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DCCJ2060/2013
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 2060 OF 2013
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| BETWEEN |
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WEALTH LEE FINANCE LIMITED |
Plaintiff |
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(惠利財務有限公司) |
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and |
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NG FUN LUNG (吳歡龍) |
1st Defendant |
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LEUNG KWAI CHUNG (梁桂仲) |
2nd Defendant |
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| Before: HH Judge Levy in Chambers |
| Date of Hearing: 14 May 2015 |
| Date of Further Written Submissions by the Plaintiff: 20 May 2015 |
| Date of Further Written Submissions by the 2nd Defendant: 21 May 2015 |
| Date of Judgment: 30 June 2015 |
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JUDGMENT
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Introduction
1. The plaintiff, Wealth Lee Finance Ltd, was at the material time, a licensed money lender. The 1st defendant, Ng Fun Lung, is the son of the 2nd defendant, Mdm Leung Kwai Chung.
2. The plaintiff’s claim is based on a loan agreement dated 31 August 2012 (“Loan Agreement”) for the advancement of a loan to the 1st defendant in the sum of $450,000 (“Loan”) executed between the plaintiff as the lender and the 1st defendant as the borrower.
3. By a legal charge (“Legal Charge”) of the same date executed by the 1st defendant on his own behalf, and as the attorney of the 2nd defendant under a power of attorney (“POA”) dated 13 April 2012 purportedly executed by the 2nd defendant as the donor in favour of the 1st defendant as the donee, the defendants charged two properties (“Properties”) registered in the joint names of the 1st and the 2nd defendants as tenants in common in equal shares in favour of the plaintiff to secure the indebtedness under the Loan Agreement.
4. After paying two instalments of the Loan, the 1st defendant defaulted on the repayment of the remaining instalements of the Loan.
5. By a writ filed on 7 June 2013, the plaintiff claims against both defendants for the monies due under the Loan Agreement and for the delivery of vacant possession of the Properties.
6. A money judgment was entered on 7 May 2014 against the 1st defendant upon his default of filing an acknowledgement of service and the serving of a defence.
7. The 2nd defendant has been granted legal aid to defend the action. It is the 2nd defendant case that she had no knowledge that the 1st defendant executed the Legal Charge on her behalf or that she had not authorized the 1st defendant to do so.
8. By summons dated 17 February 2015, and pursuant to O.14A r.1 of the Rules of the District Court, the 2nd defendant asks the court to determine a question of law arising from the POA.
Question for determination
9. In the summons, two questions were stated for the court’s determination. Counsel for the 2nd defendant, Mr Cheng, however indicated at the hearing that the determination of the second question was not needed.
10. That being the case, the only question the court was asked to determine is, on the basis that the 2nd defendant had executed the POA, whether on the true and proper construction of clause 20 of the POA, it conferred authority on the 1st defendant to execute the Legal Charge as attorney on behalf of the 2nd defendant to secure the Loan which had been advanced to the 1st defendant solely.
11. The 2nd defendant’s position is that the 1st defendant was only empowered by clause 20 of the POA to charge the Properties if the charge (and the Loan) was for the benefit of the 2nd defendant.
The plaintiff’s concession
12. Had the hearing of the application proceeded in its normal course, it would have been necessary to set out in full the specific powers stated in clause 20 of the POA. This is, however, no longer necessary as a result of the unexpected concession Mr Fong, counsel for plaintiff, made at the hearing.
13. In his submissions at the hearing, Mr Fong accepted the proper construction of clause 20 of the POA as that contended by Mr Cheng. He accepted that under clause 20 of the POA, any act to be done by the 1st defendant as the 2nd defendant’s attorney was limited to an act for the benefit of the 2nd defendant. It was therefore accepted that if the Loan Agreement and the Legal Charge had been executed for the sole benefit of the 1st defendant, the plaintiff’s claim against the 2nd defendant would be dismissed.
The plaintiff’s contentions
14. Notwithstanding the concession as to the construction of the POA, Mr Fong contended that there was evidence showing that the 2nd defendant had knowledge of and consented to the Loan and the execution of the Legal Charge. Thus, it is the plaintiff’s case that the Legal Charge had been executed for the benefit of the 2nd defendant. In the evidence filed in opposition to the application, the plaintiff denied that the Loan had been advanced to the 1st defendant solely, although the 1st defendant was the only named borrower in the Loan Agreement. Crucially, it was alleged in the 3rd affirmation of Tang Yan Leung, the manager of the plaintiff, that before the Loan was made to the 1st defendant, Mr Tang had personally telephoned the 2nd defendant to confirm her consent to the plaintiff’s making of the Loan and the charging of the Properties in relation to the Loan.
