告人於隨後14 天內把回應誓章存入法庭及送達對方。

5.   在沒有法庭許可下，任何一方不得存檔或送達進一步的誓章。若然在未得到法庭許可下存入或送達任何進一步的誓章，而毋須再作進一步命令，該誓章將會從法庭檔案中剔除。

6.   該傳票押後至另訂日期進行爭辯聆訊 (預留1 小時)，但此聆訊不會早於於本命令起計126 天。

7.   於2017年9月26日所頒下的命令將由本命令起計暫緩執行63 天。

8.   原告人需要隨後的14 天內安排雙方到排期主任前就該傳票押後聆訊進行排期。

9.   是次聆訊訟費保留待決。”

11.  Pursuant to the 31/10/17 Order, D filed his further supporting affirmation for the 23/10/17 Summons on 30 January 2018 (“D 4^th Aff’). In the D 4^th Aff, D claimed that according to the letter dated 29 December 2017 by the solicitors (“AKCC”) for the mortgagee bank Bank of China (Hong Kong) Limited (“Bank”) to D’s solicitors, AKCC and P’s solicitors would be responsible for effecting the sale of D’s Address. But in fact AKCC’s letter dated 29 December 2017 merely stated that since P was prepared to hand over keys of D’s Address to AKCC on behalf of the Bank who had obtained a possession order against D, “[AKCC] will advise [the Bank] to recover possession of [D’s Address] and effect the mortgagee’s sale of the same”. The D 4^th Aff went on to claim that “在我的理解下, 63 天內商討賣樓共識已經達成, 等待[P’s solicitors] 商討執行命令1 “向法庭申請尋求合適指示”.” Since D did not receive any reply from P’s solicitors and D could not contact them by telephone, he was advised to file the D 4^th Aff to “re-apply” for stay of execution.

12.  In the D 4^th Aff, D claimed P could have effected sale of D’s Address pursuant to court order in her favour. He did not understand why P did not proceed to sell D’s Address, so he told P’s solicitors that possession of D’s Address could be delivered to the Bank to effect mortgagee sale. D claimed that irrespective who were to effect the sale of D’s Address, the ultimate purpose was to pay the surplus sale proceeds into court, so D “認為協議賣樓目的已達成”.

13.  In the D 4^th Aff, D further claimed the Criminal Case had a disastrous effect on his family and restaurant business. He was still unemployed, and his family was maintained by his wife’s monthly salary of a few thousand dollars. His mother-in-law’s health had deteriorated and she had 2 operations in 2015-2016, so he had to help with looking after the children. 

14.  D also claimed he suffered hearing loss in 2006-2007 due to illness, which affected his work capacity, so he ceased working as estate agent in 2007. After his marriage in 2008, he and his wife decided to return to Mainland China, so his children were born there. Since the family expenses were defrayed out of income earned by his wife who had to work overtime and go on business trips, D had to look after the family, and he had to make arrangements with his wife to care for the children before he could return to Hong Kong (usually without overnight stay).

15.  In the D 4^th Aff, D claimed his solicitors failed to present his situation fully to the court, which failure led to the Decision that did not address the situation of his family/children. He further raised queries to challenge P’s affirmations. However, as there was no appeal against the Decision, Setting Aside / Payment In Order and 31/10/17 Order, I need not deal with such matters.

16.  On 14 February 2018, P filed her affirmation in response (“P 3^rd Aff”). P claimed that after the hearing on 31 October 2017 when this court granted the 31/10/17 Order, P’s solicitors told D (a) he should consider redeeming the mortgage as the amount owed to the Bank was only about $200,000, which course of action would considerably shorten the time required to sell D’s Address, and (b) the Bank was trying to effect mortgagee sale of D’s Address as a result of D’s default in mortgage loan repayments. Despite letters from P’s solicitors dated 6 and 14 November 2017 to D’s solicitors enquiring about the mode of intended sale (eg whether by auction or private treaty, and whether to be conducted by the Bank or D), the only response by D’s solicitors was that (i) the Bank had recovered possession of D’s Address, and (ii) they had limited instructions to act for D. P by the P 3^rd Aff stated P’s solicitors had delivered the keys to D’s Address to the Bank as requested, and the Bank was arranging for sale of such property.

