HANG SENG BANK LTD. v. TANG WAI FUN KARLINDAR

HCA4008/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4008 OF 2001

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J U D G M E N T

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1. The plaintiff is appealing against the decision of Master Brock made on 2 December 2002 on the summons dated 30 October 2002, in which the plaintiff sought :

(a) judgment on admissions by the defendant;

(b) alternatively, that the defence be struck out as disclosing no reasonable defence and/or being frivolous or vexatious and judgment be entered against the defendant; and

(c) costs.

2. The Master made the following order :

(a) money judgment be entered on a sum to be assessed with costs to the plaintiff; and

(b) no order as to the striking out application.

3. Today the defendant is absent. The affidavit of service has shown due service and I have been told by Miss Kwan for the plaintiff that the defendant has been absent before the Master on two previous occasions. I am satisfied that the defendant has due notice of the hearing today and I proceed in her absence.

4. The plaintiff commenced action herein on 7 September 2001, claiming :

(a) an order of possession of the mortgaged premises;

(b) payment of all sums secured by the mortgage with interest; and

(c) costs.

5. The plaintiff as mortgagee bank advanced to the defendant borrower $875,000 with interest, repayable by 240 equal monthly instalments. The loan was secured by a deed of mortgage dated 15 February 2001 of the suit property. The mortgage contained the following provisions :

(a) all sums outstanding according to the plaintiff's books are payable on demand;

(b) if the defendant fails to make payment on the due date of any sum, the entire balance shall become due and payable; and

(c) it shall be lawful for the plaintiff to enter into and take possession of the suit property.

6. The plaintiff also relied on the implied power of mortgagee under section 51 and the Fourth Schedule of the Conveyancing and Property Ordinance, Cap. 219, to take possession of the suit property.

7. The defendant started to make default in payment of the instalment as from April 2001. On 3 July 2001, the plaintiff through its solicitors demanded the defendant to pay the entire loan. The defendant failed to do so.

8. All the above were pleaded by the plaintiff and admitted by the defendant in her defence dated 30 October 2001.

9. Notwithstanding these admissions, the defendant alleged that in February 2001 she faced temporary cashflow problem. She requested the plaintiff to allow withholding of the monthly instalment for nine months. In or about March 2001, it was mutually agreed between the parties that the monthly instalment under the original payment schedule be withheld for nine months until the defendant could sell the property to cover the outstanding indebtedness. Hence, the plaintiff is not entitled to claim the outstanding balance and enter into possession immediately. I take it to mean that at the commencement of the action which was before the expiration of nine months, the plaintiff was not entitled to repayment and possession.

10. Miss Kwan submitted that the alleged mutual agreement was totally incredible and unsustainable for the following reasons :

(a) the mortgage was executed on 15 February 2001 and the alleged mutual agreement was entered into in March 2001 immediately after the execution of the mortgage; and

(b) if the mutual agreement were indeed made in March, then the defendant would not have made the monthly instalment for March 2001.

11. Miss Kwan also submitted that the alleged mutual agreement is not supported by any consideration moving from the defendant. Even if there was such an accommodation, it was a unilateral forbearance that could be revoked by giving reasonable notice, which the plaintiff had done so through their demand.

12. I agree with Miss Kwan that the alleged mutual agreement is not supported by consideration as the defendant is bound to make payment of the instalments under the original loan and no fresh consideration is pleaded. I also find that the alleged mutual agreement is inherently incredible and unbelievable. It is a plain and obvious case that it is impossible for the defence to be made out at the trial.

13. Hence, I shall set aside the order of the Master, strike out the defence and enter judgment in favour of the plaintiff. Up to date calculations have been submitted and I shall order as follows :

(1) judgment be entered in favour of the plaintiff in the sum of $952,813.34;

(2) interest at judgment rate until payment;

(3) the defendant do deliver to the plaintiff vacant possession of the property comprised in the mortgage dated 15 February 2001, known as 1st Floor, No. 76A Tai Po Mei (also known as Sub section 2 of Section R of Lot No. 612 in Demarcation District No. 36), Tai Po, New Territories, Hong Kong, within 28 days from the date of service of the order made on this appeal; and

(4) costs in that the defendant do pay the plaintiff's costs of this appeal, of the hearings before Master Brock on 19 November 2002 and 2 December 2002, and of this action, to be taxed if not agreed.