BANK OF CHINA (HONG KONG) LTD v. CHINA HONG KONG TEXTILE CO LTD AND OTHERS

HCMP 438/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 438 OF 2008

____________

____________

BETWEEN

____________

_____________

D E C I S I O N

______________

Introduction

1.  This is the appeal of the 2^nd defendant (“Mdm Chan”) against the master’s order dated 18 January 2010 where judgment was entered against her for relief typically sought in what is commonly known as “mortgagee action” applications; the more important relief being the delivery up of the mortgaged property and money judgment (with interest and costs).

2.  The defence raised on Mdm Chan’s behalf by the Bar Free Legal Service Scheme is essentially (1) the plaintiff was fixed with notice she was under undue influence and/or duress at the time when she executed the mortgage documents, and (2) non est factum.

Background Facts

3.  Mdm Chan is now 76 years old; she was about 65 years old when she executed in the mortgage documents in 1999.  She affirms she has little education.  She also claims she can only speak the Minnan dialect.

4.  She was married in the Mainland in 1953 and has 2 sons and 2 daughters.  She came to Hong Kong with a son in 1977.  Her brother bought her the mortgage property at that time and it became her residence (and later her family’s when the rest of them joined her in the 1980’s) (“the suit property”).

5.  Mdm Chan was a housewife and she relied on her husband for her livelihood until he passed away in February 2007.  Thereafter she relies on her children.

6.  The earlier history concerning the mortgage of the suit property comes entirely from Mdm Chan’s affirmation dated 23 February 2009.  Her sons first approached her for mortgaging the suit property in about 1993 or 1994.  She was told they need funds for their businesses, and the suit property had to be mortgaged to provide security.  She was also told the suit property would be redeemed when business profits were made.

7.  A similar proposal was made again 2 or 3 years later.  Although her affirmation has not expressly said so, it can be inferred the mortgage arrangement prior to 1999 has been uneventful.

8.  As regards the mortgage she executed in 1999 which leads to this action, Mdm Chan deposed she was told yet again the need to sign documents for that purpose.  She was later brought to the solicitors firm to do so.

9.  Her affirmation narrates the occasion as follows:-

“有位女職員帶我們 … 到一房間,本人與兩名兒子等了一會,女職員便拿了一些文件…放在枱上,本人不太清楚她說的是什麽,她也沒有單獨向本人解釋文件的詳細內容 … ” (emphasis supplied) (para. 11 thereof).

10.  The plaintiff denies the allegation.  According to the affirmation filed by a staff of the solicitors, she has explained the contents of the documents to Mdm Chan.  Mdm Chan exhibited no sign of not being able to understand the explanation.

11.  Because of the quoted passage of Mdm Chan’s affirmation, she cannot be disputing the plaintiff’s evidence to the effect the solicitors’ staff has talked to her and her sons.  Mdm Chan only asserts that she was not clear as to what was said to her.

Undue Influence / Duress

12.  The plaintiff argues that Mdm Chan has failed to adduce any evidence of undue influence or duress:-

(a) she expressly admits that since about 1993 or 1994 she knew she was being asked to execute a mortgage which was to be used to secure her sons’ business loans;

(b) she was not senile or otherwise suffering from disability of any kind;

(c) in 1999, she was not financially dependent on her children. Her livelihood was taken care of by her husband until 2007;

(d) there is no evidence she relied on her children to manage her affairs, or that her children exerted dominance or ascendancy over her;

(e) the matter which can be regarded as closer to this defence is she thought to herself she might be considered by her sons to be a nuisance if she did not execute the documents.

13.  The plaintiff also argues that mere old age (about 65 years old) and parental love and affection is insufficient to ground this defence.  Reliance is placed on Bank of China (HK) Ltd. v. Wong King Sing & Others (2002) HKLRD 358:-

“As to the second matter to be proved (i.e. the transaction cannot be readily explicable by the relationship of the parties), the point here is that transactions are commonly entered into by people on the ground of friendship, relationship or charity, or for other motives on which many people ordinarily act. It would be wrong for the law to set aside everyday transactions … ” (para. 53).

14.  Further to the above, Mdm Chan’s affirmation has not said she was asked to execute the documents by her sons in a hurry.  In fact, that she started to mortgage the suit property a number of times about 5 years or more before 1999 militates against any inference of the lack of opportunity to reflect on the matter.

Non Est Factum

15.  By reason of the matters aforesaid, the evidence of Mdm Chan actually goes against this defence.

Conclusion

16.  In view of the above matters, there is no evidential basis for relying on the decisions in Barclays Bank Plc. v. O’Brien [1994] 1 AC 180 and Royal bank of Scotland Plc v. Etridge (No. 2) [2002] 2 AC 773.  Because there is no evidential foundation for inferring undue influence or duress, the question of whether the plaintiff should be fixed with notice of the same does not arise.

17.  Mdm Chan also argues the originating summons procedure is inappropriate because there are factual disputes which need to be resolved at trial.  However, as stated above, any factual dispute only concerns matters of detail and cannot provide the foundation for any meritorious defence.

18.  In coming to the above conclusion, I have already taken into account Mdm Chan’s earlier affirmations dated 7 April and 9 May of 2008 where she made a bolder claim of non est factum (but no claim of undue influence/duress).

19.  Accordingly, the appeal is dismissed.

Costs Order

20.  The parties agree that the costs of this appeal should follow the event.  There will accordingly be a costs order that the costs of this appeal be paid by Mdm Chan to the plaintiff.

21.  Summary Assessment of those costs may be appropriate.  For that purpose, the plaintiff is to lodge with court and serve a statement of costs within 3 days and Mdm Chan is to lodge with court and serve a statement of objections within 3 days thereafter.