HANG SENG BANK LTD v. TSOI SIU CHING LEO

HCMP 2782/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2782 OF 2005

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J U D G M E N T

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1.  The Defendant, Mr Tsoi, is applying for an extension of time in order to appeal from so much of an order of the Registrar dated 28 February this year as relates to the Defendant giving up possession of Flat D, 38 Floor, Nob Hill, Kwai Chung, to the Plaintiff who is the mortgagee.  The order for possession was made consequent upon the Defendant having failed to satisfy a money judgment in excess of US$3 million together with arrears on the mortgage on the property in the sum of HK$3,130,243.68.  There is no complaint made by the Defendant against the money judgment which he accepts has been correctly entered by the Registrar.

2.  Given the fact that the Defendant is out of time to bring his appeal — he says this is due to the fact that he spends much of his time in China and cannot give instructions to his solicitors expeditiously — he needs to show, under Order 39/1/9 of the Rules of the High Court that his appeal has merit.  It was expressed in this way by Millett LJ (as he then was) in Mortgage Corporation Plc v Sandoes [1997] PNLR 263, “the overriding principle (is) that justice must be done.”  The prospect of the appeal succeeding and/or its intrinsic importance from the prospective of justice is the dominant consideration.  With that in mind I turn to the merits.

3.  The case is an unusual one because the Defendant and his wife own adjoining flats.  She owns flat E.  This has been converted into a single enlarged residence.  The partition wall had been removed I am told prior to the mortgage with which I am now concerned.  There are I am told no arrears on the mortgage on the wife’s property and I am also told that there is a second mortgage on this property (flat D) which is subsequent in time to the Plaintiff’s mortgage, which the wife is paying and on which there are also no arrears. 

4.  Mr Tam, for the Defendant, submits that the Plaintiff, given the unusual structural situation where this is now a single home carved out of two flats with different owners and different mortgagors, should act in the best interests of the mortgagors and consider how best to deal with the properties.  He has referred me in particular to the case of The World Enterprises (Holdings) Limited and Ors. v Hong Kong and Shanghai Banking Corporation, HCMP 2468/2000, but that case can have no possible bearing in this matter.  That case related to the mortgagee’s wish to sell a property after it had obtained possession.  Mr Chan, for the Plaintiff, rightly submits that stage has yet to be reached and if and when it is reached the Plaintiff will have to decide, no doubt in consultation with the Defendant and his wife as the adjoining owner (subject to her mortgage), how best to proceed which will include discussion as to whether to resurrect the partition wall between the flats and restore them to their original state as two separate flats.

5.  Here, all I have to decide is whether possession should be ordered based on the parties (the Plaintiff and the Defendant in this case) rights and obligations under the mortgage.  The Defendant’s wife at this stage has absolutely no say in this.  Given the very considerable indebtedness and arrears under the Defendant’s mortgage with the Plaintiff, I am entirely satisfied that the Registrar was right to have made an order for possession in the Plaintiff’s favour, which he did on the usual terms that possession would be handed back if the Defendant paid off the amount due on the money judgment.

6.  This being my view, the appeal can have no prospect of success.  I will therefore refuse the Defendant the extension of time that he seeks to bring his appeal.  In those circumstances, the Plaintiff must have its costs on an indemnity basis as provided for in Clause 18 of the Mortgage.