POST EAST FINANCE CO LTD v. CHOW CHI LIT SIMON AND ANOTHER

DCMP 1298/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 1298 OF 2005

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Judgment

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1. The Plaintiff by this originating summons claims against the Defendants for payment of outstanding dues under a second mortgage.

2. By a second mortgage dated 10 July 2000 the Defendants’ property Flat D on 30/F of Tower I Metro City Phase II at No. 8 Yau King Road Tseung Kwan O was charged to the Plaintiff to secure a loan in the sum of $585,290.00.

3. By Clause 2.01 (a) of that mortgage the Defendants have to pay interest at 1.75% p.a. above the prime rate specified by HSBC.

4. By Clause 2.01(b) the Defendants have to pay equal monthly instalments of $5,426.70 until the loan and interest have been fully paid.

5. In default under Clause 5.02, all term loans and other moneys would become repayable immediately on and demand that under Clause 18.01 (ii) the Defendants have to indemnify the Plaintiff for disbursements, costs, charges and expenses incurred by the Plaintiff in the lawyer exercise of the Plaintiff’s powers under the said mortgage.

6. The Defendants have failed to make any monthly instalments since 5 June 2004.  Despite repeated demands the Defendants have failed and/or refused to make payments to the Plaintiff.

7. The Defendants in reply claimed that:-

(i)	the application should be by way of Statement of Claim and there should be a public trial;
(ii)	they received undue influence from the Plaintiff in the restructure of the loan;
(iii)	the second mortgage was not legally binding as at the time of signing that document details of the terms have not been explained;
(iv)	they have not received the account statements since 1 April 2004;

8. The Plaintiff by affidavit stated that at a meeting between the Plaintiff and the 1^st Defendant on 15 November 2004 the Plaintiff agreed to reduce the original monthly instalments by about 30% for 12 months from 5 January 2005 to 5 December 2005.  The Defendants were invited to accept the offer by letter dated 29 December 2004 and sent to the Defendants by post.  The Defendants signed and returned the letter to the Plaintiff.

9. The Plaintiffs also set out in detail as to how the amount was calculated.

10. The senior conveyancing clerk of Messrs. Lo & Co. also filed an affidavit as to how the Defendants entered into a second mortgage at the time of purchase of the aforesaid property by the Defendants.

11. In my judgment this is an appropriate case where the Plaintiff is justified in issuing an originating summons as it was never in issue that the Defendants had entered into a second mortgage with the Plaintiff and that the Defendants had failed to pay the instalments under the mortgage since 5 June 2004.  Further the Defendants did not challenge the amount claimed by the Plaintiff after the Plaintiff had explained in the affidavits as to how the amount claimed was arrived at.

12. As to whether the second mortgage had been explained I do not think the Defendants are serious when they made that allegation because the 1^st Defendant is conversant with the English language in that his affirmations in reply are in English.  Further the Defendants must have entered into a first mortgage before they entered into a second mortgage.  They must have known the substance and contents of the mortgage or the nature of a mortgage.  This is not a case for trial on non-est factum.

13. There is also no substance in the Defendants saying that the restructure of the loan was under undue influence because the restructure was actually for the benefit of the Defendants.  Further the letter offering the restructure was by letter sent to the Defendants and the Defendants signed and returned the letter to the Plaintiff.  The Defendants have not stated how and in what way there was undue influence.  This is a bare assertion.

14. In a last ditch to delay the proceedings the Defendant applied again for Legal Aid notwithstanding the fact that they had once been refused Legal Aid.

15. For reasons above I cannot see that there is any defence to the Plaintiff’s claim and I make an order in terms of paragraphs 1 and 3 the originating summons.