Lei Shing Hong Credit Ltd v. Christian Anthony Bullen
Read the full judgment text of HCMP 1228/2015 on BabelCite. This High Court CFI judgment was delivered on 3 December 2015.
1. In late August 2013, the appellant (defendant) obtained a mortgage loan in the sum of $1,500,000. Repayments were of interest on the loan at a rate of 9.5 % payable monthly, with the principal repayable after 12 months. It was secured by way of a legal charge on the property. It goes almost without saying that the rate of interest was extremely high, well above that usually charged by more conventional financial institutions providing mortgage loans.
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HCMP 1228/2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 1228 OF 2015 _______________________
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________________________ D E C I S I O N 1.In late August 2013, the appellant (defendant) obtained a mortgage loan in the sum of $1,500,000. Repayments were of interest on the loan at a rate of 9.5 % payable monthly, with the principal repayable after 12 months. It was secured by way of a legal charge on the property. It goes almost without saying that the rate of interest was extremely high, well above that usually charged by more conventional financial institutions providing mortgage loans. 2.The loan was advanced in October 2013. The appellant who, I shall refer to by his name hereafter, had not made a payment of the instalments due since October 2014. However, as the plaintiff’s solicitors conceded, Mr Bullen regularly made payments in excess of the amounts due, those payments being applied by way of reduction of the loan principal. They were not large amounts but over the year totalled $3,396. 3.The plaintiff issued an originating summons dated 19 May 2015 seeking payment of the balance of the principal loan and arrears of interest under the instalment provisions. Alternatively it sought vacant possession of the property over which the legal charge had been registered. It also sought costs on a full indemnity basis. 4.The hearing came before Master Lai on 18 August 2015. The Master made the orders sought with a provision that if Mr Bullen were able to pay the full sum due after the plaintiff had obtained vacant possession then the plaintiff would convey the property back to him, free of any legal charge or encumbrance. He also summarily assessed the costs at $28,750. This figure is of some importance in view of what transpired in the form of a demand or threat made by the plaintiff’s solicitors with which I will deal later. 5.At that Master’s hearing Mr Bullen did not deny any of the material circumstances and in effect the Master made his order on the basis of the admissions as to indebtedness. 6.Mr Bullen filed a Notice of Appeal on 1 September 2015. It came on for hearing before me on 2 November 2015. Although Mr Bullen did not deny any of the main material matters, he had obviously been concerned at what had taken place at the hearing before the Master; a transcript of the material part accompanies this written decision. 7.In short the Master pointed out that the plaintiff’s solicitors had failed to produce the original loan agreement and the solicitor concerned agreed that she did not have it with her. The Master pointed out that by reason of the nature of the action, the original had to be produced saying “next time, ensure that you bring the original to court”. Because Mr Bullen was present and confirmed the terms of the loan, the Master indicated that “this time I can accept a copy”, emphasizing “next time, make sure that you produce the original”. 8.The text of the transcript was not available at that first hearing before me, and the plaintiff’s solicitor denied that any such exchange took place. 9.Mr Bullen was adamant that it had (and rightly so as it turned out). As he was a litigant in person and clearly felt that this was a material issue, I decided it was a matter to be investigated but that it could not be done at that time. Furthermore since Mr Bullen obviously wanted to retain possession of his home and seemed to think that he could find a solution, possibly by negotiation with the plaintiff (although the plaintiff seemed to be less interested in such a prospect), I decided that I would adjourn the hearing until 3 December, reserving the matter of costs. 10.Following the hearing I listened to the DARTS record of the proceedings before Master Lai from which it became apparent that Mr Bullen’s recollection was correct and that of the plaintiff’s solicitor quite wrong. 11.I caused both parties to be informed of this, indicating that I thought that the Master, despite the technical procedural defect, had nonetheless sensibly made the orders because not to have done so would have meant a further hearing and consequent additional costs for Mr Bullen to bear. I also noted on the transcript subsequently obtained, that he in effect made his decision then and there because Mr Bullen confirmed the terms of the loan agreement. Undoubtedly the plaintiff’s solicitors’ misplaced resistance to Mr Bullen’s accurate recollection did not go down well with Mr Bullen. 12.The hearing of the appeal resumed on 3 December. The parties had reached no agreement in the interim and there was no progress apart from the promised payment on 5 November. I asked for some information from the plaintiff’s counsel. The replies turned out to be inaccurate. He had clearly not been instructed accurately. I was less than impressed particularly since Mr Bullen, a litigant in person, was straightforward and credible and more to be relied upon. 13.The plaintiff had taken a hardline and, as Mr Bullen suggested, they appeared to regard their sum claimed for costs as an essential part of any negotiated settlement. Furthermore the plaintiff’s solicitors had indulged in unnecessary and uninformative extra paperwork. If they seek payment for this they are wasting their time. 14.The figure for costs, stated to be on an indemnity basis, was alleged by the plaintiff’s solicitors to be $492,600. This is an incredibly inflated figure quite apart from the fact it was not stated why or how such costs could have been incurred especially since Master Lai had already assessed costs at $28,750. 15.However the problem facing Mr Bullen is that he has no immediate prospect of refinancing a mortgage on his property. Earlier efforts have not borne fruit and the immediate future seems bleak. He is able to increase monthly payments to about $15,000 and he must obviously put this into effect in order to keep the indebtedness under control. 16.Providing that the plaintiff’s security is not jeopardised in the interim, the interests of the justice require some leeway to be extended to Mr Bullen. But that leeway should be limited as it would be pointless to allow the degree of indebtedness to increase beyond any capacity to reduce it significantly. The plaintiff had the property valued, on the open market, at $2.5 million, two years ago. It does not have an up‑to‑date valuation. The valuation obtained by Mr Bullen earlier this year was about $4.5 million. I bear in mind that forced sales under a possession order tend to result in below true‑value sales but a six‑month delay would not prejudice the plaintiff’s security, and it is sufficient time for Mr Bullen to explore, no doubt under time constraints, any reasonable opening for refinancing. 17.The orders I make are as follows:
Mr Jeffrey T Y Li, instructed by De Bedin & Lee, for the plaintiff Defendant in person, present | ||||||||||||||||||||||||||||||||