DBS BANK (HONG KONG) LTD v. YAP BOH GEE AND ANOTHER

HCA 2590/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2590 OF 2007

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D E C I S I O N

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Introduction

1.  The parties entered into a Legal Charge dated 30 July 1992 in respect of the mortgaged property.  The mortgage loan was HK$4.9 million to be repaid by instalments.  Since 8 July 1994, the plaintiff advanced overdraft facilities to the defendants for HK$1.5 million, which was revised over the years to HK$10 million in November 1997.

2.  Pursuant to the Legal Charge and the relevant facilities letters, the overdraft formed part of the secured indebtedness of the Legal Charge.

3.  Since April 1998, the defendants defaulted in repaying the monthly mortgage instalments under the Legal Charge.  The plaintiff sold the mortgaged property in October 1999.  The plaintiff applied the net sale proceeds to settle the outstanding indebtedness in the mortgage account in full and the overdraft account partially.  As at 10 November 1999, the net debit balance in the overdraft account was HK$4,928,056.35.

4.  The plaintiff incurred a sum of HK$106,500.00 as estate agent’s fees for the sale of the mortgaged property.  Under the Legal Charge, the defendants were liable to reimburse the plaintiff.  The plaintiff debited the defendants’ overdraft account with the same on 15 November 1999.  The total outstanding in the overdraft account on 30 November 1999 amounted to HK$5,034,556.35 (4,928,056.35+106,500) with interest in the sum of HK$68,428.75.

5.  In the statement on the overdraft account dated 13 October 2001, which the plaintiff sent to the defendants (“the Statement”), it was stated that a sum of HK$6,195,063.47 (which equalled to the then outstanding balance) was credited into the overdraft account.  The net balance was therefore stated to be nil, although it is not in dispute that the defendants had not made any payment to discharge the then outstanding balance at all.

6.  Thus on record, the defendants’ liability due to the plaintiff under the overdraft account had all been discharged.

7.  Seven years later, the plaintiff commenced the present action against the defendants for the said sum of HK$5,034,556.35.

8.  Upon the plaintiff’s application under Order 14, Rules of the High Court, the master entered judgment for the estate agent fees of HK$106,500.00 and gave the defendants unconditional leave to defend on the balance, namely HK$4,928,056.35.

9.  The plaintiff now appeals.

Defence

10.  The defendants raised a number of defence.

11.  First, there was an agreement between the parties to that the plaintiff would sell the mortgaged property and apply the sale proceeds to the full and final satisfaction and discharge of any liability under the mortgage loan and the overdraft account.

12.  Second, by reason of the representation by the plaintiff in the Statement that the defendants’ liability in the overdraft account had been discharged, the plaintiff was estopped from denying the release and discharge of the liability and claiming the same now.

13.  Third, there was waiver or acquiescence on the part of the plaintiff because of the said representation in the Statement coupled with the prolonged delay in taking the present action.

14.  Fourth, the action is time barred.

Discussion

15.  I shall deal with the point on acquiescence first.

16.  The term “acquiescence” is used in different senses.  It can refer to the action of the plaintiff over a long period of time, with full knowledge of his rights, refraining from exercising his rights in circumstances where it can properly infer that he has abandoned them.  This is waiver, affirmation and release.  See Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, (4^th Edn), para.36-090 at p.1043-1044.

17.  Here, it is reasonably arguable that the plaintiff’s conduct may have amounted to acquiescence.  There is undoubtedly prolonged and unexplained delay (8 years) on the part of the plaintiffs to commence the present action.  Further, the plaintiff did make the representation in the Statement that all the defendants’ liabilities in the overdraft account (the overdraft facilities together with the estate agent fees debited in November 1999) were all discharged in 2001.  The plaintiff’s case is that it was an internal writing-off.  The Statement was sent to the defendants by mistake.  Whether the plaintiff’s case is true is a matter for trial.  Even if the plaintiff’s case is found to be true, it will be one of the factors that the court needs to consider if the plaintiffs’ overall conduct amounted to acquiescence.  It is again a matter for trial.

18.  The operation of acquiescence is expressly preserved by section 36 of the Limitation Ordinance, Cap.347.  So even if the time limitation is 12 years, as contended by the plaintiff, and the present action was commenced within time, the defence of acquiescence is still available to the defendants.

19.  In my view, on this ground alone, the defendants should be given unconditional leave to defend the entire claim.

20.  Since the matter will go to trial, I shall say no more on the rest of the matters raised by the defendants as defence.

Conclusion

21.  For the above reasons, I will dismiss the plaintiff’s appeal, set aside the master’s order and replace it with an order that the defendants be given unconditional leave to defend the entire claim.

22.  On costs, I will direct the parties to file and exchange their submissions, which should also include the costs below, within 21 days from the handing down of this Decision.