17.  P stated her stance in the P 3^rd Aff that “[to] save the Court’s time, [P was] prepared, subject to the Court’s leave, to give [D] another 2 months’ time from now to make payment into Court and hopefully the extended time shall be sufficient for the sale of the property to materialize”.

18.  On 13 April 2018, D filed his affirmation in reply (“D 5^th Aff”). The D 5^th Aff stated that on 12 January 2018 P’s solicitors handed the keys of D’s Address to AKCC, and at the end of March 2018 the Bank obtained approval from the Housing Authority to sell D’s Address. In April 2018, the Bank put D’s Address on the market, and as it would take a while to sell the property in the secondary market, D urged the court to grant extension of time to comply with the Setting Aside / Payment In Order for 4 months (ie 2 months for putting D’s Address on the market and 2 months to complete the sale and purchase).

19.  On 8 May 2018, D filed further affirmation in reply (“D 6^th Aff”). By the D 6^th Aff, D complained he did not receive any response from the court or from P’s solicitors as to his proposal in the D 5^th Aff for extension of time of 4 months for the sale of D’s Address. In the meantime, D was notified by the Bank on 26 April 2018 that D’s Address was sold, and completion of such sale and purchase would take place on 9 July 2018.

20.  I pause here to note that D merely filed the D 4^th and 5^th Affs, but the 23/10/17 Summons was not restored for hearing, so naturally the court was unaware of and did not grant any order/directions in respect of the D 4^th and 5^th Affs.

21.  On 12 October 2018, P filed a summons to seek the following reliefs (“12/10/18 Summons”):

(a)   the 31/10/17 Order be set aside by reason that D failed to comply with the condition imposed;

(b)   paragraph 6 of the 26/9/17 Order (see paragraph 7(c) above) be affirmed and declared valid against D;

(c)   the Charging Orders Nisi and Absolute against D’s Address be affirmed and declared valid and enforceable against D.

22.  On the same day, P filed the supporting affirmation of her solicitor Lee Wai Ming (“Lee”) (“Lee 1^st Aff”). Lee recounted the procedural history in the present proceedings and went on to say as follows:

(a)   D’s Address was sold by the Bank on 9 July 2018, so P’s solicitors immediately enquired with AKCC as to whether D would, in compliance with the 31/10/17 Order, pay the balance of the proceeds of sale into court;

(b)   AKCC by their letter dated 27 July 2018 replied that the Charging Orders Nisi and Absolute were liable to be set aside, and there were subsequent charging orders against D’s beneficial interest in D’s Address, so the surplus proceeds of sale from the sale of D’s Address were not meant for setting aside the Judgment but for payment to the next encumbrancers who were banks (even though the dates of registration of the Charging Orders Nisi and Absolute were earlier than those of other banks);

(c)   P’s solicitors wrote to D by letter dated 30 July 2018 saying P would enforce the Judgment and Charging Orders Nisi and Absolute as D failed to pay the Condition Sum into court pursuant to the Setting Aside / Payment In Order, and even though D failed to collect such letter sent by registered post, copy of such letter sent by post to his service address was not returned;

(d)   by letter dated 1 August 2018 from P’s solicitors to AKCC, it was stressed that D did not pay the Condition Sum into court even though he was given ample time to do so pursuant to the Setting Aside / Payment In Order and the 31/10/17 Order, so the Judgment and Charging Orders Nisi and Absolute remained good and valid;

(e)   notwithstanding the letter by P’s solicitors to AKCC in (d) above, AKCC by their letter dated 3 August 2018 took the view that the court had power to extend time for D to make payment into court, so the Judgment was still liable to be set aside;

(f)   P’s solicitors replied to AKCC by letter dated 7 August 2018 to maintain their view that the Judgment remained valid and would not be set aside until D paid the Condition Sum into court.

