Lucky Power Ltd v. Lam, Philip Yung Tak and/or Other Occupiers

HCA 481/2012 &
HCA 1785/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 481 OF 2012

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AND

ACTION NO 1785 OF 2012

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D E C I S I O N

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INTRODUCTION

1.On 27 July 2015, I handed down a written judgment (“the Judgment”) after the trial of these two actions, which were consolidated pursuant to an order of Master Leong dated 13 May 2013.  In this decision, I shall continue to use the expressions and abbreviations as defined in the Judgment.  In what follows, unless the context indicates otherwise, references to paragraphs shall be to the paragraphs of the Judgment.

2.In the Judgment, I made the following findings:-

(1) the only legally binding agreement which Mr Casadei and Mr Lam entered into was the one embodied in the Memorandum, the legal effect of which was undoubtedly that of an equitable mortgage by deposit of title deeds (paragraph 48);

(2) the relationship between Mr Casadei and Mr Lam was that of mortgagor and mortgagee, and not vendor and purchaser (paragraph 50); and

(3) Lucky Power, being the purchaser of the Lots from Mr Casadei, was entitled to step into the shoes of Mr Casadei and exercise the equitable right of redemption to free the Lots from the equitable mortgage created by the Memorandum (paragraph 50).

3.On the basis of those findings, I made, inter alia, the following orders:-

(1) In relation to HCA 481/2012: subject to payment by Lucky Power of any amount found to be due to Mr Lam under the Memorandum in HCA 1785/2012, Mr Lam and Education shall deliver up vacant possession of the Green Area to Lucky Power.

(2) In relation to HCA 1785/2012:

(a) an account be taken of the outstanding indebtedness due to Mr Lam under the Memorandum, and payment of the amount found due by Lucky Power to Mr Lam;

(b) upon payment of the amount found due to Mr Lam under the Memorandum by Lucky Power as aforesaid, Mr Lam shall deliver up all title deeds relating to the Lots to Lucky Power as well as vacant possession of the Lots (including the Green Area) to Lucky Power;

(c) an inquiry be made of the equitable compensation payable by Mr Lam and Education to Lucky Power for being deprived of the use and enjoyment of the Green Area from 28 June 2012 to the date of delivery up of vacant possession of the Green Area to Lucky Power, and payment of the compensation found payable by Mr Lam and Education to Lucky Power; and

(d) Lucky Power be at liberty to apply for such further and other relief as it may be entitled to under the judgment.

4.By the present summons dated 15 September 2015, Lucky Power seeks an order that, upon its payment into court or to Mr Lam of the sum of HK$320,000, or such other sum as may be determined by the court, being the amount due to Mr Lam under the Memorandum, Mr Lam and Education shall forthwith deliver up vacant possession of the Lots (including the Green Area), and all title deeds and documents relating to the Lots, to Lucky Power.

5.Lucky Power’s application is supported by the 3^rd affirmation of Chui Chung Man Yankee filed on 15 September 2015.  Mr Lam and Education oppose the application, and have filed two affirmations made by Mr Lam dated 24 September 2015 and 26 October 2015 respectively.

Amount due to Mr Lam under the memorandum

6.According to Mr Lam, the total amount that he advanced to Mr Casadei pursuant to the Memorandum was HK$320,000.  This figure is not disputed by Lucky Power. There is also no suggestion that any repayment was made to Mr Lam, whether by Mr Casadei or anyone else.  Accordingly, the principal amount due to Mr Lam under the Memorandum would be HK$320,000.

7.Clause 2 of the Memorandum provides that Mr Casadei shall not redeem the Lots on or before 1 July 1997, otherwise he shall have to pay interest on the outstanding amount of the loan at the rate of 15% per annum from the date of the Memorandum to the date of payment.  Since Mr Casadei never redeemed, or attempted to redeem, the Lots on or before 1 July 1997, Clause 2 of the Memorandum plainly has no application.

