MAXCOLM FINANCE LTD v. CHAU TIN YAM AND ANOTHER

DCMP 5717/2025

[2026] HKDC 166

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 5717 OF 2025

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REASONS FOR JUDGMENT

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A.  Introduction

1.  This is a money lender’s action and mortgage action begun by an originating summons pursuant to respectively Order 83A and Order 88 of the Rules of the District Court, Cap 336H and the Partition Ordinance, Cap 352 (“Partition Ordinance”). Unless otherwise specified, all references to Orders and rules are to the said Rules and all currency is in Hong Kong dollars.

2.  The plaintiff is carrying on business as a money lender with a licence under the Money Lenders Ordinance, Cap 163 (“Money Lenders Ordinance”). The 1^st defendant is a borrower.

B.  The facts

3.  The 1^st and 2^nd defendants (collectively “the defendants”) have been the registered owners of the property known as 7^th Floor, No 75 Kweilin Street, Kowloon (“the property”) as joint tenants since 2022.

4.  On 7 May 2025, the plaintiff and the 1^st defendant signed three documents, namely, a loan agreement (in Chinese) (“the loan agreement”), a memorandum in writing of the loan agreement made under section 18(1) of the Money Lenders Ordinance, and the mortgage of the property (“the mortgage”).

5.  The relevant provisions in the loan agreement are as follows:

(1)  Clause 2: The amount of the principal of the loan shall be $500,000 (“the loan”), and the rate of interest charged on the loan is $27.36% per annum.

(2)  Clauses 3 and 4: The Loan shall be repayable by 84 instalments as follows: the 1^st instalment of $12,685 shall be paid on or before 5 June 2025; and the 2^nd to the 83^rd instalments of $13,420 each, and the 84^th instalment of $13,379 shall be paid on or before the 5^th day of each succeeding month until payment in full.

(3)  Clause 6: If the plaintiff shall take legal action against the 1^st defendant for recovery of the principal outstanding and/or interest, the 1^st defendant shall pay the plaintiff pre-judgment and post-judgment interest on the outstanding amount at the rate of 27.36% per annum.

(4)  Clause 7: If the 1^st defendant fails to pay any of the monthly instalments on its due date, whether in respect of principal or interest, the 1^st defendant shall pay interest on that sum at the rate of 27.36% per annum from the date of default until full payment.

(5)  Clause 8(a): On the 1^st defendant’s failure to pay on due date any outstanding instalments after 7 days’ written demand by the plaintiff, the plaintiff can institute legal proceedings against the 1^st defendant for recovery of all amounts outstanding and interest.

(6)  Clauses 10, 11 and 16: the 1^st defendant agreed that his interest in the property be charged to the plaintiff as security for his punctual repayment of the loan, and appointed the plaintiff to sign all deeds and perform all acts in the name of the 1^st defendant (including the sale of the property), to repay any outstanding indebtedness.

(7)  Clause 13: the plaintiff shall at its absolute discretion apply any repayment to settle the subject loan indebtedness according to the priority as it thinks fit and appropriate, and this provision applies to any repayments received at any time irrespective of continuity or termination of the loan agreement, and before or after any judgment.

(8)  Clause 14: if the 1^st defendant shall fail to comply with any obligations thereunder, the plaintiff is entitled to take legal action against the 1^st defendant and all litigation expenditures (on a fully indemnity basis) shall be borne by the 1^st defendant.

6.  The relevant provisions in the mortgage are as follows:

(1)  Clauses 2.01 and 2.02: In consideration of the plaintiff agreeing to grant to the 1^st defendant general credit facilities, the 1^st defendant covenanted to forthwith repay on demand Secured Indebtedness (as defined), not exceeding $1,500,000 with interest and commission thereon and all costs, charges and expenses thereof.

(2)  Clause 3.01: The 1^st defendant as beneficial owner charged the property to the plaintiff.

(3)  Clauses 5.01 and 5.02: If the 1^st defendant makes default in the payment of any part of the Secured Indebtedness (as defined) following demand duly made, an Event of Default (as defined) shall have occurred. Thereafter, all sums due shall become repayable immediately on demand, together with interest accrued thereon until payment in full.

(4)  Clause 6.01(a): If any Event of Default shall have occurred, then it shall be lawful for the plaintiff at any time thereafter without the 1^st defendant’s consent to take possession of the property.

(5)  Clauses 18.01(a) and 18.01(b): The 1^st defendant shall on demand pay to the plaintiff all costs incurred in the lawful exercise of the powers therein and all reasonable expenses (including legal expenses on the solicitors and own client basis) incurred by the plaintiff in suing for or recovering any sum due, with the object of affording a full indemnity to the plaintiff.

7.  In breach of the loan agreement, the 1^st defendant has defaulted in making the monthly payments due since 5 July 2025.