Lee claimed that as the Bank was of the view that the Judgment was still liable to be set aside unless this court affirmed and declared the Judgment was valid and good, P would be unable to recover the Judgment Sum, which monies were part of her savings for her retirement in the United Kingdom.

23.  In the absence of D at the hearing of the 12/10/18 Summons on 12 November 2018, I granted leave for P to withdraw such summons with no order as to costs. The court noted there was no appeal against the 26/9/17 Order made after argument by both parties, so there was no proper basis for setting aside such order. Further, if such order were set aside, it was unclear how the costs order made thereunder could be maintained. If P’s true complaint was D’s alleged non-compliance with the Setting Aside / Payment In Order, then it was not a matter of setting aside the order itself, but how to deal with non-compliance of the condition imposed in such order and how the 23/10/17 Summons which had not been restored should be resolved.

24.  On 14 November 2018, P’s solicitors wrote to D with copy to the Listing Clerk to make an appointment to restore the 23/10/17 Summons for hearing. On 23 November 2018, in D’s absence, the 23/10/17 Summons was restored for hearing before this court on 9 April 2019 with 1 hour reserved (“Hearing”).

25.  On 21 November 2018, D filed his further affirmation (“D 7^th Aff”). In the D 7^th Aff, D claimed he had complied with the 31/10/17 Order by “達成賣樓協議過程”. Even though P’s solicitors disagreed there was such agreement, D queried why, if there had not been any agreement, P would have agreed to further extension of time for 2 months for the sale of D’s Address, and why P would have handed over keys of D’s Address to the Bank. D said he filed D 5^th and 6^th Affs to inform the court the timetable for the sale of D’s Address, the actual sale of such property, and the date of completion of such sale and purchase (ie 9 July 2018). D claimed P’s solicitors had not informed him about the situation upon the sale of D’s Address, but AKCC had told him the Bank would pay the surplus proceeds of sale into court. D exhibited the first page of the originating summons in HCMP1940/2018 by the Bank against P, D and other 2 parties (presumably other encumbrancers in respect of D’s Address) under Order 17 rule 3 of the RHC for the defendants to appear to state their case in respect of the surplus proceeds of sale from the mortgagee sale of D’s Address. The returnable date of such originating summons was 5 December 2018 before master in chambers.

26.  On 3 December 2018, P filed Lee’s affirmation in response to the D 7^th Aff (“Lee 2^nd Aff”). Lee explained that the purpose of the 31/10/17 Order was to give time for P and D to try to reach agreement to effect sale of D’s Address, so that the surplus sale proceeds of sale and D’s other financial resources could be used to comply with the Setting Aside / Payment In Order to pay the Condition Sum into court whereupon D would be entitled to defend P’s claim. On 6 and 14 November 2017, P’s solicitors wrote to D’s solicitors to enquire about the arrangements for the sale of D’s Address, but was informed that the Bank had obtained an order for possession in respect of D’s Address (see paragraph 16 above), so D could no longer discuss the sale of D’s Address with P. In the circumstances, P and D could not have reached agreement in respect of the sale of D’s Address pursuant to the 31/10/17 Order. D filed the D 4^th, 5^th and 6^th Affs to request further extension of time and further directions by the court, but D did not say in such affirmations he was financially able to pay the Condition Sum into court. It was said the Setting Aside / Payment In Order had not been complied with for over a year, and D had been dragging his feet.

27.  Lee in the Lee 2^nd Aff claimed that when P received the D 4^th Aff requesting 2 months’ extension of time to effect the sale of D’s Address, P filed the P 3^rd Aff to agree to such extension of time for 2 months because at that time D’s Address was about to be sold by the Bank due to D’s failure to pay mortgage instalments. D was unable to participate in the mortgagee sale of D’s Address pursuant to the 31/10/17 Order, so if D failed to comply with the Setting Aside / Payment In Order to pay the Condition Sum into court, the Judgment would remain effective and would not be set aside. Since D failed to pay the Condition Sum into court for over a year despite the Setting aside / Condition Order, P opposed any further extension of time.

