LAU SIN v. WEALTH ASIA CREDITS LTD

HCMP 1164/2023

[2024] HKCFI 1367

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1164 OF 2023

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REASONS FOR JUDGMENT AND
SUMMARY ASSESSMENT OF COSTS

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Introduction

1.1.  The plaintiff (“Madam Lau”)  is the registered owner of a unit in Tseung Kwan O (“the Property”). The defendant (“WAC”)  is a licensed money-lender. 

1.2.  On 26 September 2014, WAC registered a Third Mortgage against the Property. 

2.  On 16 May 2024, the parties appeared before me on the hearing of an Originating Summons issued on 25 July 2023 (“the 2023 OS”)  in which Madam Lau seeks against WAC orders:

(1)  that WAC’s registration of the Third Mortgage be vacated on the ground that the registration and the Third Mortgage have been obtained by fraud without Madam Lau’s consent, authority or knowledge, namely by Mary Wong (“MW”)  having forged Madam Lau’s signature on a Power of Attorney under which MW executed the Third Mortgage; and

(2)  declaring that 4 loan agreements purportedly made between Madam Lau and WAC and the Third Mortgage are unenforceable, null and void and of no legal effect against her and should be set aside (also on the basis that MW had entered into those loan agreements using the forged Power of Attorney without Madam Lau’s consent, authority or knowledge).

3.  At the conclusion of the hearing, I struck out the 2023 OS as an abuse of process and ordered Madam Lau to pay the costs of the OS to WAC.  My reasons for the strike-out and my summary assessment of costs appear below.

Background

4.  The material facts are summarized chronologically below. 

5.  The 4 loan agreements referred to above were dated 25 June 2014, 10 July 2014, 15 August 2014 and 26 September 2014 respectively, the last loan having been taken out for repayment of the 3^rd loan which was itself taken out for repayment of the 1^st and 2^nd loans.  The Third Mortgage was dated 26 September 2014. 

6.  On 30 October 2014, MW was arrested by the police.

7.  On 24 September 2015, another moneylender Glory Sky Finance Ltd (“GSF”)  sent a demand letter to Madam Lau for $2.9 million and interest, alleging that the Property had been mortgaged to it under a mortgage dated 19 August 2014 executed by MW under the Power of Attorney.  

8.  Madam Lau then made a report to the police.

9.  On 11 January 2016, WAC sent a demand letter to Madam Lau for a sum of more than $1.5 million said to be the outstanding principal and interest on its loan.

The 2017 Action  

10.1.  On 25 April 2017, Madam Lau issued HCA988/2017 (“the 2017 Action”)  against MW as 1^st defendant, GSF as the 2^nd defendant and WAC as the 3^rd defendant. 

10.2.  The Statement of Claim pleaded (among other things)  that:

-  a Purported Power of Attorney had been used to mortgage the Property (§4):

-  Madam Lau had not executed the Purported Power of Attorney and it was made without her authorization, knowledge or consent (§5);

-  MW “under the purported authority and/or power of the Purported Power of Attorney entered into a loan agreement with [WAC], particulars of which will be provided after discovery and/or interrogatories (hereinafter [sic] as the ‘Purported D3 Loan Agreement’)” (§12);

-  MW had executed the Purported D3 Loan Agreement without Madam Lau’s authorization, knowledge or consent (§13);

-  No money had been paid by WAC to Madam Lau or at her direction (§14); and

-  MW had executed the Purported Third Mortgage without Madam Lau’s authorization, knowledge or consent (§§15-16).

10.3.  The relief Madam Lau sought against WAC included:

-  a declaration that the Purported D3 Loan Agreement is void as against Madam Lau (§10);

-  an order that the Purported D3 Loan Agreement and copies thereof be delivered to Madam Lau for cancellation (§11);

-  an order that copies of the Purported Power of Attorney be delivered up to Madam Lau for cancellation (§12);

-   a declaration that the Purported Third Mortgage is void as against Madam Lau (§13);

-  an order that the Purported Third Mortgage and copies thereof be delivered up by WAC to Madam Lau for cancellation (§14); and

-  an order that the registration of the Purported Third Mortgage in the Land Registry be vacated (§15).  

It is obvious that the relief sought in the 2023 OS (see §2 above)  was similar to that in the 2017 Action.

10.4.  On 10 August 2017, WAC filed a Defence and Counterclaim in which it was alleged (among other things)  that:

-  Madam Lau had appointed MW to be her attorney by virtue of the Power of Attorney (§7); and

-  the Power of Attorney was valid and effective (§11). 

10.5.  On 27 September 2017, Madam Lau filed a Reply and Defence to Counterclaim.

10.6.  There is nothing in the papers before me showing what has happened in the 2017 Action after the close of pleadings.  

