Etc Finance Ltd v. Wealth Paramount International Ltd and Another

HCA 2027/2014

ACTION NO 2027 OF 2014

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D E C I S I O N
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1.This is an appeal against the order of a master dated 30 July 2015 whereby the master dismissed the plaintiff’s striking-out application by its summons dated 4 May 2015 (“the Summons”). I shall deal with this appeal by way of an actual rehearing of the Summons.

2.As a brief introduction, the plaintiff is a licensed moneylender and was the mortgagee lender.  The 1^st defendant is a company incorporated in Hong Kong and was the mortgagor borrower.  The 2^nd defendant is the sole director of the 1^st defendant and a guarantor of the 1^st defendant’s relevant liability to the plaintiff. 

3.The plaintiff’s claim in this action is well-documented and supported by the following documents: (1) a facility agreement dated 5 February 2014 signed by the plaintiff, the 1^st defendant and the 2^nd defendant; (2) a mortgage dated 11 March 2014 between the 1^st defendant and the plaintiff (3) a guarantee dated 11 March 2014 in favour of the plaintiff executed by the 2^nd defendant and (4) miscellaneous documents, including payment instructions, cheques and remittance advice showing the advancement of the loan.

4.The plaintiff claims that the actual amount loaned to the defendant was HK$11.9 million, and the outstanding amount as at the date of the writ stood at $12,563.890.66. 

5.The defendants have filed a joint defence dated 17 March 2015.  At that time, they were legally represented. On 23 July 2015, Messrs Peter Yuen & Associates successfully applied for cessation to act for them.  As a result, at the hearing before the master, the defendants were unrepresented and indeed were absent.  Thus far, the defendants have not responded to the plaintiff’s striking-out application at all.  

6.The defence under attack contains nothing more than bare denials and non-admissions and there the defendants also contended that the interest should be less than those pleaded in the statement of claim.  I understand that the difference is only very minor.  The defendants did not set out any particulars as to why the interest computed by the plaintiff is inaccurate.

7.In my judgment, the defence is strike-outable under Order 18 rule 19.  It is clear to me that it does not discloses any reasonable defence and it appears to me that it is an abuse of process because it is doomed to failure. It appears to be hopeless too. It should be struck out.

8.This is undoubtedly a mortgage action, and for the plaintiff to apply to obtain judgment, it should apply with an affirmation in compliance with Order 88 rule 5.  The primary purpose of the requirements thereunder is to afford protection to, among other persons, the mortgagor.  Such an affirmation is required in an application for default judgment even if the proceedings were begun by writ: Order 88 rule 6.

9.Mr Chan SC appearing for the plaintiff submits that this is essentially a striking-out application and such an affirmation is not necessary.  After the defence is struck out, the plaintiff can come back and apply for judgment or the court may exercise its discretion to enter judgment against the defendants under Order 18 rule 19.  This would obviate the need on the part of the plaintiff to file such an affirmation in its striking-out application.  

10.I am not convinced by this submission.  By the Summons, the plaintiff also asks for judgment against both defendants.  In considering whether the plaintiff is entitled to judgment, this court is anxious to ensure that the interests of the defendants are sufficiently safeguarded.  I see no reason why this court should insist on an affirmation in compliance with Order 88 rule 5 when default judgment is applied for against a defendant who did not bother to file a defence whereas such an affirmation can be dispensed with when the defendant has filed a strike-outable defence as in this case.

11.In the premises, this court adjourned the hearing for a short while so as to allow the plaintiff to file an affirmation in compliance with Order 88 rule 5, and the plaintiff has eventually produced such an affirmation.  Mr Chan SC undertakes on behalf of the plaintiff that it will be filed within the office hours on the following day.

12.In light of the particular circumstances of this matter, I believe that there are special grounds that I should allow additional evidence to be adduced in this appeal, knowing that the additional evidence is not to be disputed.  

13.For the reasons given above, I set aside the order of the master and make an order in terms of paragraph 1 and 2 and 3 thereof. 

(Discussion re costs and certificate for counsel) 

14.The plaintiff asks for costs and I see no reason why costs should not follow the event. The defendants should pay the plaintiff’s costs of this action including the plaintiff’s costs in respect of this appeal and the application before the master. I do not think a certificate for two counsel is justified. After all, this is a straightforward and unopposed mortgage action. I would not make any order for a summary assessment.  

15.I thank counsel for their assistance.

Mr C H Chan, SC, and Mr Derek Chan, instructed by Fred Kan & Co, for the plaintiff

Both defendants were not represented and did not appear