28.  At the hearing of the originating summons in HCMP1940/2018 on 5 December 2018, Master J Wong ordered the Bank to pay the surplus proceeds of sale in the sum of $1,360,421.44 into court in those proceedings within 14 days of the date of the order, and upon such payment the Bank would be relieved from all claims by P, D and the other defendants in respect of such surplus proceeds of sale, and no action shall be brought by P, D or the other defendants against the Bank to recover such surplus proceeds. Master J Wong also ordered that the interpleader proceedings as among P, D and other defendants be adjourned to 5 June 2019 for further directions. Subsequently on 18 December 2019, the surplus proceeds were paid into court in HCMP 1940/2018.

29.  On 5 March 2019, P filed a summons in the present action for the following reliefs (“5/3/19 Summons”), which summons was also returnable at the Hearing:

(a)   unless D do pursuant to the Setting Aside / Payment In Order pay into court “75% of the judgment sum of HK$1,934,050 with interest thereon at 8% per annum from 20 November 2013 to date of judgment (ie 30 January 2014) and thereafter at judgment rate until payment [ie the Condition Sum]” on/before 23 April 2019, D be debarred from paying the same into court and the Judgment do stand;

(b)   costs of the application be to P.

30.  Thus, the matters before me at the Hearing were D’s 23/10/17 Summons and P’s 5/3/19 Summons. To appreciate the nature of the parties’ arguments in respect of such summonses, it is necessary to have proper understanding of the Setting Aside / Payment In Order and 31/10/17 Order.

31.  Under the Setting Aside / Payment In Order, D carried the sole burden to pay the Condition Sum into court in order to set aside the Judgment and Charging Orders Nisi and Absolute and to proceed to defend P’s claims in the present action. If D failed to pay the Condition Sum whether within the prescribed time or at all, the Judgment and Charging Orders Nisi and Absolute still stood, and they remained valid and binding on D. Further, there was no obligation on P’s part to assist D to secure resources to comply with the Setting Aside / Payment In Order to pay the Condition Sum into court. The fact D alleged he was financially unable to so pay without sale of D’s Address or at all was not P’s concern under the Setting Aside / Payment In Order. All that concerned P was whether or not the Condition Sum was paid into court.

32.  The 23/10/17 Summons and 31/10/17 Order must be viewed in light of the aforesaid proper understanding of the Setting Aside / Payment In Order. D’s requests for extension of time to comply with the Setting Aside / Payment In Order to pay the Condition Sum into court and for stay of execution of such order in the meantime were essentially applications for indulgence of time. As explained above, such obligation to pay the Condition Sum into court fell squarely on D’s and not P’s shoulders.

33.  The court notes that DHCJ Paul Lam SC granted the 11/3/16 Order for the sale of D’s Address and for delivery of vacant possession of D’s Address to P (see paragraph 5 above), but this would not change the unilateral obligation that fell solely on D to pay the Condition Sum into court under the Setting Down / Payment In Order as explained above. There was no obligation on P to arrange or effect sale of D’s Address to facilitate D securing funds to pay the Condition Sum into court. On the contrary, it was for D to make such arrangements. D’s alleged impecuniosity and the fact P had obtained keys to D’s Address pursuant to the 11/3/16 Order were neither here nor there.

34.  In light of such background, P opposed D’s 23/11/17 Summons, which summons was to be adjourned for argument. So at the hearing on 31 October 2017, I granted case management directions for P and D to respectively file/serve affirmations in opposition and in support/reply, and adjourned such summons for argument to a day to be fixed with 1 hour reserved (see paragraph 10(2)-(6) and (8) above).

35.  But in light of (a) the 11/3/16 Order that permitted P to sell D’s Address (see paragraphs 5 and 33 above), and (b) the 23/10/17 Summons by which D requested for time indulgence to pay the Condition Sum, P indicated she was prepared to allow 63 days to see whether the parties could jointly try to agree to and arrange for a sale (“聯合嘗試達成共識及作出有關出售 …… 的安排”) of D’s Address, and then if appropriate (“然後若然合適的話”), P and D would jointly apply to court (“共同向法庭作出申請”) for appropriate directions to facilitate the sale of D’s Address so as to pay the surplus proceeds of sale into court (“以便將出售物業後淨收益存入法庭”) to meet the condition imposed in the Setting Aside / Payment In Order.

