DBS BANK (HONG KONG) LTD v. NGAI YIM SHING AND OTHERS

HCA 897/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 897 OF 2000

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REASON  FOR  DECISION

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1.  On 24 November 2004, after hearing submissions from the parties, I dismissed the Applicant Lee Siu Ming’s appeal against the decision of Master Lung dated 25 October 2004.  I now give reasons for my decision.

2.  Master Lung’s order was for dismissal of the Applicant’s application under a summons of 20 October 2004.  The summons was a homemade one written in Chinese.  In the summons, the Applicant asked for the following relief which could be translated literally as “stay of execution of a Notice to Occupant”,

“暫緩執行《給佔用人通知書》”

Attached to the summons was a Notice to Occupier issued by the Bailiff on 19 October 2004. The notice was in the following terms,

“Notice to Occupier

Action No. : HCA897/2000

1.	Pursuant to the Writ of Possession of the above-mentioned action, possession of the premises i) Flat H, 11th Floor, Block 16, Sceneway Garden, 8 Sceneway Road, Kowloon and ii) Car Parking Space No.CP56 on Level 29.65 (L4) on Site 2 of Sceneway Garden, 8 Sceneway Road, Kowloon, Hong Kong is to be delivered to the Plaintiff before 26.10.2004.
2.	Any occupier who claims a right to remain on the premises in question should make application to the High Court without delay.
3.	For enquiries, please contact Senior Bailiff Mr Wong at :

Bailiff Kowloon Possession Office
Room 208, 2/F, Lands Tribunal Building,
38 Gascoigne Road, Yaumati, Kowloon
Tel : 2170 3834”

This should not be the first notice the Applicant received regarding the order for possession since she had made an earlier application for stay of execution on 8 September 2004.

3.  Giving allowance to the fact that the Applicant is legally unrepresented, it seems that what she sought was a stay of execution of the writ of possession.  Her ground of application was set out in an affirmation of 25 October 2004.  She claimed that she was a tenant of the suit premises and when she rented the property, she was unaware of the legal proceedings.  She said she had rented another place for her residence but she could only moved in by the end of December.  She also said due to her unemployment and the poor economic climate, she did not have enough money to move elsewhere at this stage.  She asked for indulgence from the court.  As mentioned, Master Lung dismissed her application.  Pending appeal, Master Kwang granted an interim stay of execution of the writ of possession until 16 November 2004 (the first hearing of this appeal).

4.  On 16 November 2004, the Applicant did not attend the hearing due to other engagements.  This court raised some queries with Mr Ho, solicitor for the Plaintiff and Mr Ho needed some time to look into the matter.  The appeal was therefore adjourned to 24 November 2004.

5.  At the hearing of 24 November 2004, the Applicant appeared in person and explained to this court that she had moved into the suit premises in early 2003 and the rent was $8,000 per month.  She did not have the rent receipt because she agreed with the landlord that no rent receipt would be required.  She told this court that the landlord told her if rent receipt was required, the rent would be $15,000.  The landlord also said he reserved the right to rent a room in the premises to another person, hence the rent was lower.

6.  It is not disputed that the Applicant had no notice of the present action prior to the issue of the writ of possession.  This comes about in circumstances set out below.  The Applicant said she only learnt of the order of possession in about September 2004 when the Bailiff first executed the writ of possession.  She had in fact made an application for stay of the order for possession on 8 September 2004.  On 15 September 2004, Master Hui granted a stay for 21 days.  The Applicant should be aware by then that the landlord, viz. the 1^st Defendant, had no right to let the property to her.  Despite that, she continued to pay rent due to the fact that the tenancy was, according to the Applicant, arranged through a friend.

7.  I now turn to the relevant history of this action.  The action is a mortgage action within the scope of Order 88, Rules of the High Court.  The Plaintiff sues as mortgagee for, inter alia, possession of the property due to the defaults of the 2^nd Defendant as borrower.  The 1^st Defendant was a guarantor.  The nature of the claims have been fully set out in the judgment of Sakhrani J dated 24 May 2004.

