FOREVER PROPERTY FINANCE COMPANY LTD v. BARRETTO, BERNICE MARY

HCA 2189/2015

[2023] HKCFI 2629

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2189 OF 2015

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HCA 505/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 505 OF 2021

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J U D G M E N T

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INTRODUCTION

1.  This is the trial of two money lender actions. 

2.  In HCA 2189/2015 (“the 2015 Action”), the plaintiff, which is a licenced money lender under the Money Lenders Ordinance (Cap.163, Laws of Hong Kong), sues Madam Barretto, Bernice Mary (“the defendant”)  for the sum of $1,115,300.39 together with interest and for delivery of vacant possession of the property known as Flat B on 19^th Floor of Wah Koon Building, No.191 Hollywood Road, Hong Kong (“the Property”)  pursuant to, inter alia, two loan agreements dated 20 May 2013 and 10 December 2013 respectively and a legal charge dated 17 October 2012.

3.  In HCA 505/2021[1] (“the 2021 Action”), the plaintiff sues the defendant and her mother Madam Chan Hei Kwan Helena (“Helena”)  for the sum of $275,132.89 together with interest and for delivery of vacant possession of the Property pursuant to, inter alia, a loan agreement dated 17 June 2014 and a legal charge dated even date.

4.  By consent, judgment has been entered against Helena on 11 December 2020 in the 2021 Action.  As a result, only Madam Barretto remains a defendant in the 2021 Action.[2]

5.  By the order of Master Hui dated 18 November 2021, the 2015 Action and the 2021 Action have been ordered to be heard and tried at the same time before the same Judge or immediately one after the other as to be directed by the trial Judge. 

THE DEFENDANT’S ABSENCE

6.  The defendant did not appear on the first day of the trial.

7.  Be that as it may, I was satisfied that she was well aware of the date of the trial, as she had sent a letter to the Court dated 18 September 2023 and informed that she was not going to attend the trial by reason of various medical conditions.  In the same letter, she also asked the Court to “close” both cases, as they had been “solved out of court”. 

8.  However, the said letter was only supported by a medical report dated 4 August 2020 issued by Dr Henry Hui of the Department of Psychiatry of Pamela Youde Nethersole Eastern Hospital.  Even in such a medical report, Dr Hui stated that while the defendant was suspected to suffer from delusional disorder, her psychotic symptoms had subsided after medication had been prescribed.  Her mood was found to be euthymic.  Her sleep and appetite were normal.  No suicidal ideation was evident.  Neither could any psychotic features be elicited.

9.  In such circumstances, I considered it fair to proceed with the trial in the absence of the defendant.

10.  The trial was therefore proceeded with accordingly and the plaintiff’s evidence (given by Ms Ng Wai Nga)  was completed in the morning on 19 September 2023.  Direction was given for the plaintiff to lodge and serve written closing submissions.

11.  At around 2:40pm on the same day, this Court received a “certificate of sickness” dated even date from the defendant by fax.  The certificate was issued by a Dr Lai Wing Him. It was certified that the defendant was “unfit for work” and she was recommended 2 days of sick leave by reason of adjustment disorder.  However, the trial had been completed by then (subject to written closing submission which was due to be lodged by the plaintiff on 20 September 2023).

THE PLAINTIFF’S CASE

12.  The plaintiff’s case is straight-forward and will be set out below.

The 2015 Action

13.  The defendant had been borrowing money from the plaintiff since 17 October 2012.

14.  On 17 October 2012, the defendant entered into a legal charge (“the Second Legal Charge”)  with the plaintiff by mortgaging her ½ share of the Property to secure for any loan and facilities granted or to be granted by the plaintiff to the defendant from time to time and the payment of amount which may be due owing or incurred to the plaintiff by the defendant.

15.  By a loan agreement (“the 1^st Loan Agreement”)  and a memorandum both dated 20 May 2013 (collectively referred to as “the 1^st Agreement”)  entered into by the plaintiff as lender and the defendant as borrower, the plaintiff agreed to lend and the defendant agreed to borrow a sum of $680,000.

16.  The 1^st Loan Agreement provides, inter alia, that:-

(1)  Clauses 1 and 2: The loan amount of $680,000 was secured by the Second Legal Charge;

(2)  Clause 1.4: The defendant agreed to pay interest at the rate of 36% per annum (3% per month);

(3)  Clause 2.1: Interest shall be payable monthly in arrears on the 20^th day of each month and the redemption date shall be on or before 20 May 2014;

(4)  Clause 2.2: In the event the defendant defaulted in payment of any interest/installments on the due date, then the whole outstanding sum shall become immediately due;

(5)  Clause 3.2: The plaintiff is entitled to recover interest after judgment at the same interest rate of 36% per annum notwithstanding that there is a prescribed court judgment rate; and

(6)  Clause 4: The plaintiff is entitled to institute legal proceedings against the defendant to cover the outstanding principal and interest, and in such event, the plaintiff is entitled to recover the legal costs incurred on solicitor and client basis.

