NEW CHINA MANAGEMENT LTD v. SZE SHUN CHAP

DCMP 4480/2023

[2024] HKDC 1728

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4480 OF 2023

--------------------

--------------------

--------------------

-------------------

JUDGMENT

-------------------

Introduction

1.  The Plaintiff (“P”) is the manager of premises situated at the Portion of Basement of the Podium of Blocks 1, 2 and 3 of City Garden, No 233 Electric Road, North Point, Hong Kong (“Maxibase”).

2.  The Defendant (“D”) is the registered owner of Shop Nos 209, 210, 211, 212, 213, 214, 215, 216, 217, 218, 219 and 220 of Maxibase (“the Properties”).

3.  By Originating Summons dated 22 September 2023 (“the OS”), essentially, P is suing D under the Second Sub-Deed of Mutual Covenant and Management Agreement (“the DMC”) dated 16 October 2013 and seek declaratory relief of sums due, an order for vacant property and sale of that the Properties to settle the sums owed by D under O 88, r5A of the Rules of the District Court, Cap 336H (“RDC”).

4.  Notwithstanding service of the OS on D, no acknowledge of service of the OS has been filed by D.

5.  D does not appears today. I am satisfied that notice of the hearing of the OS was given to D. In fact, on 9 October 2024, D wrote to the Court to say that he has authorized Mr See Kin Wah Joseph to represent him. I do not accept there is any basis for D to appoint or authorize anyone to attend on his behalf and to treat such as his appearance.

6.  I therefore treated D as absent at today’s hearing notwithstanding Mr See’s attendance. I am of the view that in these circumstances, it is expedient to proceed with today’s hearing in the absence of D pursuant to O 32, r 5 of RDC made applicable to originating summons by O 28, r 1 of RDC.

7.  Furthermore, D not having filed any acknowledge service of the OS or any affidavit evidence in opposition, I am satisfied that I can summarily dispose of the OS where the facts and liability are established: see Hong Kong Civil Procedure 2024, Vol 1, §28/3/1.

8.  Mr Wong, solicitors, appears for P.

P’s Case

9.  P’s case, according to the Affirmation of Mak Kwok Leung filed in support of the OS, is as follows:

(1)  D was in default of payment of: (a) management fees in respect of the Properties for the period from June 2019 to February 2024; and (b) renovation contribution to repair and maintenance for the period of August 2019 to February 2021. As of 8 March 2021, HK$286,689 was in arrears (“the Arrears”);

(2)  As a result on 8 March 2021, pursuant to clause 7.7.7 of the DMC, P registered a Memorandum of Charge against the Properties in the Land Registry to secure the payment of the Arrears together with all costs, interest, collection charge and expenses which are incurred in recovering the same, including any further management fees, charges, contributions, legal costs, court fees or demand of funds payable under the DMC (“the Charge”);

(3)  Notwithstanding the registration of the Charge against the Properties, as of March 2024, D still failed to make payment of the accrued interest, collection charge and legal costs;

(4)  By letter from P’s solicitors to D dated 29 August 2024, D was demanded to settle the total accrued interest, collection charge and legal costs in the sum of HK$223,411.44 (“the Sum”). However, D still failed to settle the Sum;

(5)  A memorandum of charge dated 22 April 2021 has been registered against the Properties in favour of Cayley Property Management Limited. P’s solicitors were informed that outstanding amount and legal costs for the vacation of the said memorandum of charge is HK$10,403;

(6)  The rateable value to the Properties for the year of assessment 2024-2025 is HK$119,760;

(7)  According to a valuation report dated 2 October 2024, the estimated market value of the Properties in its existing state and physical condition, free from all encumbrance, is HK$3,690,000 whilst for sale under repossession is HK$3,190,000; and

(8)  The sale price of the Properties should be not less than HK$3,190,000, the likely expense is around 1% of the sale price and legal costs is about HK$18,000.

Discussion

10.  D has raised no defence to P’s claim.

11.  I am satisfied that the Sum is due and payable by D and is secured under the Charge.

12.  I am also satisfied under clause 7.7.8 of the DMC, the Charge is enforceable as an equitable charge at the suit of P: see Chevalier Property Management Ltd v Yu Chau Yeung [2007] HKCLRT 667 at §11.

13.  As the rateable value of the Property is below HK$320,000, this court has the jurisdiction to make an order for sale.

14.  I am satisfied the requirements under O 88, r 5A of RDC have been fulfilled and an order for sale should be made in the event P fails to settle the Sum within 28 days of service of the order made by this court.

Disposition

15.  Accordingly, I give judgment for P and make an order in terms of the draft order as amended by me.

16.  Costs should follow the event. Pursuant to clause 7.7.5 of the DMC, the defaulting owner is liable and P is entitled to recover costs on solicitor and own client basis. I therefore order that D do pay P’s costs of these proceedings, on a solicitors and own client basis, to be taxed if not agreed.