THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD v. LIN HAIYAN

HCMP 662/2025

[2026] HKCFI 1271

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 662 OF 2025

_______________________

______________________

BETWEEN

______________________

______________________

REASONS FOR JUDGMENT

______________________

1.  By originating summons dated 30 April 2025 (“OS”), the Hongkong and Shanghai Banking Corporation Limited (the “Bank”) sought an order pursuant to Order 88 of the Rules of the High Court for, inter alia, (1) payment of all monies due under the Mortgage (described below) together with interest, and (2) delivery of vacant possession of the property known as Flat C, 16/F, King Tien Mansion, Horizon Gardens, 18D Taikoo Shing Road, Hong Kong (the “Property”) comprised in the Mortgage. At the conclusion of the hearing, I made an order in terms of the OS. My reasons appear below.

Factual background

2.  Lin Haiyan (the “Defendant”) is the registered owner of the Property.

3.  On 22 March 2011, the Bank and the Defendant entered into a mortgage loan facility letter for a mortgage loan in respect of the Property up to HKD 4,115,000 (the “Mortgaged Loan”).

4.  On 31 March 2011, the Defendant mortgaged the Property to the Bank as security for the payment of all monies due from the Defendant to the Bank then or in future, primary or secondary. Under clause 3.1 of the Mortgage Conditions the secured liabilities included the amounts owing under any existing or subsequent agreement for banking, credit and other facilities.

5.  In 2014 to 2015, Haiyork Holding Limited (the “Borrower”) conducted trading business and maintained banking facilities with the Bank. At all material times the Defendant was a director of the Borrower.

6.  Between 18 March 2015 and 10 July 2019, the Defendant executed 3 personal guarantees (collectively, the “Guarantees”) to secure the Borrower’s liabilities in favour of the Bank comprising a guarantee up to USD 12 million; an unlimited guarantee; and a guarantee up to HKD 15 million.

7.  The Bank granted the Borrower banking facilities under various facility letters, overdraft facilities and HKMCI banking facility letters including import facilities dated 19 April 2018 and 9 July 2019 (as subsequently amended and supplemented).

8.  Meanwhile the Borrower purchased 2 insurance policies in May and August 2015, (collectively, the “Insurance Policies”) and obtained associated loans from United Life Insurance to finance their purchase (“ULI Loans”).

9.  In September 2015, the Borrower assigned one of the Insurance Policies to the Bank and the other in July 2019.

10.  The Mortgage secures the Defendant’s liabilities under (1) the Mortgage Loan, and (2) the Guarantees securing the Borrower’s liabilities under the Borrower’s facility letters.

11.  The Bank sent various demand letters to the Borrower and the Defendant in April 2025 but no payment was made. The Bank then commenced these proceedings to recover the amounts outstanding. They are set out in the table in §33 of the affidavit of Lauren Claire Oxley (“LCO”) dated 30 April 2025 (“LCO 1^st”) replicated below:

12.  It shows a principal amount of USD 3,522,866.43 outstanding in respect of Import Loans and a principal amount of HKD 12,968,906.39 outstanding in respect of the unauthorised overdraft and Mortgage Loan (the “Outstanding Liabilities”).

13.  Ms Valerie Kwok, counsel for the Bank, submitted that this was a straightforward enforcement action by the Bank to recover the outstanding amounts from the Defendant under the Mortgage and the Guarantees. She noted that there is no challenge to the validity of the Mortgage, the Borrower’s facility letters, the Guarantees or the Mortgage Loans or the Outstanding Liabilities save as to quantum.

The Defendant’s objections

14.  At the hearing, it became clear that the Defendant’s objections concerned 2 matters.

(1) Manifest error

15.  In her written submissions, Ms Eugenia Yang, counsel for the Defendant, highlighted an unexplained increase of guarantee liabilities from HKD 12,664,748.22 as at 8 April 2025 to HKD 12,968,906.39 as at 30 April 2025. She submitted that there is a thus an unexplained increase of HKD 304,158.17 in a matter of 22 days which suggested that there was a “manifest error” in the Bank’s calculations.

16.  The amount shown outstanding as at 8 April 2025 is extracted from the Bank’s letter of 9 April 2025 to the Borrower while the amount outstanding as at 30 April 2025 is extracted from the Bank’s letter of 30 April 2025 to the Defendant. However, the Defendant’s liability to the Bank is different from that of the Borrower’s because, apart from the guarantee liabilities, the Borrower is also liable for the monthly repayment of the Mortgage Loan of HKD 304,738.18 that accounts for the difference. The amount identified is virtually identical to the amount of the Mortgage Loan.

17.  While the amounts are not exactly identical, a typographical error (typing “1” instead of “7” as the 4^th digit) is a possibility. In any event, in the circumstances a difference of $600 is de minimus and certainly cannot be considered a ‘manifest error’ to counter the conclusive evidence clause[1].

(2) Set off arising from the surrender of the Insurance Policies

18.  In response to the Defendant’s complaint in her affirmation filed in opposition on 9 September 2025 at § 27 that she had no means of knowing the value of the ULI Loans as at 29 October 2021 and how much of the outstanding facilities owned by the Borrower had been partially set off, LCO filed her 2^nd affirmation on 28 November 2025 (“LCO 2^nd”).

19.  § 11 of LCO 2^nd provided details of the surrender values of the Insurance Policies and their application to set off the ULI Loans under the Insurance Policies and the Import Loan. After providing details in subparagraphs (a) and (b) of the full settlement of the outstanding principal and interest of both ULI Loans, subparagraph (c) read as follows:

“(c) the remaining surrender value in aggregate of USD 539,013.69 was applied to partially settle the Import Loan (168-331155-120) on 16 March 2024.”

20.  Loan Repayment Advices dated 16 March 2024[2] were exhibited in LCO 10. They show amounts of principal repaid of USD 254,526.61 and USD 283,011.61 respectively plus interest of USD 1475.47. The amounts repaid in the aggregate correspond to the amount stated in subparagraph (c).

Conclusion

21.  As both of the Defendant’s objections have been satisfactorily answered, there was no reason for not granting the relief sought in the OS.