HAMMER CAPITAL PRIVATE INVESTMENTS LTD v. INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LTD AND OTHERS

HCMP 2046/2018

[2018] HKCFI 2603

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2046 OF 2018

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D E C I S I O N

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1.  The issue before me is whether to grant an interim injunction to restrain the Receivers (the 2^nd Defendants) from proceeding with an intended public auction of the Mortgaged Properties which is currently scheduled to take place on 26 November 2018 (next Monday). In view of the urgency with which this application has come before the court, I shall give only brief reasons for my decision.

2.  The injunction originally sought by the Plaintiff, as per its summons dated 19 November 2018, is to the effect that the proposed auction cannot take place on 26 November 2018 or on any other date, unless (a) a reserve price of HK$1.79 billion is set, or (b) it is with the prior written consent of the Plaintiff, or (c) it is sanctioned by an order of the court.  In her reply submissions, Ms Chan on behalf of the Plaintiff raised a revised formulation of the injunction, which I shall deal with later.

3.  The Plaintiff, as the 2^nd Mortgagee, has an interest to see that the Mortgaged Properties are sold for a proper price. Equally, the 2^nd Defendants, as the Receivers, are under a duty to obtain the best price reasonably obtainable at the time when they choose to sell, but they are under no duty to postpone the sale merely because a higher price may be obtained on a later date, or a delayed sale may be advantageous to the Plaintiff.

4.  It is clear from the terms of the injunction sought that the critical issue is whether a reserve price of HK$1.79 billion ought to be set.  That figure represents, I understand, the sum total of the indebtedness owing to the 1^st Defendant (as the 1^st Mortgagee) of about HK$1.3bn and to the Plaintiff (as the 2^nd Mortgagee) of about HK$495m by the principal debtor.  The Plaintiff has not, however, adduced any acceptable evidence regarding the market value of the Mortgaged Properties.  The fact that the Plaintiff was, at one stage, prepared to pay the sum of about HK$1.3bn to purchase the 1^st Defendant’s loan, or HK$1.79bn to purchase the entire Mortgaged Properties, cannot, in my view, be regarded as proper evidence of the market value of the properties.  There is also evidence that in September 2018, some other interested party was prepared to pay HK$1.55bn for the Mortgaged Properties, but again that cannot be regarded as evidence that the market value of the Mortgaged Properties is around HK$1.79bn as of today.

5.  On the other hand, the sworn evidence of the Receivers is that the reserve price which has been set for the auction for each of the 3 floors in question is based on the average of the market values provided by 3 independent valuers.  Hence, although the opening bidding prices (based on the lowest forced sale values/repossession values) are lower than the market values, it seems clear that the Mortgaged Properties will not actually be sold for less than their market values.  I see no reason not to accept the evidence of the Receivers on this point.

6.  In so far as the Plaintiff complains about (i) the mode of sale (by public action as opposed to open tender), (ii) the limited marketing period, and (iii) the completion deadline (within a period of 4 weeks), I have considered the evidence filed on behalf of the Plaintiff and the 1^st and 2^nd Defendants respectively.  I do not consider that it is possible to come to any definite conclusion at this interlocutory stage.

7.  In so far as it is alleged that the 2^nd Defendants are acting in concert or in collusion with the 1^st Defendant to favour an associated company of the latter (namely, ICBC Leasing), I consider that the evidence currently before the court is far from being sufficient to support such a serious allegation even on the threshold of a “serious issue to be tried”.

8.  In my view, the critical consideration remains whether the Mortgaged Properties will be sold below their proper market values notwithstanding the 3 complaints mentioned above.  On the evidence before me, I am satisfied that the properties will not be sold for less than their proper market values, and thus I do not consider that the injunction sought by the Plaintiff, in the original form as set out in the summons, can be justified. This conclusion makes it unnecessary for me to consider the question of the adequacy of the Plaintiff’s undertaking in damages.

9.  As earlier mentioned, in the course of her reply submissions, Ms Chan sought a revised form of injunction, namely, that the 1^st and 2^nd Defendants be restrained from proceeding with the public auction of the Mortgaged Properties (i) on 26 November 2018 or (ii) earlier than 10 December 2018 unless (a) the completion date is at least 10 weeks from the date of the auction, or (b) it is with the prior written consent of the Plaintiff, or (c) it is sanctioned by an order of the court.  It appears that the focus of the complaint under this revised formulation of the injunction is now shifted to the completion date.  However, it remains the case that, if the Mortgaged Properties will not be sold for less than their market values, there cannot, in my view, be any real objection to the proposed auction taking place on next Monday or on any other date.  I do not therefore consider that the revised formulation of the injunction meets the substance of the 1^st and 2^nd Defendants’ objection to the application.

10.  In all, I am not minded to grant the interim injunction sought by the Plaintiff.  Depending on the result of the auction, there may or may not be any useful purpose for the Plaintiff to further pursue the summons.  I do not therefore propose to give any directions for filing of evidence today.  I shall adjourn the summons sine die with liberty to restore.

11.  I shall now hear the parties on the question of costs.