15. With the concession having made in relation to the construction of the POA, it would appear that if the court could resolve the factual disputes in relation to whether the 2nd defendant had benefited from the Loan and whether she had verbally agreed to the execution of the Legal Charge as the plaintiff alleged in the evidence filed in this application, the entire proceedings between the plaintiff and the 2nd defendant could have been brought to a speedy end.
16. Consequently, the option of holding an examination of the deponents of the affirmations in relation to the factual disputes referred to in the preceding paragraph was therefore explored with the parties. Mr Cheng was very much in favour and urged the court to give directions for the hearing of the preliminary issue. Mr Fong however vigorously opposed the trial of a preliminary issue at the interlocutory stage.
17. The application was therefore adjourned to enable counsel to lodge further written submissions on the question of whether the court in the hearing of the O.14A application should receive oral evidence to resolve the factual dispute in relation to the issue of whether the execution of the Legal Charge was for the sole benefit of the 1st defendant.
Should oral evidence be taken?
18. Further written submissions have been received.
19. It is not in dispute that the taking of oral evidence in this interlocutory application would be equivalent to the holding of a trial of a preliminary issue under RDC O.33 rr.3 & 4 (2). It is trite that an order for a trial of a preliminary issue should only be made in exceptional circumstances or on special grounds, and it should only be made where it is just and convenient: Charles Tsu Yew Wong & Anor v HSBC Private Trustee (Hong Kong) Limited, unreported, HCA 10631/1998,14 August 2008 at §7, referring to Lee Yiu Kwan v Ting Yin Wah & Anor [2004] HKEC 1222; Hong Kong Civil Procedure 2008, Vol.1, §33/4/9A; Telford Development Ltd v Shui On Construction Co Ltd [1999] 2 HKC 110.
20. After having considered counsel’s further written submissions, I took the view that there were no special grounds for this court to examine the deponents in this application.
21. It is observed that at this stage, the allegations made by Mr Tang referred to in §14 above have only been contained in his 3rd affirmation, but have not been pleaded. Moreover, discovery has also not taken place, and it would be undesirable to allow the parties to have a trial of a preliminary issue without the allegations have been properly pleaded. It is likely that the plaintiff, according to Mr Fong’s indication at the hearing, would cross-examine the 2nd defendant in relation to some of the pervious mortgages and loan agreements executed by the defendants, which matters have not been pleaded. This may lead to the examination of the deponents without proper pleadings of all the facts and matters relating to the preliminary issue. This would be, in my judgment, procedurally unfair as the deponents and therefore the parties would be caught by surprise.
22. Since only the deponents of the affirmations, Mr Tang and the 2nd defendant, would be examined, the parties would thereby be precluded from calling other witnesses to testify on their behalves. If such a restriction were imposed, I am of the view that injustice may result. On other hand, if the parties are at liberty to call additional witnesses to testify, this may have the consequence of letting the preliminary issue develop into a full-blown trial, thereby undermining the purpose of saving costs and time by taking evidence at this stage.
23. In conclusion therefore, I do not find that the taking of oral evidence would likely achieve the purpose of saving costs and expediting the proceedings.
Disposal
24. Consequent on the concession made by Mr Fong at the hearing of this application, the construction of the POA that the 2nd defendant had originally asked the court to undertake in this application had become otiose. In such a case, the correct disposal of the summons should be an order of dismissal.
25. As for the costs of the summons, I take the view that a fair costs order, given that the plaintiff’s concession was only made at the hearing but not earlier, should be costs in the cause. I therefore further make a costs order nisi that the costs of the summons, including costs reserved, be costs in the cause, with certificate for counsel. The 2nd defendant’s own costs be taxed in accordance with the Legal Aid Regulations.
Case Management Directions
26. It is observed that a Timetabling Questionnaire had only been filed by the 2nd defendant on 7 November 2014, but the plaintiff seems to has completely disregarded the requirements of O.25 of the Rules of the District Court and Practice Direction 5.2 in relation to the filing and serving of a Timetabling Questionnaire and its obligation as a plaintiff in taking out a case management summons. In order to ensure that no further delay would be caused, I direct the plaintiff do within 14 days from the date of the handing down of this judgment file and serve a case management summon together with a completed Timetabling Questionnaire.
27. Lastly, I wish to thank counsel for their assistance rendered in this case.
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(Katina Levy) |
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District Judge |
Mr Stephen Fong, instructed by Deannie Yew & Associates, for the plaintiff
Mr Alfred Cheng, instructed by Sit Fung Kwong & Shum, for the 2nd defendant
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