8.  By letter dated 12 September 2025, the plaintiff’s solicitors demanded the 1^st defendant to repay within 7 days all overdue instalments and accrued interest under the loan agreement.

9.  By letter dated 25 September 2025, the plaintiff’s solicitors demanded the 1^st defendant to repay within 7 days the entire outstanding balance of the loan and interest, failing which the plaintiff shall commence legal proceedings against him and the 2^nd defendant to enforce the mortgage and seek an order for sale of the property under the Partition Ordinance. A similar letter bearing the same date was also sent to the 2^nd defendant.

10.  The 1^st defendant failed and still fails to repay any part of the overdue sum.

C.  Procedural history

11.  By an originating summons issued on 15 October 2025 (“the originating summons”), the plaintiff commenced this money lender’s action and mortgage action to claim monetary judgment against the 1^st defendant, and claim an order for possession and for sale under the Partition Ordinance.

12.  On 16 October 2025, a representative of the plaintiff’s solicitors served the originating summons on the Director of Lands by ordinary post. On 28 October 2025, that representative served the same on the defendants by insertion into the letter box of their usual or last known address and affixed the same to a conspicuous place at the main entrance of the property: see Affirmation of Lai Siu Wai filed on 20 November 2025.

13.  The defendants have never acknowledged service of the originating summons.

14.  On 23 December 2025, the plaintiff filed Affirmation of Lee Oi Ying in support of this action. On the same day, the plaintiff issued a notice of appointment to hear originating summons (Form No 12), specifying the orders it intended to seek at the hearing (“the notice of appointment”).

15.  On 29 December 2025, a representative of the plaintiff’s solicitors served the notice of appointment and Affirmation of Lee Oi Ying on the Director of Lands and the defendants by ordinary post addressed to their usual or last known address: see 2^nd Affirmation of Lai Siu Wai filed on 8 January 2026.

16.  The defendants have never filed any affidavit evidence in opposition to this action.

17.  On 6 January 2026, the said representative affixed a copy of Notice to Occupants filed on 23 December 2025 upon a conspicuous place at the main entrance of the property: see 2^nd Affirmation of Lai Siu Wai filed on 8 January 2026.

18.  At the first hearing of the originating summons, the defendants were absent. Having regard to the documents filed and all the circumstances of the case, I found that they had notice of the time appointed for the first hearing which had been duly served on them, and it was expedient to proceed in their absence pursuant to Order 28, rule 1 and Order 32, rule 5.

D.  Discussion

19.  At the hearing, Mr Lo for the plaintiff adopted the Skeleton Submissions lodged on 16 January 2026 seeking summary disposal of the originating summons pursuant to Order 28, rules 4(1) and 6.

20.  Having considered submissions of and evidence adduced by the plaintiff, I made the following findings:

(1)  The relevant documents have been served on the Director of Lands as required under section 3(2) of the Partition Ordinance and rule 4 of the Partition Rules, Cap 352A, and posted the same in a conspicuous place at the entrance to the property pursuant to Order 10, rules 4(2) and 5(1).

(2)  Affirmation of Lee Oi Ying has: sufficiently given (a) the requisite particulars under Order 83A, rule 3; (b) the circumstances under which the right to possession arises and the state of the account between the 1^st defendant and the plaintiff with specified particulars under Order 88, rule 5(3); (c) the requisite particulars as to every person who is in possession of the property under Order 88, rule 5(4), namely the defendants; and (d) exhibited a true copy of the loan agreement and the mortgage pursuant to Order 83A, rule 4(2)(a)(iii) and Order 88, rule 5(2).

(3)  At the hearing, the plaintiff produced the original of the loan agreement and the mortgage pursuant to Order 83A, rule 4(2)(a)(iii) and Order 88, rule 5(2).

(4)  The amount due and payable under the loan agreement and the mortgage was $576,109.14.

(5)  Pursuant to clause 6.01(a) of the mortgage, the plaintiff may take possession of the property.

(6)  The plaintiff is a “person interested” in the property under section 3(1) of the Partition Ordinance. The property is a domestic unit with a saleable area of about 777 square feet in a 9-storey composite building. A partition of the property would not be beneficial to all the persons interested and would be impracticable. There is no evidence that an order for sale would cause any hardship to the defendants. The reserve price based on the valuation of the professional surveyor is reasonable. An order for sale will be beneficial to all persons interested in the property, including the defendants.

E.  Disposition

21.  For the foregoing reasons, I made an order in terms of the draft order submitted to the Court, and revised in the course of the hearing, including a monetary order for repayment in the sum of $576,109.14, an order for possession and an order for sale of the property.

22.  Having considered the Statement of Costs, I ordered that the 1^st defendant do pay the plaintiff the costs of this action, summarily assessed at $80,000. As requested, I made no order as to costs between the plaintiff and the 2^nd defendant.

23.  I thank Mr Lo for his helpful submissions.