HKSAR v. KIT CHOY DEVELOPMENT LTD

HCMP 2357/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2357 OF 2010

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REASONS FOR DECISION

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A. THE APPLICATION

1.  The Plaintiff applies under Order 50 rule 9A of the Rules of the High Court (“HCR”) for the enforcement of the charging order absolute (“COA”) it obtained  on 1 June 2007 by sale of the Defendant’s Property, which beneficial interest stands charged by the COA.

2.  The Defendant, represented by its director, Mr. Choy Bing Wing (“Mr. Choy”), opposes the application.

3.  At the substantive hearing, I granted an order for sale with consequential directions and costs, which order is annexed to this judgment.

4.  These are the reasons for my decision.

B.      BACKGROUND

B.1    The Magistrate summons

5.  In November 2002, the Defendant was convicted and fined by a magistrate with an offence of having failed without reasonable excuse to comply with a fire safety improvement direction.  It appealed but the late Gall J on 7 December 2005 dismissed the appeal, and further made a costs order against the Defendant in respect of the costs of the appeal and the court below.

6.  The Defendant’s subsequent application for leave to appeal to the Court of Final Appeal was unsuccessful.

B.2    Charging Order Absolute

7.  The Plaintiff’s costs were taxed by Mr. Registrar Chan, and on 3 November 2006 he issued an allocatur for the sum of $133,442 (“the Judgment Sum”).

8.  The Defendant failed to satisfy the Judgment Sum. In granting the COA, the court also awarded interest from 7 December 2005 at judgment rate until payment on the Judgment Sum and added costs of $8,000 to the Judgment Sum (I shall call the Judgment Sum, interest and costs as the “Judgment Debt”).

B.3    The application for an order for sale

9.  The Defendant paid nothing.

10.  The Plaintiff therefore issued the originating summons on 12 November 2010 (which was amended on 23 February 2011) (“AOS”) for an order for sale of the Property as well as for consequential directions pertaining to a sale.  The total amount of the Judgment Debt and the costs outstanding as of the date of 29 October 2010 was initially stated to be $146,648.11, which amount was corrected to $193,067.52[1].

C.      THE OBJECTIONS

C.1    Initial Objections

11.  In the first hearing of the AOS on 19 April 2011, Mr. Choy repeatedly alleged that there was already a satisfaction of the Judgment Debt by a cheque payment for the Defendant did not wish to contend the proceedings.

12.  Upon clarification, I was informed by the solicitor appeared for the Plaintiff at the hearing, Mr. Tam, that the cheque Mr. Choy referred to was a cheque dated 8 April 2011 drawn in favour of his firm for an amount of $146,648.11. He said that they could not accept the cheque as payment for two reasons. First, the amount $146,648.11 stated in the cheque could not satisfy the entire Judgement Debt as the amount had been corrected to $193,067.52, which the Defendant was aware of. Secondly, Mr. Choy has imposed a condition by writing some remarks at the back of the said cheque that states: “Messrs Lo and Lo can and may cash this cheque when undertaking is given to Kit Choy and/or Bing Choy by M/S Lo & Lo on behalf of Direction of Fire Services/ Secretary for Justice of HKSAR”.

13.  Since Mr. Choy has repeatedly informed the court that the Defendant was willing to pay up, I stood down the hearing so that the parties could have some time to resolve the dispute.  When the hearing was resumed, I was informed that Mr. Choy however only agreed to make some changes to the remarks at the back of the cheque that the payment of the cheque is under an understanding that Mr. Tam “understands the matter behind the grievances of Kit Choy and/or Big Choy by …”. The matter therefore had to proceed to arguments.

14.  Mr. Choy had filed submissions to oppose the application, contending, among others, that the judgment was obtained by fraud, and was unenforceable according to Article 87 of the Basic Law, and that there was cover up of the mistake by the government.

15.  Mr. Choy’s initial main objections can be briefly stated as follows:

(1)  Since the ratable value of the Property should be below $240,000, the application should have been commenced in the District Court.

