DAH SING BANK, LTD v. RETKIE CO LTD AND OTHERS

HCMP 297/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 297 OF 2016

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J U D G M E N T

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1.  This is a mortgage action where the plaintiff bank is seeking to enforce 2 mortgages executed by the 1^st defendant over its landed property for due payment of all money owed to the plaintiff, together with interest, by itself and the 2^nd defendant.

2.  The plaintiff’s case is straightforward.  The mortgages were executed in exchange for banking facilities granted to the 1^st and 2^nd defendants.  The 3^rd defendant is a guarantor of the 2^nd defendant’s liabilities to the plaintiff.  This action is only pursued against the 1^st defendant because the 2^nd defendant is in liquidation, whereas the 3^rd defendant has been bankrupted. 

3.  It is clear that the evidential requirements under O 88, r 5 of the RHC have been satisfied.  The evidence is that the property is vacant.

4.  The 1^st defendant does not dispute its liability to repay to the plaintiff.  There is an argument over the quantum of the debt, and the 1^st defendant asks to be allowed to sell the property by itself in order to repay the plaintiff. 

5.  I am unable to see any real doubt over the amount of the debt, both principal and interest, owed to the plaintiff.  The 2^nd affirmation of Mr Ho Yau Keung has made that reasonably clear, and there is no reply to the same. 

6.  In respect of the issues raised by the 1^st defendant over: (a) the penalty interest charged by the plaintiff and (b) whether the plaintiff should have enforced the guarantee over one of the 2^nd defendant’s loans by the Hong Kong Mortgage Corporation, I am afraid that the contractual provisions leave no room for argument. 

7.  As regards the 1^st defendant’s argument that it had acted reasonably in trying to discharge its liabilities to the plaintiff, I do not believe that it constitutes a valid defence to these proceedings.  The court may be sympathetic to the predicaments in which the 1^st defendant had found itself due to unforeseen turn of events, but its task is to uphold the rights of the parties in accordance with the terms of the mortgages. 

8.  Finally, the 1^st defendant’s contention that there should be a surplus in the event of sale of the property, and therefore it should be allowed to sell the property by itself, is premised upon the proposition that the Hong Kong Mortgage Corporation will discharge 80% of the loan which it has guaranteed.  Given that the plaintiff has the contractual entitlement to decide on the manner in which to enforce its rights, this contention must also be rejected. 

9.  In the premises, I make an order in terms of the draft order before the court.