THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD v. TONG MIU MEE FAIRY

HCMP 1983/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1983 OF 2014

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D E C I S I O N

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INTRODUCTION

1.  The defendant is the registered owner of the property known as All That Flat G, 8^th Floor, Blossom Court (Tower 1), No 1 Capeland Drive, Peninsula Village, Discovery Bay City, Lantau Island, New Territories, Hong Kong (“the Property”).  The defendant is also the mortgagor, and the plaintiff the mortgagee, of the Property under a mortgage dated 10 June 2011 (“the Mortgage”).

2.  On 11 August 2014, the plaintiff commenced the present mortgage action against the defendant to recover various sums due to the plaintiff and secured by the Mortgage, and for an order for possession of the Property.

3.  On 22 December 2014, upon the hearing of the originating summons herein, Master K Lo ordered the defendant to (i) pay to the plaintiff the sums of HK$4,971,728.71 and US$691,554.43 found to be due and secured by the Mortgage together with interest thereon, (ii) deliver to the plaintiff vacant possession of the Property within 28 days after service upon her of the order, and (iii) pay to the plaintiff the costs of the proceedings on an indemnity basis, which the Master assessed at HK$132,333.40.

4.  By a notice of appeal dated 31 December 2014, the defendant appealed against Master K Lo’s order.  This is my decision on the defendant’s appeal.

THE DEFENDANT’S GROUND OF APPEAL

5.  As can be seen from the defendant’s notice of appeal and her affirmation filed on 2 January 2015 in support of the appeal, the defendant’s appeal is directed against Master K Lo’s order requiring her to deliver vacant possession of the Property to the plaintiff within 28 days of service of the order on her.  The defendant’s challenge of this order is on the ground that the Property is currently being occupied by a tenant.

6.  Apparently, at the time of the purchase of the Property by the defendant on 10 June 2011, the Property was subject to a tenancy agreement dated 11 March 2011 (“the Old Tenancy Agreement”).  The term of that tenancy was 2 years commencing on 20 March 2011.  The defendant says that the plaintiff was fully aware of the existence of this tenancy at the time of the Mortgage.  For the purpose of the present appeal, I shall proceed on the basis that this was indeed the position.

7.  At the hearing of the appeal on 14 April 2015, the defendant informed me that the tenant under the Old Tenancy Agreement passed away in around October 2011, and she entered into another tenancy agreement dated 3 June 2014 (“the New Tenancy Agreement”) with a new tenant for a term of 2 years commencing on 5 July 2014.  The defendant said that she did not inform the plaintiff of the New Tenancy Agreement or sought the plaintiff’s consent for her entering into the New Tenancy Agreement because she was not aware that she was required to do so.  The defendant further said that the purpose, or the main purpose, of her appeal was so that the current tenant of the Property could be given time, say 3 months, to move out from the Property.

8.  It is clear that the existence of a tenancy agreement entered into without the consent of the plaintiff and/or the fact that the Property is currently occupied by a tenant cannot constitute any defence to the plaintiff’s claim for possession of the Property.  As I explained to the defendant at the hearing, if the tenant has any sufficient ground to seek a stay of execution of the order for possession (as to which I express no view), it is for the tenant to come to court to apply for a stay of execution.  According to the defendant, the tenant is aware of Master K Lo’s order, but the tenant has not, so far as I am aware, made any application for stay of execution of the order for possession.

OTHER MATTERS

9.  The defendant raised two other matters at the hearing of the appeal.

10.  First, she said that, at the time of the execution of the Mortgage, she was not aware that it was an “all monies” mortgage which also secured her liabilities as guarantor of the indebtedness of her husband, Mr Tai Tak Hip trading as Leadstar Industrial Company (“the Borrower”), to the plaintiff, in addition to the mortgage loan which the defendant obtained from the plaintiff.  The evidence shows that the defendant was the marketing manager and financial controller of Leadstar Industrial Company, and an authorised signatory of the Borrower’s account with the plaintiff, and that she entered into four written guarantees dated 11 June 2010, 11 June 2010, 8 September 2010 and 20 June 2011 respectively with the plaintiff in relation to the Borrower’s indebtedness to the plaintiff.

