BANK OF CHINA, HONG KONG BRANCH v. TSOI MING WAI

HCMP3422/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.3422 OF 2001

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J U D G M E N T

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Background

1. By a facility letter dated 7 September 2000, the plaintiff agreed to lend a mortgage loan of HK$1,052,100 to the defendant with interest to be charged at 2.25% per annum below the best lending rate quoted by HSBC from time to time to finance her purchase of Flat No.8, 1/F, Block A, Kam Tai Court, 33 Ning Tai Road, Shatin, New Territories ("the Property"). Repayment was to be made by way of 300 equal monthly instalments of HK$7,604.65 each. By a legal charge dated 2 January 2001 ("the Legal Charge"), the defendant mortgaged the Property to the plaintiff as security for the loan. Thereafter, the defendant entered into possession of the Property and has since been remaining there. But other than one instalment of the mortgage repayment was made in March 2001, no further repayment has been made to date.

2. On 26 June 2001, the plaintiff commenced the present proceedings under Order 88, Rules of the High Court. The defendant did not file any evidence to oppose the Order 88 application. She purported to file a defence and counterclaim in July 2001. She also took out an application in August 2001 to strike out the plaintiff's claim with various affirmations in support. In the event, her application to strike out was dismissed. On 6 March 2002, the Registrar entered judgment against the defendant and ordered her to deliver vacant possession of the Property to the plaintiff. Later on 21 May 2002, the Registrar entered monetary judgment against the defendant in the sum of HK$1,105,220.25 with interest on the sum of HK$1,050,851.79 at the rate of 2.875% per annum or HK$82.77 from 20 March 2002 to judgment date and at judgment rate thereafter until payment. The defendant now appeals against both orders. At the hearing before me on 28 June 2002, after hearing the defendant, I directed her to file a supplemental affirmation to verify what she said in her oral submissions. I also gave leave to the plaintiff to file an affirmation to reply. The matter was then adjourned for part-heard. It eventually came back before me on 11 February 2003.

Grounds of defence

3. To defend the claim, the defendant sought to raise a number of allegations against the plaintiff, its solicitors, Messrs Kao, Lee & Yip ("KLY") and the Housing Authority, the developer of the Property. Her allegations are all denied. In my view, none of her purported defence is made out. I will explain why below.

4. The defendant first complained that the contents of the Legal Charge had not been explained to her prior to execution of the same at KLY's office. This complaint must fail because neither the plaintiff nor KLY as the plaintiff's solicitors was under a general duty in law to explain the contents of the Legal Charge to her : see Barclays Bank plc v. Khaira [1992] 1 WLR 623, Kincheng Banking Corporation v. Kao Yu Kuei [1986] HKC 212. Since neither the plaintiff nor KLY was under a duty to explain the contents of the Legal Charge to her, the allegation that the same had not been explained to her, even if true, is neither here nor there. It is common ground that KLY was also acting for the defendant for the sale and purchase. If her allegation against KLY is true, she may have a claim against KLY. But the plaintiff is not liable for KLY's failure in this regard.

5. The defendant tried to invoke the doctrine of non est factum by asserting that she did not fully understand the meaning and effect of the Legal Charge. But again this attempt must fail for the simple reason that there is nothing to suggest that the document she signed was radically from what she thought. Indeed, she knew she was signing a mortgage document. She was then a person of full age and capacity. In the circumstances, she was bound by the Legal Charge even if, as alleged, she did not fully understand the meaning of the contents of the Legal Charge : see Saunders v. Anglia Building Society [1971] AC 1004.

6. The defendant further alleged that she was not informed of the existence of the General Terms and Conditions of Mortgage/Bridging Loan Facility applicable to the Facility Letter. It is flatly contradicted by the contents of the Facility Letter which expressly incorporated the General Terms attached to it. Given the express incorporation, the defendant is bound by the General Terms even if she was, as alleged, not given a copy of the General Terms.

7. The defendant's principal complaint is that the clerk of KLY responsible for the execution of the Legal Charge had unreasonably turned down her request for inspecting the Property first before releasing the money to the Housing Authority. She was concerned about the quality of the Property at the time, having learnt of scandals concerning the projects developed by the Housing Authority. However, she was told that inspection could only be carried out after execution of the Legal Charge. She had no choice but to sign the Legal Charge. After entering into possession, she found out that the condition of the Property was defective and unsatisfactory. She complained that KLY had failed to protect her rights. Had KLY acceded to her request, she would have found out the defective condition of the Property and she would have withdrawn from the sale. The plaintiff was responsible for KLY's negligence. I disagree. If KLY, as her solicitors, had failed in their duty to protect her right as alleged, she may have a claim against them. But I am not persuaded that the plaintiff should somehow be responsible for KLY's negligence in failing to protect her rights.

8. The defendant seemed to have relied on the doctrine of undue influence. But the basis upon which she raised such a defence is not clearly borne out in her evidence. In this connection, she again referred to the purported negligence on the part of KLY in protecting her rights. But that is not enough to raise the presumption of undue influence. Generally speaking, a presumption of undue influence arises only if the transaction is manifestly disadvantageous to the person influenced : see Chitty on Contracts, Vol.1, 28th edn, para.7-044 at pp.434-435. Here, the defendant had in my view failed to show that the transaction was manifestly disadvantageous to her. She intended to buy the Property. She obtained the loan from the plaintiff to enable her to do so. She did acquire the Property with the benefit of the mortgage loan. There is nothing to suggest that the terms of the Legal Charge were in any way excessively onerous. While she may find the condition of the Property unsatisfactory, it has nothing to do with the Legal Charge, the transaction she sought to avoid.

9. The defendant repeatedly referred to the poor condition of the Property as a ground for defending the plaintiff's claim. But the condition of the Property is simply irrelevant to the plaintiff's claim on the Legal Charge. She went on to allege that she was cheated into buying the Property and entering into the Legal Charge. These are all wild and bare allegations unsupported by any credible evidence before me. I have no hesitation to reject them.

10. The defendant complained that the monetary judgment included a disputed item of HK$5,000, which was a rebate of solicitors' conveyancing charges. But according to the second supplemental affirmation of Kaiser Kwan King Fat filed on 8 May 2002 in support of the quantum, that item was not included. This complaint must also fail.

11. The defendant lastly contended that the action should be ordered to continue as if begun by writ. Such a course is appropriate only if there are substantial disputes of facts, the resolution of which are necessary for a proper determination of the claim. Here, none of the defence is made out. The factual disputes the defendant sought to raise are either irrelevant or incapable of supporting any defence. They simply do not assist her at all. This request must be refused.

Conclusion

12. For the above reasons, the Registrar was correct in entering judgment for the plaintiff as he did. This appeal must fail and I dismiss it accordingly with costs against the defendant including all related costs reserved, to be paid forthwith and to be taxed if not agreed.