17.  The said loan amount of $680,000 was advanced by the plaintiff to the defendant accordingly on 20 May 2013.

18.  In the period between June 2013 and December 2014, the defendant had repaid the plaintiff a total sum of $279,320.

19.  By another loan agreement (“the 2^nd Loan Agreement”)  and another memorandum both dated 10 December 2013 (collectively referred to as “the 2^nd Agreement”)  entered into by the plaintiff as lender and the defendant as borrower, the plaintiff agreed to lend and the defendant agreed to borrow a sum of $100,000.

20.  The 2^nd Loan Agreement provides, inter alia, that:-

(1)  Clauses 1 and 2: The loan amount of $100,000 was secured by the Second Legal Charge;

(2)  Clause 1.4: The defendant agreed to pay interest at the rate of 42% per annum (3.5% per month);

(3)  Clause 2.1: Interest shall be payable monthly in arrears on the 10^th day of each month and the redemption date shall be on or before 10 December 2014;

(4)  Clause 2.2: In the event the defendant defaulted in payment of any interest/installments on the due date, then the whole outstanding sum shall become immediately due;

(5)  Clause 3.2: The plaintiff is entitled to recover interest after judgment at the same interest rate of 42% per annum notwithstanding that there is a prescribed court judgment rate;

(6)  Clause 4: The plaintiff is entitled to institute legal proceedings against the defendant to cover the outstanding principal and interest, and in such event, the plaintiff is entitled to recover the legal costs incurred on solicitor and client basis.

21.  The said loan amount of $100,000 was advanced by the plaintiff to the defendant on 10 December 2013.

22.  Only a total sum of $30,833 had been repaid by the defendant to the plaintiff in the form of periodic monthly instalments from December 2013 to December 2014.

The 2021 Action

23.  On 17 June 2014, the plaintiff, the defendant and Helena[3]entered into a loan agreement (“the 3^rd Loan Agreement”)  and a memorandum (collectively referred to as “the 3^rd Agreement”)  whereby the plaintiff agreed to lend and the defendant and Helena agreed to borrow a sum of $200,000.

24.  The 3^rd Loan Agreement provides, inter alia, that:-

(1)  Clauses 1 and 2: The loan amount of $200,000 was secured by the Third Legal Charge (see below);

(2)  Clause 1.4: The defendant and Helena agreed to pay interest at the rate of 42% per annum (3.5% per month);

(3)  Clause 2.1: Interest shall be payable monthly in arrears on the 17^th day of each month and the redemption date shall be on or before 17 June 2015;

(4)  Clause 2.2: In the event the defendant and Helena defaulted in payment of any interest/installments on the due date, then the whole outstanding sum shall become immediately due;

(5)  Clause 3.1: The defendant and Helena are liable to pay the plaintiff a further interest of the whole sum of the principal and interest from the date of default until the date of full payment thereof, and the payment of such additional interest shall not be reckoned and deemed as part payment of the principal sum and interest;

(6)  Clause 3.2: The plaintiff is entitled to recover interest after judgment at the same interest rate of 42% per annum notwithstanding that there is a prescribed court judgment rate; and

(7)  Clause 4: The plaintiff is entitled to institute legal proceedings against the defendant and Helena to cover the outstanding principal and interest, and in such event, the plaintiff is entitled to recover the legal costs incurred on solicitor and client basis.

25.  On the same day, the parties also entered into a legal charge (“the Third Legal Charge”)  whereby the Property was mortgaged to the plaintiff as security for any loan and facilities granted or to be granted by the plaintiff to the defendant and Helena from time to time and the payment of amount which may be due owing or incurred to the plaintiff by the defendant and Helena.

26.  The said loan amount of $200,000 was advanced by the plaintiff to the defendant and Helena on 17 June 2014.

27.  In the period between June 2014 and December 2014, the defendant and Helena had only repaid the plaintiff a total sum of $30,500.

28.  As aforesaid, by consent, judgment has been entered against Helena on 11 December 2020.

29.  On 18 December 2020, Helena paid the plaintiff a sum of $716,535.62. 

30.  However, interest on overdue interest under the 3^rd Agreement was still left unpaid.

31.  Pursuant to the 3^rd Agreement and the Third Legal Charge, the defendant is still liable for the outstanding amount payable under the 3^rd Agreement.

