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HCA 762/2011
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 762 OF 2011
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BETWEEN
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BANK OF CHINA (HONG KONG) LIMITED |
Plaintiff |
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and
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PAN-WIN MOTORS LIMITED |
1st Defendant |
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LAU HEI YUEN |
2nd Defendant |
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SIU LEUNG YAU |
3rd Defendant |
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| Before: Deputy High Court Judge Wilson Chan in Court |
| Date of Hearing: 13 May 2014 |
| Date of Judgment: 13 May 2014 |
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J U D G M E N T
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1. Today is the day fixed for the trial of the claims in this action by the plaintiff against the 2nd defendant, default judgment having been entered by the plaintiff against the 1st and 3rd defendants. The 2nd defendant is absent, notwithstanding that Notice of Trial having been given to the parties on 21 March 2013.
2. I directed that the trial of this action be proceeded with in the absence of the 2nd defendant, pursuant to Order 35, rule 1(2) of the Rules of the High Court.
3. By a facility letter dated 15 February 1997, the plaintiff granted, inter alia,trust receipt facility to the 1st defendant up to the extent of HK$5 million.
4. By a Deed of Second Charge (“the Second Charge”) dated 27 September 1997, the 2nd defendant charged his property at South Horizons (“the South Horizons Property”) to the plaintiff to secure the liabilities of the 1st defendant.
5. Before the Second Charge, there was a first legal charge (“the First Charge”) over the South Horizons Property dated 20 June 1997. It was to secure a term loan extended by the plaintiff to the 2nd defendant.
6. By a Deed of Guarantee (“the Guarantee”) dated 19 September 1997, the 2nd and 3rd defendants jointly and severally guaranteed the liability of the 1st defendant up to the extent of HK$12.5 million together with interest.
7. The 1st defendant defaulted on the trust receipt facility. The plaintiff also demanded payment of the whole outstanding term loan granted by the plaintiff to the 2nd defendant secured by the First Charge. This resulted in HCMP 398/1999, commenced by the plaintiff against the 2nd defendant. Under that action:
(1) The plaintiff herein obtained monetary judgment for the term loan and vacant possession of the South Horizons Property.
(2) The plaintiff also sold the South Horizons Property pursuant to the power of sale under the First Charge.
(3) The sale proceeds were not sufficient to cover the outstanding balance. The 2nd defendant eventually repaid the outstanding balance of the term loan on or about 21 February 2002.
8. As to the outstanding trust receipt facility, the 1st and 3rd defendants made various part-payments. The last payment by the 1st defendant was made in 2008 and the last payment by the 3rd defendant was made in 2007. Yet there remains an outstanding balance.
9. On 3 May 2011, the plaintiff commenced the present proceedings against the 1st to 3rd defendants for the outstanding trust receipt facility.
10. Default judgment has been obtained against the 1st and 3rd defendants on 28 October 2011.
11. From the unchallenged evidence of the plaintiff’s only witness, a Mr Lee Wai-ho, an Assets Recovery Manager of the plaintiff, I am satisfied that the plaintiff has proved its case as pleaded in the Statement of Claim.
12. In the 2nd defendant’s Defence and Counterclaim dated 14 June 2011, the 2nd defendant has pleaded three defences.
13. First, the 2nd defendant pleads that the Second Charge and the Guarantee are unenforceable on the ground that the 2nd defendant was ignorant of their provisions, their intent and the manifestly disadvantageous consequences to him, or that he was at all material times ignorant of the financial affairs of the 1st defendant.
14. Secondly, the 2nd defendant says that he executed the Second Charge and the Guarantee as a result of the 3rd defendant’s undue influence and/or misrepresentation and the plaintiff had constructive notice of the same.
15. In the absence of any evidence from the 2nd defendant to substantiate these allegations, I have no difficulty in holding that the 2nd defendant has failed to discharge the burden on him to prove all the essential elements of the above defences.
16. Further, the 2nd defendant pleaded in his Defence and Counterclaim that the plaintiff’s claim is time-barred.
17. In this regard, it is important to remember that the court would not of its own motion take the point that the plaintiff’s claim is out of time. A plea of the limitation defence should be raised expressly and unambiguously, and the court will only deal with the defence as pleaded.
18. The 2nd defendant’s pleaded case is that an Event of Default under the Second Charge had occurred on or about 9 March 1999, when a charging order in favour of BOC Credit Card (International) Limited was registered against the South Horizons Property, which was not discharged within 10 days. It is then said that the plaintiff’s cause of action under the Second Charge accrued on 9 March 1999, which was more than 12 years before the issuance of the writ herein.
19. However, a number of provisions in the Second Charge and the Guarantee clearly state that the liabilities secured thereunder were only payable on demand.
20. In Rowlatt on Principal and Surety (6th ed) at paragraph 10-01, it is said that:
“Where a surety is only liable to pay after demand, time does not begin to run till after it has been made.”
21. Accordingly, I agree with Mr Bernard Man, counsel for the plaintiff, that the 2nd defendant’s pleaded case is misconceived. Time did not start running upon an Event of Default as alleged by the 2nd defendant.
22. For the reasons stated above, I shall allow the plaintiff’s claims against the 2nd defendant and dismiss the 2nd defendant’s counterclaim.
23. Accordingly, I give judgment in favour of the plaintiff against the 2nd defendant as follows:
(1) There be judgment in favour of the plaintiff against the 2nd defendant in the sum of HK$4,069,563.70;
(2) The 2nd defendant do pay to the plaintiff interest on the outstanding principal of HK$1,962,738.64 at the rate of 11 % per annum from 25 March 2011 to the date of this judgment, amounting to HK$677,870.78;
(3) The 2nd defendant do pay to the plaintiff interest on the said outstanding principal sum of HK$1,962,738.64 at the judgment rate from 14 May 2014 until payment in full; and
(4) The counterclaim by the 2nd defendant against the plaintiff be dismissed.
24. I further order that the 2nd defendant do pay to the plaintiff the costs of this action and the 2nd defendant’s counterclaim, such costs to be taxed on an indemnity basis if not agreed.
25. Lastly, I thank Mr Man for his helpful assistance in this matter.
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(Wilson Chan)
Deputy High Court Judge
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Mr Bernard Man, instructed by Anthony Chiang & Partners, for the plaintiff
1st, 2nd and 3rd defendants were not represented and did not appear
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