8.  The writ was issued on 25 January 2000. Due to various reasons, the action did not come on for trial until 24 May 2004.  Although the Plaintiff’s solicitors had posted up the Writ of Summons at the suit premises at the commencement of action, no step has been taken since then to ascertain the identity of the occupants nor to post up further notice of the proceedings prior to the trial.  Notice of judgment was also not posted by reason of the fact that Practice Direction 16.4 is not applicable since this is an Order 88 action, see Order 45 Rule 3(2).

9.  The rationale for excluding Order 88 action from the requirement under Order 45 Rule 3(2) is explained in Para.88/5/14 of Hong Kong Civil Procedure 2004.  It is said that the court will have considered the matters set out in Order 45 Rule 3 before the order is made.  Similar explanation was given in Para.88/5/16 of Supreme Court Practice 1999.  This is probably due to the requirement under Order 88 Rule 5(4) that a plaintiff claiming delivery of possession must file an affidavit giving particulars of every person who to the best of the plaintiff’s knowledge is in possession of the mortgaged property.  Although Rule 5 is only applicable in respect of action commenced by originating summons, Rule 6(4) provides that the same requirement applies to leave application for default judgment in an action commenced by writ.

10.  However, the present action was tried before Sakhrani J.  The judgment was not entered by way of default judgment.  Therefore no affirmation in compliance with Rule 5(4) has been filed.  I was told by Mr Ho that evidence has been given by an officer of the Plaintiff at the trial before Sakhrani J that according to the Plaintiff’s records, the Plaintiff had not consented to any letting out of the suit premises by the mortgagor and the 1^st Defendant remained in possession.  Under Clause 10 of the Legal Charge in respect of the suit premises, the 1^st Defendant could not let out the same without the consent of the Plaintiff.

11.  The Plaintiff had apparently not investigated adequately into the occupation of the suit premises since the commencement of the action.  The evidence of the officer was therefore misleading.  It gave an inaccurate impression to the court that the 1^st Defendant was in possession and an order for possession was granted on that basis.

12.  In the context of the present case, this may not matter very much in the end since the Applicant’s tenancy could not bind the Plaintiff in view of Clause 10 and the lack of consent from the Plaintiff.  However, the case does demonstrate that there is a loophole in the rules.  In the absence of any positive duty on the part of a mortgagee to ascertain the identity of the occupants before getting an order for possession (I do not intend to consider whether there is such a duty in this Reasons for Decision since the matter has not been argued before me), the only safeguard for the occupier is the posting up of the writ at the commencement of the action.  However, if there is a long lapse of time between commencement of action and the making of order for possession (as in the present case), there could be changes in occupancy in the meantime.  

13.  Usually, a mortgage action could be disposed of relatively expeditiously, especially if it is commenced by Originating Summons.  If the hearing is within 6 months’ time, it might be a safe working assumption that there had been no change in occupation of the suit premises and the posting up of the writ can serve as adequate notice of proceedings given to the occupants.  However, as the history of the present action demonstrates, there are exceptions.  One may therefore wonder whether there should be any distinction in the requirements for the issue of writ of possession between Order 88 actions and other types of action where possession is sought especially when there is a long lapse of time between commencement and trial of an Order 88 action.  Be that as it may, the existing rules provide for an exception in relation to Order 88 action.

14.  It is against these backgrounds that the Applicant did not receive any notice of the action prior to the execution of the writ of possession by the Bailiff.  As mentioned, by reason of Clause 10 and the lack of consent of the Plaintiff for the letting, she cannot rely on any right to resist the Plaintiff’s claim for possession.

