BANK OF CHINA (HONG KONG) LTD v. EXPERT PROMISE LTD

HCMP 1136/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1136 OF 2003

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J U D G M E N T

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1. This is a mortgagee action by which the Plaintiff, as mortgagee seeks to recover possession of the mortgage property at Flat E, 2nd Floor, Block 2 and Car Parking Space No. 345 on Basement, Villa Concerto, Symphony Bay, No. 530 Sai Sha Road, New Territories ["the Property"]. The Plaintiff also seeks money judgment against the Defendant.

2. By a Mortgage dated 4 May 2001, the Defendant charged the Property (which was registered in the name of the Defendant and beneficially owned by it) to the Plaintiff to secure the Defendant's obligations in respect of banking facilities granted by the Plaintiff to the Defendant. According to a confirmation letter dated 4 May 2001, the Plaintiff granted a mortgage loan in the sum of $3,710,000 to the Defendant. The monthly instalment payable under the terms of the loan was $22,095.50 per month, subject to fluctuation depending on the applicable prime interest rate.

3. According to the evidence before me, the Defendant had failed to pay for the instalment accruing since April 2002. The last payment made by the Defendant was made on 3 June 2002 which was a late payment of the instalment due in March 2002. Despite demands by the Plaintiff, the Defendant failed to make further payment.

4. On 15 March 2003, the Plaintiff issued the present proceedings against the Defendant. Since the Defendant is a limited company, it may not carry on proceedings in the High Court otherwise than by a solicitor except where leave is given under Order 5 Rule 6(3). The application has to be made to the Registrar and a judge has no power to grant such application (see Kone Elevator (HK) Ltd v. Senfield Limited (unreported), CACV 216 of 2002, 24 February 2003). The Defendant was well aware of that and an application was made. On 2 June 2003, Master Levy granted an order permitting Ms Leung Fung Ha, a director of the Defendant company to represent the Defendant in these proceedings.

5. However, when the matter came before me on 29 August 2003, Ms Leung did not appear. Instead, a Mr Yeung Wing-keung purported to represent the Defendant company. Mr Yeung told me that he is not a director of the company. As such, he simply does not fall within the scope of Order 5 Rule 6(3), see China Top Consultants Ltd v. Prosperity Construction & Decoration Ltd, HCA 6903 of 2000, 29 August 2003. In any event, I am not satisfied as to the reason for Ms Leung's absence and as mentioned, I do not have the power to grant leave to Mr Yeung to act for the company even if he were a director. I therefore cannot allow Mr Yeung to address this court on behalf of the Defendant and I treated the Defendant as electing to be absent from the hearing on 29 August 2003.

6. I have carefully examined all the evidence filed, including the latest affirmation filed by the Defendant on 28 August 2003. The defence case as set out in the affirmations filed by the Defendant essentially boils down to one argument, viz. that a manager of the Plaintiff had agreed in October 2001 to suspend the Defendant's payment obligation in respect of the principal sum due under the mortgage loan awaiting the sale of the Property. In the meantime, the Defendant was only required to make payment in terms of interest. It was also alleged that the Defendant had continued to pay interest thereafter until March 2002 when the Plaintiff wrongfully refused to accept payment of interest only. These allegations were, of course, denied by the Plaintiff. The Defendant also said it was prepared to repay all the interest due between March 2002 and May 2003, pay regular instalment since May 2003. The Defendant also intended to sell the Property and agreed to repay all the principal amounts due between October 2001 and April 2003 after the sale of the Property.

7. The proper approach in deciding whether I should dispose of the matter summarily under Order 28 Rule 4 can be found in the judgment of Ma J (as he then was) in Wing Hang Bank Ltd v. Liu Kam Ying HCMP 2519 of 2001, 6 March 2002, para. 10 and the judgment of the Court of Appeal in Bank of China (Hong Kong) Ltd v. Keen Lloyd Resources Limited CACV 1787 of 2001, 26 February 2002 paras. 13 to 22.

8. The evidence before me clearly showed that the defence case as summarized in Paragraph 6 above is plainly incredible. Even on the evidence produced by the Defendant, there had been payment of principal as well as interest after October 2001. In none of the affirmations filed by the Defendant did the deponents explained why this was so if there had been an agreement to suspend payment of principal in October 2001 as alleged by the Defendant. Further, in response to a letter of demand from the Plaintiff's solicitors dated 22 January 2003, the Defendant wrote a Chinese letter to the Plaintiff's manager on 31 January 2003. There was no reference in that Chinese letter to the alleged agreement in October 2001. All these show that there is no merit in the defence assertions of an agreement to suspend payment of principal in October 2001.

9. In my judgment, this is a case where the court can summarily decide that the defence case cannot be believed and there is simply no defence to the Plaintiff's claim. I am satisfied that the Plaintiff, as mortgagee is entitled to possession and money judgment against the Defendant. On the material before, I am also satisfied that the total amount due to the Plaintiff as at 29 August 2003 was $3,990,221.35, the calculation of which was set out in the enclosure to a letter dated 29August 2003 from the Plaintiff's solicitor, a copy of which had also been sent to the Defendant.

10. I will therefore give judgment in favour of the Plaintiff in terms of Paragraph 1 of the Originating Summons. Judgment shall also be entered against the Defendant in the sum of $3,990,221.35 plus interest on $3,634,091.52 (being the outstanding principal) at the rate of 11% per annum from 30 August 2003 to the date of this judgment and thereafter at judgment rate until payment. I will also order the Defendant to pay the Plaintiff's costs of these proceedings, such costs to be taxed if not agreed on indemnity basis.