THE DEFENDANT’S CASE

32.  The defendant had filed nearly identical Defence and Counterclaim in both the 2015 Action and the 2021 Action. 

33.  The Counterclaims made by the defendant in the actions had been discontinued (in the 2015 Action)  and struck out (in the 2021 Action), as the case may be.

34.  The defendant’s pleaded defence may be summarised as follows:

(1)  She had made full repayment to the plaintiff;

(2)  The Plaintiff had charged extortionate charges and interest against her;

(3)  The plaintiff has not provided her with “charges and interest substantiations”;

(4)  The plaintiff’s staff member, Ms Kathy Chan, has caused her “excess nuisances”.

DISCUSSION

35.  As aforesaid, the defendant did not attend the trial to give evidence.  Consequently, her various witness statements are not admissible.  Hence, there is no evidence in support of any of the defences raised in her Defence filed in the actions.

36.  In relation to her lines of defence raised:

(1)  Despite her allegation that she had fully repaid the loans, she had not produced any evidence in support at all.  To the contrary, while she pleaded that she had already made full payment on 16 January 2015, it can be seen from her various emails sent after that date that she was still arguing that she “will” only pay the principal but not any interest. Further, in a letter issued by the defendant’s former solicitors dated 6 February 2015, it was alleged that the outstanding amount should be $980,000. It was not alleged therein that the defendant had made any payment at all.  In other words, the pleaded defence is contradicted by her own contemporaneous documents. This defence is therefore rejected.

(2)  The respective rates of interest as stipulated under the 1^st Agreement, the 2^nd Agreement and the 3^rd Agreement are all below 48% per annum[4].  There is no allegation that the plaintiff has charged any further fees which should be taken into account when the effective rate of interest is calculated.  This defence is therefore rejected.

(3)  The complaint that the plaintiff has not provided her with “charges and interest substantiations” is contradicted by the plaintiff’s letter to the defendant dated 12 March 2015 in which the calculation of the amount due under the 1^st Agreement, the 2^nd Agreement and the 3^rd Agreement had been clearly set out in an attachment.  This defence is therefore unmeritorious.

(4)  The allegation that Ms Kathy Chan has caused the defendant “excess nuisances” has not been established as a matter of fact, and in any event that does not amount to a defence in law.

37.  On the other hand, I accept the evidence of the plaintiff’s witness, Ms Ng Wai Nga, which is unchallenged in court, and am satisfied that the plaintiff has proved its case in both actions against the defendant.

38.  For the avoidance of any doubt, I should make it clear that I have also considered the defendant’s letter dated 21 September 2023 in which she “opposed”/“denied” the plaintiff’s closing submissions.  With respect, the said letter cannot assist her at all in her defence herein.  In particular, her reliance on a decision of Deputy District Judge Winnie Tsui (as she then was)  dated 10 June 2016 is totally misconceived, as the learned Judge only refused to strike out the defendant’s Defence on that occasion[5].   It has not dealt with the plaintiff’s closing submissions herein at all as alleged.

CONCLUSION

39.  I therefore give judgment in favour of the plaintiff against the defendant in both actions.

HCA 2189/2015

40.  I make the following orders in HCA 2189/2015:

(1)  The defendant do pay the plaintiff $2,932,515.58 with interest on $680,000 at the rate of 3% per month from 20 September 2023 until payment;

(2)  The defendant do pay the plaintiff $477,127.33 with interest on $99,282.07 at the rate of 3.5% per month from 20 September 2023 until payment;

(3)  The defendant do deliver to the plaintiff vacant possession of the Property known as Flat B on 19^th Floor of Wah Koon Building, No.191 Hollywood Road, Hong Kong.

41.  I make the following orders in HCA505/2021:

(1)  The 2^nd named defendant do pay the plaintiff $196,059.60 being interest on overdue interest in respect of the loan advanced under the 3^rd Agreement calculated up to 19 September 2023 with interest thereon at the rate of 3.5% per month from 20 September 2023 until payment;

(2)  The 2^nd named defendant do deliver to the plaintiff vacant possession of the Property known as Flat B on 19^th Floor of Wah Koon Building, No.191 Hollywood Road, Hong Kong.

COSTS

42.  I make a costs order nisi that the defendant shall bear the plaintiff’s costs of the action, to be taxed on solicitor and own client basis[6]if not agreed. 

43.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper)  within 14 days hereof.