(2)  The Plaintiff is not entitled to obtain vacant possession as this action is not a mortgagee action under Order 88, HCR.

(3)  The interest rate charged at 8% to 11 % on the Judgment Sum is grossly excessive and ultra vires.

16.  At the substantive hearing, shortly after Mr. Cheung (the Plaintiff’s solicitor) had started his submissions, Mr. Choy interrupted. He said that he would only wish to make it known that the Defendant has only two objections, and would not be pursuing the other objections.  After he had submitted the two objections in section C.2 below, he stormed out of the courtroom.

17.  Although Mr. Choy repeatedly stated that he would be making payment as he was leaving the courtroom, I directed to continue with the hearing in Mr. Choy’s absence.

C.2    The only two objections

18.  The first objection relates to the fluctuating judgment interest rate the Plaintiff adopts in calculating the interest of the Judgment Sum.  Mr. Choy contended that the judgment rate should be fixed at 8%. I shall call this the “Interest Objection”.

19.  The second objection is the prosecution costs the late Gall J ordered the Defendant to pay.  Mr. Choy contended that the costs of the fire sprinklers should be paid by the prosecution. I shall call this the “Costs Objection”.

D.      DISCUSSION

20.  Since Mr. Choy had unequivocally confined his objections to the two aforesaid grounds, it is necessary for me to deal with these objections only.

D.1    Interest Objection

21.  This objection, in my view, is totally devoid of merit.  According to the COA, the Plaintiff is entitled to have interest at judgment rate.  Mr. Choy’s contention of fixing the judgment rate at 8% is unarguable.

22.  I reject the objection.

D.2    Costs Objection

23.  This objection is totally irrelevant.

24.  From the Defendant’s correspondence with the Plaintiff’s solicitors as well as letters sent to the court, I note the bitter grudges the Defendant (or rather more appropriately if I may so, Mr. Choy) has been holding against the Fire Services Department arising from the government’s summons and the conviction at the Magistrate Court.  This contempt against the government does not however avail to the Defendant any valid defence to this application.  It remains a fact that the Defendant has exhausted all the appeal venues, and the Judgement Debt remains unsatisfied. The Plaintiff is entitled to enforce the judgment.

25.  This objection is likewise rejected.

E.      CONCLUSION AND ORDER

26.  In spite of Mr. Choy’s absence for the large part of the hearing, I have carefully considered all the evidence as well as his submissions, and conclude that his objections are entirely baseless.  I am satisfied that the Plaintiff is entitled to the relief claimed in the AOS. There is no opposition to the valuation of the Property, I granted an order in terms of the draft order with the reserved price of $2,400,000 as set out in the second valuation report dated 3 May 2011. 

27.  Mr. Choy has no dispute to the Plaintiff’s entitlement to costs.  Since the Plaintiff obtained the relief sought, he should have the costs.  I therefore granted costs in favour of the Plaintiff, and directed the costs be gross- sum assessed.

28.  Mr. Cheung submitted at the hearing a statement of costs claiming a total amount of $48, 616.67.  Generally, if an application is not opposed, the court will usually allow gross-sum costs of $25,000 for this type of application.  I would therefore allow a sum of $25,000 in respect of the proceedings up to the substantive hearing.  The second set of gross-sum costs should be the costs occasioned by the Defendant’s objection, which I assessed at $18,000.  The total gross-sum costs for the entire proceedings should therefore be $43,000 ($25,000 + $18,000).

29.  Since Mr. Choy did not have the opportunity of making representations regarding the amount of costs, I therefore direct that the assessed costs of $43,000 should be nisi.  Should the Defendant wish to object to the amount, the Defendant shall make an application to vary the assessment that I have made within 14 days from the date of handing down of this judgment, failing which the order nisi regarding the amount shall become absolute.