36.  This eventually became paragraph 1 of the 31/10/17 Order (see paragraph 10(1) above), but a number of matters were immediately apparent:

(a)   The 31/10/17 Order only required P and D to make attempts to see if they could reach agreement on and make arrangements for the sale of D’s Address within 63 days, but such order did not direct them to come to any agreement. Hence, if either party declined to agree, then D’s 23/10/17 Summons would be restored for argument, and P and D would file affirmations to support and/or to oppose such summons. This was the reason why paragraph 1 of the 31/10/17 Order was expressly made to be without prejudice to P’s and D’s stance in respect of the 23/10/17 Summons (“在不損害雙方於該傳票中的立場的前提下”).

(b)   Paragraph 1 of the 31/10/17 Order envisaged joint efforts by P and D (and not any other party) to reach agreement on the sale of D’s Address within 63 days. The reason why the order envisaged joint efforts by P and D was because D was the registered owner of D’s Address and P was entitled to sell such property pursuant to the 11/3/16 Order. Paragraph 1 of the 31/10/17 Order did not refer to any third party for effecting the sale of D’s Address because such third party not being a party to the present action (i) had no obligation to pay any part of the surplus proceeds of sale into court as the Condition Sum or part thereof, and (ii) would not be bound by any agreement between P and D (or indeed any directions that might be made in the present action) in relation to the disposal of the surplus proceeds of sale in the third party’s hands.

(c)   If P and D (and not any third party) were able to agree to a sale of D’s Address, paragraph 1 of the 31/10/17 Order envisaged joint efforts by P and D (and not any other party) to make arrangements for the sale of such property. Since D’s Address was a tenants purchase scheme property and subject to mortgage in favour of the Bank, such arrangements would presumably include removal of alienation restriction and/or obtaining mortgagee bank consent for sale.

(d)   Under paragraph 1 of the 31/10/17 Order, it was not enough for P and D to simply reach agreement on the sale of D’s Address by them because the ultimate purpose of such sale was to pay the surplus proceeds of sale into court for the purpose of the Condition Sum (and for no other purpose). It would be meaningless if D’s Address were sold and the surplus proceeds of sale were for whatever reason not paid into court for the Condition Sum. Hence, paragraph 1 of the 31/10/17 Order envisaged that if P and D could agree on the terms of how the surplus proceeds of sale would be paid into court for the purpose of the Condition Sum, they could by consent make joint application to the court to ask for those terms to be formalised as court order or directions. This explained why the sale had to be arranged by P and D and not any third party because a third party had no obligation to and in fact could not apply to the court in the present proceeding to specify the disposal of the surplus proceeds of sale by formal court order or directions. But P and D were not required to agree (and indeed P could disagree) whereupon the P and D would simply revert to restoring the 23/10/17 Summons for argument and eventual determination by the court.

(e)   It was on the aforesaid basis that this court granted an interim stay of 63 days under the 31/10/17 Order, but by now such interim stay had expired.

37.  The above showed that consistent with the Setting Aside / Payment In Order the 31/10/17 Order was merely facilitative in giving opportunity for P and D to agree as explained in paragraph 36 above, but allowing either of them (particularly P who had no obligation to help D with securing resources for the Condition Sum) not to agree. It was also clear that if the sale of D’s Address was seized by a third party, then paragraph 1 of the 31/10/17 Order would fall away as (a) P and D could no longer reach agreement on or make arrangements for such sale as between themselves, (b) P and D could not have their own say over the disposal of the surplus proceeds of sale, and (c) the court in the present proceedings could not seize jurisdiction over the third party who was not a party to the present action to direct such third party as to the disposal of  the surplus sale proceeds.

