Standard Chartered Bank (Hong Kong) Ltd v. Pak Kwan Ho and Another

HCMP 1637/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1637 OF 2015

________________________

________________________

________________________

DECISION

________________________

1.This is the direction hearing of the plaintiff’s Originating Summons dated 7 July 2015, by which the plaintiff claimed against the 1^st defendant and his wife the 2^nd defendant for all monies due to it and secured under a Legal Charge/Mortgage dated 30 September 2000 (“the Legal Charge”) in respect of the property at House Type J, No 30 of San Diego Avenue, Royal Palms, Phase A, Wo Shang Wai, Yuen Long, New Territories (“the Property”), possession of the Property as well as costs.

2.On 1 March 2016, Master Lai ordered the 1^st defendant to repay the plaintiff HK$3,439,949.41 together with interest on the principal of (i) $2,271,200.44, (ii) $992,550.37 and (iii) $175,706.26 at judgment rate from the date of the order until payment.  On the other hand, the learned Master adjourned the plaintiff’s claim against the 1^st defendant for possession of the Property to be dealt with together with its claim against the 2^nd defendant for possession of the same.  Therefore, the remaining task of the court in these proceedings is to adjudicate the plaintiff’s claim against the 2^nd defendant for debts and its claim against both defendants for possession of the Property.

3.The plaintiff submits that the Originating Summons should be proceeded for substantive hearing with one day reserved.

4.The 2^nd defendant submits that the Originating Summons should be continued as if the matter had been begun by writ and asks this court to give directions for pleadings, discovery and witness statements under Order 28, rule 7 of the Rules of the High Court.

5.It is well-established that if the available evidence shows there are genuine or substantial issues of fact which require to be adjudicated, it would usually be justified for the court to order an originating summons to be continued as if begun by writ: Shum Wah Ming v The Estate of Chen King Ngo (deceased), unreported, CACV 21/1996, as cited in paragraph 28/8/2, Hong Kong Civil Procedure 2017, Volume 1. 

6.On the other hand, the court should also consider whether in the circumstances of the case, the ultimate resolution of the dispute between the parties would be significantly delayed by ordering the originating summons proceedings be treated as if begun by writ: Ye Hong Ying v Chan Lup Ying [1996] 1 HKLR 255 at 258I, as cited in paragraph 28/4/2, Hong Kong Civil Procedure 2017, Volume 1.  In this connection, I should take note that it is now close to two years since the Originating Summons was issued in July 2015.

7.On whether there are genuine or substantial issues of fact, without attempting to make any definitive assessment of the merits of her case, at the outset, the evidence submitted by the 2^nd defendant is rather thin.

8.On 2 October 2015, the 2^nd defendant filed one affirmation of ten pages.  This is the only evidence the 2^nd defendant has filed.  In essence, she raises three heads of defence — undue influence, misrepresentation and material change in circumstances rendering the 2^nd defendant not liable for the debts under the Legal Charge.

9.She alleges that the Legal Charge was procured by her husband’s undue influence.

10.According to the Court of Final Appeal in Li Sau Ying v Bank of China (Hong Kong) Ltd (2004) 7 HKCFAR 579 at 596, paragraph 34, in cases where the parties’ relationship did not fall within the categories where undue influence was presumed as a matter of law, the parties should concentrate on whether the evidence justified the inference that, on a balance of probabilities, the impugned transaction was procured by undue influence, that is to say, by an abuse by the allegedly dominant party of the trust and confidence reposed in him by the allegedly subservient party.

11.In her affirmation (paragraph 6), other than stating that she had placed complete trust and confidence in his husband (the 1^st defendant), the 2^nd defendant made no elaboration as to how the circumstances had given rise to or justified an inference that the 1^st defendant abused that trust and confidence, or that the entering into the Legal Charge by herself was a transaction which was not readily explicable, see Bank of China (Hong Kong) Ltd v Well Lok Printing Ltd & Ors, unreported, HCMP 3925/2002, 5 September 2006,at paragraph 35.  She pointed out that the transaction was manifestly disadvantageous to her, but it has now been well established that manifest disadvantage is not the test, particularly in relation to husband and wife, see paragraph 8-091, Chitty on Contract, 32^nd edition, summarizing the English House of Lord’s judgment, in Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773 at 800, paragraphs 30 – 33.

12.Her evidence on misrepresentation at paragraph 16 is short, general and lack of particulars.  She complained that the legal executive of the firm of solicitors did not explain to her the terms of the Legal Charge or the fact that what she was signing was an “all monies legal charge” on the Property but merely witnessed her signature, and that she was misrepresented by the plaintiff and the firm of solicitors to sign the Legal Charge believing that it was only to secure the real estate loan.  No more details were provided.  She complained that all along the information disclosed in the plaintiff’s documents was that it was a fixed sum mortgage loan. Nonetheless, the terms and conditions attached to the plaintiff’s letter of offer dated 28 August 2000 jointly signed by the 1^st defendant and the 2^nd defendant had expressed to the contrary, ie that any facilities made available in the future would be secured by the Legal Charge. 

13.On the defence of material change of circumstances, the 2^nd defendant so far has not raised any dispute of fact, and it appears to be a pure legal argument.

14.From the above, I do not see any genuine or substantial issues of fact raised by the 2^nd defendant which justify treating the present proceedings as if begun by writ.  This is so particularly bearing in mind that almost two years have lapsed since the commencement of these proceedings.

15.I therefore order that the substantive hearing of the Originating Summons be fixed with one day reserved.

Mr Isaac C K Chan, instructed by Tsang, Chan & Wong, for the plaintiff

The 1^st defendant appeared in person

Mr Tony Ko, instructed by M K Lam & Co, for the 2^nd defendant