30.  Since no affirmation of service in relation to service by posting-up the AOS on the Property has been filed, I directed an affirmation of service was to be filed within 7 days, and upon the expiration of 28 days from the date of posting -up, the order shall be sealed.

 Order

1.  An Order that the Defendant do within 28 days from the service of this order on the Defendant deliver up vacant possession of the Property known as  (1) 6/337 parts or shares of and in all those piece or parcel of ground registered in the Land Registry as the Remaining Portion of Section W of Inland Lot No. 2366  and the Extension Thereto; on (2) the Remaining Portion of Sub section 1 of Section W of Inland Lot No. 2366 and the Extension Thereto; on (3) the Remaining Portion of Section T of Inland Lot No. 2366 and the Extension Thereto; and on (4) the Remaining Portion of Section U of Inland  Lot No. 2366 and The Extension Thereto (Shop No 1 on Ground Floor, Wing Po Mansion, No 33 Fort Street, Hong Kong) (“the Property).

2.  An Order for sale of the Property with a reserved price at $2,400,000.00. The said reserved price shall be valid for 6 months.

3.  An Order that the Plaintiff’s solicitors shall have the conduct of the sale of the Property by appointing an auctioneer to sell the Property by auction at open market.

4.  An Order that unless otherwise agreed by the parties interested therein, the proceeds of sale of the Property shall be paid to and stakeheld by the Plaintiff’s solicitors and be applied according to the following priority:-

i.  in discharge of all rent, rates, taxes and other outgoings due and affecting the Property;

ii.  unless the Property is sold subject to a prior incumbrance, in discharge of any prior incumbrance;

iii.  in payment of all lawful remuneration, costs, charges, and expenses and all lawful costs and expenses properly incurred in the sale of the Property or other dealing;

iv.  in payment of all outstanding amount due under the Charging Order Absolute dated 1 June 2007 (as set out in the Schedule below), interest and costs thereof and the costs of these proceedings,

v.  in payment of the residue to the person who, immediately before any sale or dealing, was entitled to the Property or authorized to give a receipt for the proceeds of the sale of the Property, and any surplus shall be paid to in Court to the credit of the Defendant.

5.  The Defendant do within 28 days from the service of this order on it, file and serve an affidavit stating what deeds or documents relating to the title of the Property are in its possession and whether they are in possession of another person, and if so, stating the name and address of every such person and further that it do within the same time lodge such deeds and documents with the Plaintiff’s solicitors as are stated by it in its own possession.

6.  Upon 14 days’ written notice by the Plaintiff’s Solicitors, the Defendant do cause or execute all necessary documents required to convey the title of the Property upon completion of the sale of the Property and that if the Defendant neglects or refuses to comply with the Order or cannot be found after reasonable inquiry has been made, the documents aforesaid be executed by the Registrar of the High Court pursuant to section 25A of the High Court Ordinance

7.  An Order that the Defendant do cause to be delivered up to the Plaintiff’s solicitors all documents of title to the Property in its control or possession or in the control or possession of its chargee/ mortgagee within 14 days after the Plaintiff has given written notice to the Defendant to that effect;

8.  Upon the Defendant satisfying all outstanding amount owed to the Plaintiff stated in the  said Charging Order Absolute, together with all interest and costs of these proceedings, this order shall cease to have any further effect but without prejudice to the validity of the contract made prior to or without notice of these proceedings of such redemption and payment; and

9.  An Order that costs of these proceedings be to the Plaintiff, which costs are gross-sum assessed at $43,000.00, which assessed costs are to be nisi, and to become absolute unless an application is made to vary the nisi costs order within 14 days from the date of the handing down of this judgment.

Schedule

Charging Order Absolute

It is ordered that the interest of the Judgment Debtor (the Defendant) in the Property to stand charged with the sum of HK$133,442.00 together with interest thereon from 7^th December 2005 at judgment rate until payment and costs assessed at HK$8,000.00 by gross sum assessment, the said costs to be added to the judgment debt