15.  As a matter of strict legal rights, the Applicant has no ground to ask for stay of execution.  In Leicester City Council v Aldwinckle (1991) 24 HLR 40, the English Court of Appeal held that in the absence of rules requiring notice to be given to a tenant, the court cannot on its own motion insist on such notice being given before leave is granted for issue of writ of possession.  By the same parity of reasoning, under the existing rules, given that leave is not required for issue of writ of possession for an Order 88 action (and the issue of writ is in such circumstances an administrative act as opposed to a judicial act, see Tuohy v Bell [2002] EWCA Civ 423, 27 March 2002, Para.22), the court cannot insist on actual notice being given to occupier before a writ of possession could be regarded as validly issued.  Hence, notwithstanding the lack of notice on the part of the Applicant as to the proceedings prior to the issue of writ of possession, the writ was valid.

16.  Although the court also has the inherent power to prevent abuse of proceedings and avoid oppression, the English Court of Appeal in Aldwinckle also held that the use of available process does not of itself constitute abuse nor amount to oppression.  Leggatt LJ said at p.46,

“…the court would be interfering unjustifiably with the existing policy of Parliament were it to introduce its own requirements as to additional conditions that have to be satisfied before execution may issue.”

See also London Borough of Hammersmith & Fulham v Hill (1994) 27 HLR 368.

17.  The only remaining basis on which a stay of execution can be granted is indulgence.

18.  Indulgence had been given to the Applicant by Master Hui in September 2004.  Whilst the court no doubt has the inherent power to grant a stay of execution to give an occupant reasonable time to vacate from the suit premises, that power should not be exercised in a manner incompatible with the position that a plaintiff is entitled to the fruit of his judgment.  As Huggins J observed in Lo Chi v Protective Gloves Manufactory Ltd [1969] HKLR 626,

“As it seems to me the court has to ride a course between making a new contract between the parties and doing injustice to the defendants by giving them insufficient time to move out.  In my view the most important aspect is that the judicial discretion should be exercised so as to give the defendants no more than is reasonably necessary to enable them to vacate the premises and that I should not have more than a passing regard to the need for them to move into new premises.”

19.  It is also important to bear in mind that there is an inevitable time lapse between any court order and the actual execution by the Bailiff (as demonstrated by the Notice issued by the Bailiff set out above).  To that extent, there is already some margin of indulgence built into the system.  In the present case, the order for possession was granted on 24 May 2004 and the Plaintiff has yet to get actual possession of the suit premises.

20.  On the facts of the present case, I am of the view that the indulgence granted by Master Hui already gave the Applicant a reasonable time to vacate from the premises.  Whilst I have every sympathy with her personal predicament, it would not be fair nor appropriate for me to grant her further time.  In my judgment, to delay the execution process further would tantamount to an unjustified curtailment of the Plaintiff’s right to have the fruit of the judgment.   

21.  I wish to mention a point that emerged from the submissions made at the hearing.  The Applicant said she leased the property from the 1^st Defendant in early 2003.  However, the 1^st Defendant was actually made bankrupt in HCB 15643 of 2002 on 2 December 2002.  He therefore had no right to lease the suit premises and had no right to collect rent from the Applicant.  Of course, I have not heard from the 1^st Defendant and he might dispute these assertions by the Applicant.  However, I would direct that a copy of this decision be given to the Official Receiver so that these matters might be looked into in relation to the affairs of the bankrupt.

22.  Since the Applicant is unrepresented, I direct my clerk to inform her by letter that if she so wishes, she could make an appointment within 14 days with the Court Interpreter through my clerk to arrange for having the Reasons for Decision interpreted to her orally.

23.  Lastly, I wish to thank Mr Ho for his assistance.  He quite fairly acknowledged that under the existing regime, Order 88 may not contain sufficient safeguards to bring notice of proceedings to occupants when there is a long lapse between date of commencement of action and date of order.  This is something which warrants further considerations.  In the meantime, the profession should be alerted to this problem and I venture to suggest that even though the rules contain no such requirement, it would be good practice to give notice of trial or alternatively notice of order for possession to the occupants when there is a long lapse of time between date of writ and date of trial or order to cater for change of occupancy in the meantime.  It is in the interest of all concerned that the occupants were given opportunity to seek relief as soon as possible. 

24.  As the matter is of some general interest, I direct the Reasons for Decision to be handed down in open court.