CHINNEY SHUN CHEONG BUILDING SERVICES ENGINEERING LTD (formerly known as CHINNEY E & M (MAINTENANCE) LTD) v. LO KWAI FAN

HCMP 629/2023

[2023] HKCFI 1593

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLEANOUS PROCEEDINGS NO 629 OF 2023

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D E C I S I O N

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A.  Introduction

1.  The Plaintiff is the Defendant’s judgment creditor in the sum of HK$13,806,813.73 together with interest (“judgment sum”) and costs.

2.  On 15 November 2022, Master Matthew Leung granted a charging order absolute in HCA 824/2020 (“the Charging Order Absolute”) over all those 59/38, 258^th parts or shares of and in The Remaining Portion of New Kowloon Inland Lot No. 6322 (Flat No. 9 on 9^th Floor of Block A, Hang Chun Court, No. 2 Hang Cheung Street, Kowloon) (the “Property”). The Defendant is the sole registered owner of the Property.

3.  This is the 1^st hearing of an originating summons dated 21 April 2023 (the “OS”), taken out by the Plaintiff for an order for sale of the Property, pursuant to O.50, r.9A of the Rules of the High Court (the “RHC”).

B.  Legal principles

4.  The Court has a discretion over whether to enforce a charging order by sale. Whilst the competing equities of the parties will be carefully weighed, there must be a good reason to justify why the court should on the one hand grant an order in a party’s favour but on the other refuse to enforce that very order. SKK (HK) Co Ltd v Tsui Po Hing [2021] HKCFI 1676 at §§15-17 per Linda Chan J.

5.  In Machanao Construction Corporation v Oceanball Investment Ltd (unrep., HCMP 2224/1999, 14 December 1999), Yuen J (as she then was) stated at p.3:

“The relevant factors to be considered include in this case the fact that the amount outstanding under the judgment debt is more than the value of the Defendant’s interest in the trust, the fact that there is no known prior encumbrance over that interest, that there is no record of any payment made by the Defendant, that there is no evidence of any other claims against the Defendant, that the Defendant has chosen not to appear and the Plaintiff is not aware of any other means of the Defendant to repay the judgment debt.”

6.  If the Court is satisfied that there is no triable issue, it may make an order for sale at the first hearing of the originating summons: Hong Kong Civil Procedure 2023 at §28/4/2, §88/5A/2.

C.  Applying the legal principles to the facts of this case

7.  In the present case, the Defendant and the occupants of the Property (if any) have been given due notice of this hearing and the orders to be sought at the hearing:

(1)  On 21 April 2023, copies of the OS and supporting affirmation were inserted through the letter box of the Property, being the Defendant’s usual and last known address. On the same day, a copy of the originating summons was posted upon the gate of the Property.

(2)  On 22 May 2023, copies of the notice of appointment for the hearing and the notice to occupants were sent to the Property by post. On the same day, a copy the notice to occupants was posted upon the gate of the Property.

8.  Neither the Defendant nor any occupants of the Property have come forth to defend the OS.

9.  Applying Machanao, an order for sale is justified on the following grounds:

(1)  The outstanding amount owed by the Defendant to the Plaintiff was HK$17,801,148.95 as of the date of the OS, with interest continuing to accrue thereafter. This is more than the market value of the Property, namely HK$8,160,000.00.

(2)  There is sufficient equity in the Property to justify ordering a sale. The value for sale under repossession of the Property is HK$7,340,000.00 in the open market and $6,060,000.00 in the secondary market. There is no known prior encumbrance on the Property. After deducting expenses, there will still be a substantial surplus which can be used to repay the judgment sum and costs.

(3)  There is no record of any payment made by the Defendant. Other than the Property, there is no evidence of any other means of the Defendant to pay the judgment sum and costs.

(4)  There is no third party interest in the Property. The Defendant is the only registered owner of the Property and, to the best of the Plaintiff’s knowledge, is the sole beneficial owner of the Property. The Plaintiff has no reason to believe that the Defendant is not currently in possession of the Property.

D.  Conclusion

10.  For the reasons given, I give an order for sale as follows: -

(1)  Unless within 28 days after service upon the Defendant of the Order to be made herein, the Defendant do make the following payments to the Plaintiff:

(a)  the sum of HK$13,806,813.73 with interest calculated at judgment rate from 29 September 2020 up to payment;

(b)  costs of the hearing for assessment of damages with certificate for counsel and costs of the action summarily assessed at HK$950,000.00;

(c)  costs of HK$9,100.00 for the Charging Order Absolute dated 15 November 2022 granted in HCA 824/2020;

(d)  costs of these proceedings in §(10) below;

the Property being subject to the Charging Order Absolute may be sold;

(2)  The Defendant do deliver up vacant possession, together with the title deeds and documents, if any, in his possession to the Plaintiff within 42 days from the date of service of this Order on him;

(3)  The conduct of the sale of the Property be given to the Plaintiff;

(4)  The Plaintiff be at liberty to sell the Property by either private treaty or public auction at a minimum price of HK$6,060,000.00 in the secondary market (without payment of the premium to the Housing Authority) or HK$7,340,000.00 in the open market (on the assumption that the premium for removal of alienation restriction has been fully paid);

(5)  The Defendant do all acts and things necessary for the sale of the Property to the purchaser(s) and cause all necessary documents and instruments required to convey title of the Property to the purchaser(s) to be properly signed or executed;

(6)  The proceeds of sale of the Property shall be applied in the following order of priority: -

(a)  in discharge of all taxes, rates, government rent and other outgoings due and affecting the Property;

(b)  unless the Property is sold subject to prior incumbrance(s), in discharge of the prior incumbrance(s);

(c)  in payment of all lawful costs and expenses properly incurred in the sale of the Property;

(d)  in payment of the money, interest and costs due under the Charging Order Absolute and this Order;

(e)  the balance (if any) be paid to the chargee of the incumbrance affecting the Property who ranks immediately behind the Charging Order Absolute, or to the Defendant if there is no such subsequent charge;

(7)  the Charging Order Absolute be released and discharged upon payment of the full purchase price by the purchaser(s) and completion of the sale of the Property to the purchaser(s);

(8)  Upon the Defendant paying to the Plaintiff the money hereby ordered to be paid and all other moneys (if any) secured to the Plaintiff by the Charging Order Absolute, the Plaintiff (subject to and without prejudice to the due exercise of any power of sale for the time being vested in them) do redeliver to the Defendant possession of the Property and release the security constituted by the Charging Order Absolute as the Defendant may agree or the Court may direct;

(9)  There be liberty to apply; and

(10)  The costs of these proceedings be awarded in favour of the Plaintiff and on the usual lump sum reference figure of $30,000.

11.  I thank Mr Jiang for his assistance.