HCCC98/2020

11.  In 2020, criminal proceedings were commenced against MW in HCCC98/2020.  In 2023, MW pleaded guilty in the High Court to 7 charges of fraud.  Charges 6 and 7 relate to transactions concerning the Property.  On 17 January 2023, she was sentenced to 3 years imprisonment after plea for each of Charges 6 and 7, with the overall period of imprisonment being 9 years after plea.

The 2023 OS

12.  On 12 April 2023, Madam Lau’s solicitors sent a letter to WAC demanding the vacating of the Third Mortgage as a lis pendens[1] in the Land Registry.

13.  This was followed by the 2023 OS in which, as noted above, Madam Lau sued WAC again on the same issues as in the 2017 Action and sought similar relief.

Discussion

14.1.  Counsel for WAC Miss Hannah Tang submitted that the court should strike out the 2023 OS on two grounds, one of which was that, as Madam Lau had already commenced the 2017 Action against WAC based on the same facts, containing the same issues, and seeking the same relief, the 2023 OS is an abuse of process.

14.2.  This submission was supported by the following holding in Berthier Godown Ltd v E Wah Realty Ltd[2], cited by Kwan J (as she then was)  in Re Shun Tak Holdings Ltd[3]:

“ It is that if the party seeks to raise new matters in separate proceedings or seeks to reverse a previous assumption that has been the basis of earlier proceedings in new proceedings, that amounts, first of all, to an abuse of the process and second, he is estopped from doing so. A fortiori, this must be so if the earlier proceedings are still in existence and the party can raise those matters in the proceedings which have already been started and in which orders have already been made. He certainly cannot seek to raise factual and legal issues in conflict with his earlier stance and the earlier order of the court. He must pursue all the remedies available to him and raise all the arguments that are available to him in the first proceedings”. (Emphasis added).

15.  Counsel for Madam Lau Mr Steve Cheung advanced the following arguments against abuse of process.

16.1.  First, Mr Cheung argued that in Re Shun Tak Holdings, there was only one set of proceedings and that Kwan J only held that the proceedings should have been commenced in a different form. I do not see how that assists him.  If anything, the abuse is more egregious in the present case when there is already an existing set of proceedings between the same parties on the same matter for the same relief. 

16.2.  Mr Cheung then argued that the subject matter in the 2017 Action referred to one loan agreement, whereas in the OS, the reference is to four.  In my view, there is no difference.  The Third Mortgage was to secure the last loan.  As mentioned above, the last loan agreement (called the Purported D3 Loan Agreement in the 2017 Action)  was for repayment of the 3^rd loan agreement, which in turn was for repayment of the first two loans.  If Madam Lau had sought discovery against WAC in the 2017 Action, she would have discovered that, but in any event, that was clear from the statement of Au Mei Lin Sylvia, the managing director of WAC, made to the police on 22 May 2017, and which Madam Lau had a copy of, as she exhibited it as “LS-5". 

17.1.  Second, Mr Cheung argued that there has been a change in circumstances after the 2017 Action in that MW was convicted in 2023, so that (he argues)  there was now no dispute of fact. 

17.2.  Regarding the argument that there was “now no dispute of fact”, s.62 Evidence Ordinance Cap 6 does not render the conviction conclusive evidence against WAC.  Even on Mr Cheung’s own submissions, he did not put it any higher than that the conviction shifted the burden of proof and was probative evidence of some weight. In any event, it does not justify commencing fresh proceedings when the 2017 Action is still extant.

17.3.  Mr Cheung then argued that there would be a saving in costs by commencing the OS proceedings.  In my view, the contrary must be so.  Having expended costs in the 2017 Action, the parties now had to expend costs on a fresh proceeding, albeit on the same issues and involving the same relief.  Insofar as it was suggested that it would be more costly to go to full trial in the 2017 Action as there are no longer any triable issues as a result of the conviction, it would be for Madam Lau’s legal advisers to consider if a summary judgement application should be made in the 2017 Action.

18.1.  Finally, Mr Cheung informed the court that Madam Lau’s current legal team was not aware of the 2017 Action until it was mentioned in Madam Au’s affirmation in opposition to the OS.  He said from the Bar table that even though his solicitors had thereupon filed a notice to act in the 2017 Action, they have not been able to see the court file.  

18.2.  If Madam Lau had not mentioned the 2017 Action to her current legal team, then she has no one to blame but herself.  That does not make the 2023 OS any less an abuse of process.  As for access to the 2017 Action court file, her current team has not applied to adjourn the hearing of the OS pending such access.

Order

19.  By reason of the above matters, I struck out the OS as an abuse of process.  Mr Cheung did not dispute that costs should follow the event.  Having considered WAC’s statement of costs and Mr Cheung’s comments thereon, I would summarily assess the costs at $72,290.