38.  Once the meaning and effect of the 31/10/17 Order as explained above were properly understood, D’s contentions largely fell away:

(a)   There was no basis for D to complain that P failed to sell D’s Address pursuant to the 11/3/16 Order because (i) the Bank as prior mortgagee had obtained a possession order in respect of D’s Address upon D’s default in mortgage instalment payments, and (ii) it was entitled to possession in priority over D as defaulting mortgagor and P as subsequent encumbrancer by virtue of the Charging Orders Nisi and Absolute. The fact P handed over keys of D’s Address to the Bank did not reflect any agreement and/or arrangement for sale of such property as between P and D or as between P and the Bank.

(b)   The Bank decided to sell D’s Address on its own by way of mortgagee sale. It was not a sale by either P or D or by the Bank in conjunction with P and/or D, and neither P (as subsequent encumbrancer) nor D (as defaulting mortgagor) had any say over such mortgagee sale. Indeed, by virtue of the Bank’s repossession of D’s Address and decision to effect mortgagee sale of such property, D no longer had any locus to discuss any sale of D’s Address with P.

(c)   In light of (b) above, I am unable to accept D’s suggestion that agreement was reached within 63 days between him and P for the sale of D’s Address. I also reject D’s suggestion (which flied against the terms of paragraph 1 of the 31/10/17 Order as I have explained above) that he and P reached agreement for the Bank to effect mortgagee sale of D’s Address.

(d)   In fact, the lack of agreement was reflected in solicitors’ correspondence whereby P’s solicitors invited proposals as to the mode of intended sale of D’s Address, and D’s solicitors gave less than satisfactory response that they had limited instructions to act for D and the Bank had taken possession of D’s Address (see paragraph 16 above). Indeed, as evident from the D 5^th and 6^th Affs, D was well aware the sale of D’s Address was a mortgagee sale by the Bank, and not any sale arranged between P and D (see paragraphs 18 and 19 above).

(e)   Although D accepted the ultimate purpose was to pay the surplus proceeds of sale into court as part of the Condition Sum (see paragraph 12 above), he failed to cause the surplus proceeds of sale to be so paid into court in the present action for the purpose of the Condition Sum. However, the burden was on him to pay the Condition Sum into court, so the obligation fell on him (and not on P) to cause the Bank to pay over the surplus proceeds of sale into court for the purpose of the Condition Sum (and for no other purpose), which he failed to do. I cannot see how it could be said “協議賣樓目的已達成”.

(f)   D’s failure to cause the surplus proceeds of sale of D’s Address to be paid into court in the present action for the purpose of the Condition Sum was evident from (a) the Bank’s reluctance to pay over the surplus proceeds of sale into court for such purpose (see paragraph 22 above) and D’s inaction to cause the Bank to do so, and (b) the Bank’s interpleader proceedings in HCMP 1940/2018 and eventual payment of the surplus proceeds of sale into court in those proceedings and not into court in the present action for the purpose of the Condition Sum (see paragraphs 25 and 28 above).

(g)   In the circumstances, D’s constant theme that P and D had already “達成賣樓協議過程” was not what paragraph 1 of the 31/10/17 Order fully envisaged because P and D were quite unable to make joint application to the court for directions as to payment of the surplus proceeds of sale (which were in the hands of the Bank who was not a party to the present action) for the purpose of the Condition Sum. Unless the surplus proceeds of sale were caused to be paid into court for the purpose of the Condition Sum, the sale of D’s Address was not meaningful at all for the Setting Aside / Payment In Order.

(h)   There was also no basis for D to complain that AKCC and P’s solicitors failed to inform him about the situation after the sale of D’s Address. Since the burden was on D to pay the Condition Sum into court, it was for D and not P to cause the Bank to so pay the surplus proceeds of sale into court for such purpose and to propose directions for P’s agreement and for the court to formalise by court order. If this was not achieved, P could simply restore her stance and oppose the 23/10/17 Summons.