8.Apart from Clause 2, there is nothing in the Memorandum to suggest that any interest is payable to Mr Lam on the outstanding amount of the loan.  This is not entirely surprising, because Clause 5 of the Memorandum provides that:-

“The Borrower hereby covenants with the Lender that so long as there is any amount outstanding herein, the Lender shall be entitled to the exclusive use occupation and enjoyment of [the Lots].”

9.In other words, under the Memorandum, Mr Lam is entitled to the exclusive use occupation and enjoyment of the Lots without payment of any rent or mesne profits so long as there is any amount outstanding.

10.I accept Ms Ng’s submission on behalf of Lucky Power that, in the circumstances, Mr Lam is not entitled to any interest on the outstanding amount of the loan.  I pause to observe that Mr Lam and Education have not contended otherwise.  Accordingly, the amount due to Mr Lam under the Memorandum is HK$320,000.

MR LAM AND EDUCATION’S OBJECTIONS TO THE APPLICATIONS

11.In the two affirmations of Mr Lam as well as in the written submissions lodged with the court on behalf of Mr Lam and Education, they repeat their allegations made at the trial.  I do not propose to deal with those allegations again in this decision.

12.In addition, Mr Lam argues that the amount due to him under the Memorandum should be HK$9 million.  This figure is based on the difference between (i) the purchase price (HK$15 million) that Mr Wang agreed to pay under the Provisional Agreement for the purchase of the Lots less than the Green Area (paragraph 16), and (ii) the total amount already paid by Mr Wang and received by Mr Lam under the Provisional Agreement (HK$6 million) (paragraph 18).  I am unable to see how or why the sum of HK$9 million could or should be regarded as the outstanding amount due to Mr Lam under the Memorandum.

13.Mr Lam further submits that he was prepared to give up the Green Area, which he says Mr Wang was prepared to pay HK$2 million for it, without any payment by Lucky Power provided that all outstanding claims and costs which he may be liable to Lucky Power should be regarded as settled or discharged once and for all. Somewhat inconsistently, he also submits that he should be permitted to use the Green Area for an indefinite period.  I am unable to see why Mr Lam should be entitled to remain in possession of the Green Area, or that Lucky Power should be required to give any consideration before it can recover vacant possession of the Green Area.

14.In passing, I should record that Ms Ng has informed the court that her client has decided not to enforce the claim for equitable compensation referred to in paragraph 3(2)(c) above against Mr Lam.

15.Lastly, Mr Lam mentions that after the handing down of the Judgment, Lucky Power caused or procured the Buildings Department to demolish various structures on the Green Area or the Lots.  Even if this is true (as to which I make no finding), it has no bearing on the present application by Lucky Power.

DISPOSITION

16.For the foregoing reasons, I make the following order:-

(1) upon payment by Lucky Power of the sum of HK$320,000 into court within 14 days from the date of this order –

(a) Mr Lam shall deliver up all title deeds relating to the Lots, as well as vacant possession of the Lots (including the Green Area), to Lucky Power; and

(b) Mr Lam and Educational shall deliver up vacant possession of the Green Area to Lucky Power;

(2) upon fulfilment of paragraphs (1)(a) and (b) above, the sum of HK$320,000 paid into court by Lucky Power may be paid out to Mr Lam upon his application; and

(3) Lucky Power be at liberty to apply for such further or other relief as may be necessary to carry this order into effect.

17.I also make an order nisi that Mr Lam and Education shall pay Lucky Power’s costs of this application, to be taxed if not agreed.

Ms Queenie W S Ng, instructed by Angela Lau Law Office, for the plaintiff

The 1^st defendant in HCA 481/2012, acting in person and present

The defendant in HCA 1785/2012, acting in person and present

The 2^nd defendant in HCA 481/2012, represented by the 1^st defendant (pursuant to leave granted by Master Lai on 5 June 2012) and present