ASIA COMMERCIAL BANK LTD. v. NG CHUN SHI AND OTHERS

HCMP2072/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.2072 OF 1999

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J U D G M E N T

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1. By an originating summons dated 9 April 1999, the plaintiff claimed against all the defendants herein possession of two premises and for payment of all monies due under two Deeds of Mortgage. Subsequently an order was made for the proceedings to continue as if commenced by Writ and a Statement of Claim was filed. Now, it appears from the Statement of Claim that the plaintiff granted various banking facilities to the 5th defendant which was an unincorporated body whose members were the 1st and 2nd defendants. The 3rd and 4th defendants were, I understand, the brothers of the 2nd defendant and this trial only concerns them.

2. It was one of the conditions for the plaintiff to grant the banking facilities to the 5th defendant that the 3rd and 4th defendants' property known as Flat 1, 18th Floor, Man Wah Building, No.21 Man Ying Street, Kowloon, Hong Kong be charged to the plaintiff as security for granting the loans.

3. Pursuant to this agreement, the 3rd and 4th defendants entered into a mortgage dated 13 September 1996 whereby the premises were mortgaged to the bank by a first legal charge as security for all monies payable or which may at any time or from time to time become payable by the borrower, which was the 5th defendant to the plaintiff.

4. The 3rd and 4th defendants have not appeared at this trial but from their pleadings, it appears that their case is that they were told by a Mr Ferant H.K. Chan, a solicitor of the firm of solicitors appointed by the plaintiff to have the mortgage executed that the consideration for the mortgage was the sum of $1,221,225,000 and that the mortgage was simply intended to cover a loan in that amount. In other words, it was not, so far as they understood it, or were given to understand it by the representations of the solicitor, an "all monies" mortgage.

5. I have heard the evidence of Mr Lau, the Deputy Manager of the plaintiff who has produced his earlier affirmations which stand as his evidence and a Statement of Account which shows the total indebtedness of the defendants as at today's date. That is $6,391,100.

6. I have also heard the evidence of Mr Ferant H.K. Chan, the handling solicitor of the firm appointed by the plaintiff to deal with this matter. I am satisfied from Mr Chan's evidence that, although he cannot now fully remember what happens, he would in accordance with his usual practice have given a full explanation to the 3rd and 4th defendants as to the nature of the mortgage which they were signing and in particular as to the fact that it was an "all monies" mortgage. He would have done this by reference to the bank's facility letter which he would have had with him, the bank's Letter of Instruction to him, and his own letter to the bank on which the specimen signatures of the 3rd and 4th defendants were appended. He also said that the 3rd and 4th defendants were apparently educated overseas and conversant with the English language. They should have had no difficulty in understanding the documents which they saw and in any event he had given them a full explanation in Cantonese.

7. I have dealt at some length with this point because of the defence which has been raised. These "all monies" mortgages are very common and they very often give rise to problems which have to be settled by litigation. Obviously they have to be handled with great care by solicitors who draw them up and have them executed by mortgagors who are effectively signing away their property as security for a loan to another person, not simply on the basis that they will lose the property itself if that other person does not pay up at the end of the day, but that they will also become jointly and severably liable with the borrower, probably for a great deal of money.

8. I am satisfied that in this case, the solicitor did everything that was proper. In this connection, I also note that he obtained from the 3rd and 4th defendants a written acknowledgment that he had advised them to obtain independent legal advice and they had declined to do so.

9. This being so, I am satisfied of the liability of the 3rd and 4th defendants under this mortgage in the sum of $6,391,100 and accordingly there will be a monetary judgment in favour of the plaintiff against the 3rd and 4th defendants for this sum with interest thereon at the judgment rate until payment and costs which, following the provisions of the mortgage itself, are to be taxed on the solicitor and own client basis if not agreed.