39.  As seen from the above account, P had been facilitative in (a) having her solicitors write to D’s solicitors on 6 and 14 November 2017 for proposals for arrangements for sale of D’s Address to be made by P and D (see paragraph 16 above), (b) in agreeing to further indulgence of 2 months for the sale of D’s Address to materialise and, more importantly, for D to make payment into court (see paragraph 17 above), and (c) in causing her solicitors to negotiate with the Bank’s solicitors for payment of the surplus proceeds of sale into court pursuant to paragraph 1 of the 31/10/17 Order (see paragraph 22 above).

40.  D suggested that (b) above showed there was agreement between P and D over sale of D’s Address. I disagree. It was nothing more than time indulgence given by P in light of the then imminence of the mortgagee sale of D’s Address, and the P 3^rd Aff made clear the purpose of such time extension was to give D a further 2 months to pay the Condition Sum into court. But D was unable to meet such deadline in any event, and even if there was such alleged agreement (which I disagree), it would have been spent.

41.  For all of the above reasons, there was no agreement between P and D in relation to the sale of D’s Address for the purpose of paying the surplus proceeds of sale into court for the purpose of the Condition Sum, and the sale of D’s Address was eventually effected by the Bank who did not pay the surplus proceeds of sale into court in the present action for the purpose of the Condition Sum.

42.  In the circumstances, I proceed to consider D’s 23/10/17 Summons and P’s 5/3/19 Summons. The reality was that despite lapse of 1 year and 5 months after the prescribed deadline for payment of the Condition Sum into court under the Setting Aside / Payment In Order, D failed to pay the Condition Sum into court. Given such delay there was little justification for further extension of time.

43.  D suggested he was impecunious and could not afford to pay the Condition Sum into court (see paragraphs 13-14 above). But the matters he raised in support of such contention had been canvassed in paragraphs 98-102 of the Decision, and to date he had not provided objective or documentary evidence to evidence his allegations or address the concerns set out in the Decision. D did not even produce copies of his bank statements or insurance policies. The burden was on D to persuade the court why time extension or stay of execution would be appropriate. There was also no explanation as to how he would be able to come up with funds to pay the Condition Sum into court if time was granted. If D wished to utilise the surplus proceeds of sale for such purpose, it was for D to secure the surplus proceeds of $1,360,421.44 paid into court in HCMP1940/2018 for the Condition Sum. Not only did D fail to do so, he did not say how he could pay the difference between the Condition Sum (ie $1,450,537.50 plus interests) and the surplus proceeds of sale in the sum $1,360,421.44 (even if such surplus proceeds of sale could be used for the purpose of the Condition Sum) except to assert he would not be able to pay.

44.  For all of the above reasons, there was little justification for further extension of time and/or stay of execution. But since P was prepared to give further indulgence until 23 April 2019, I consider it appropriate to grant extension on “unless order” basis. Plainly, given the long delay and D’s failure to come up with any payment towards to the Condition Sum, it is necessary to bring finality to this matter, and interests of justice would require this last chance for D would be accompanied with the imposition of a sanction upon failure to comply. [1]

45.  I therefore Order that unless D do comply with the Setting Aside / Payment In Order by paying into court 75% of the Judgment Sum of $1,934,050 with interest thereon at 8%pa from 20 November 2014 to the date of judgment (ie 30 January 2014) and thereafter at judgment rate until payment (ie the Condition Sum) on or before 4pm on 30 April 2019, D shall be debarred from paying the Condition Sum into Court (“Sanction”).

46.  This meant that if D failed to comply with the order in the above paragraph within the prescribed time, the Sanction will be automatically effective whereupon the Judgment, Charging Order Nisi and Charging Order Absolute would be fully valid and effective and not liable to be set aside. I have moved the deadline from 23 April 2019 to 30 April 2019 since this Decision is handed down on 18 April 2019.

47.  There is no reason why costs should not follow event, so I grant a costs order nisi that D shall pay P costs of and occasioned by the 23/10/17 Summons and 5/3/19 Summons (including all costs reserved if any) to be taxed if not agreed.

48.  Should D require translation of this Decision into punti language, he can contact my clerk to arrange an appointment for a court interpreter to verbally translate this Decision to him at the High Court Building at a mutually convenient time.