11.  The Mortgage itself was apparently executed by the defendant in the presence of a solicitor, and expressly incorporated the plaintiff’s standard “Mortgage Conditions (August 2007 Edition)” as part of the terms and conditions of the Mortgage.  Those conditions were in both the English and Chinese languages and defined the “Secured Liabilities” to mean “all money, obligations and liabilities in any currency (together with any accrued interest) due, owing or incurred by [the mortgagor] now or in the future, actual or contingent, primary or secondary, on [the mortgagor’s] own or jointly with any other person”.

12.  The defendant is bound by the said mortgage conditions. Although the defendant claimed, in paragraph 3 of her affirmation dated 30 September 2014, that she had not been informed by the plaintiff that her liabilities as guarantor of the Borrower’s indebtedness to the plaintiff would also be secured by the Mortgage, what she said falls far short of raising any arguable defence of misrepresentation, non est factum or other grounds to vitiate the Mortgage.

13.  Second, the defendant challenged the amounts which the plaintiff had debited from the Borrower’s account as costs incurred by the plaintiff to enforce payment of the Borrower’s indebtedness to the plaintiff.  The plaintiff has, in the affirmation of Tomothy Calvin Tse filed on 5 March 2015, given an explanation of the three debit entries in the amounts of HK$20,000, HK$49,939.60 and HK$122,933.50 on 4 August 2014, 13 October 2014 and 31 December 2014 respectively in the Borrower’s account.  Irrespective of whether the explanation given by the plaintiff is sufficient, I do not see that it would affect the validity or correctness of the costs order made by Master K Lo.

THE DEFENDANT’S APPLICATION FOR ADJOURNMENT OF THE HEARING OF THE APPEAL

14.  Lastly, I shall deal with the defendant’s application for adjournment of the hearing of the appeal.  The application is advanced on the basis that her appeal against the decision of the Director of Legal Aid refusing to grant legal aid to her in these proceedings will be heard on 19 June 2015.  At the hearing, I informed the defendant that I would deal with her application for adjournment and her appeal together in view of the fact that the merits of her appeal would be a factor that I would take into account in deciding whether to adjourn the hearing of the appeal.  I also told the defendant that she should make all submissions in support of the appeal.

15.  The fact that the defendant has a pending legal aid appeal is not, by itself, a sufficient ground for an adjournment of the hearing of present appeal. Further, for the reasons given above, I do not consider that the defendant’s appeal has merits.  I would not therefore accede to the defendant’s application to adjourn the hearing of the appeal.

DISPOSITION

16.  I dismiss the defendant’s notice of appeal dated 31 December 2014 with costs to the plaintiff.  Under clauses 5 and 21 of the Mortgage, the plaintiff is entitled to have those costs assessed on an indemnity basis.

17.  At the hearing, the plaintiff asked for summary assessment of its costs, and the defendant was given an opportunity to comment on the plaintiff’s costs statement.  The total amount claimed by the plaintiff comes to HK$95,892.40. The plaintiff’s two handling solicitors spent a total of 6 hours in preparing for the hearing of the appeal (including preparation of hearing bundles, skeleton submissions and supplemental skeleton submissions) and another 7 hours for “[c]onsidering the merits of the Defendant’s appeal and new evidence, adjournment application relevant case authorities on appeal and the basis of costs of such appeal”.  It seems to me that the 7 hours spent by the two handling solicitors for those purposes are grossly excessive.  The same comment applies to the time (7 hours) taken by the two handing solicitors to peruse documents, including a number of affirmations made by the defendant in support of her previous applications for stay of execution.  All those affirmations were relatively short and straight forward.  Even where costs are to be assessed on an indemnity basis, the court is not bound to accept the receiving party’s costs statement at face value.  Overall, I would summarily assess the plaintiff’s costs of this appeal in the sum of HK$75,000.