Standard Chartered Bank (Hong Kong) Ltd v. Wonggenos Enterprises Co Ltd and Others
Read the full judgment text of DCMP 878/2018 on BabelCite. This District Court judgment was delivered on 17 June 2022.
1. This is the 2 nd Defendant’s appeal [1] against the decision of Master B Mak made on 25 April 2022 dismissing her application by summons dated 17 January 2022 for a stay of execution of the Writ of Possession and Fieri Facias Combined issued on 29 December 2021 in respect of the property situate at Flat C on 25 th Floor, St. Louis Mansion, No 20 Macdonnell Road, Hong Kong (“the Property”), being the property forming the subject of this mortgage action.
Cites 12 cases
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DCMP 878/2018 [2022] HKDC 534 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO 878 OF 2018 --------------------
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--------------------- Before: Deputy District Judge Joseph Vaughan in Chambers Date of Hearing: 27 May 2022 Date of Reasons for Judgment: 17 June 2022 ----------------------------------------- REASONS FOR JUDGMENT ----------------------------------------- Background 1.This is the 2nd Defendant’s appeal[1] against the decision of Master B Mak made on 25 April 2022 dismissing her application by summons dated 17 January 2022 for a stay of execution of the Writ of Possession and Fieri Facias Combined issued on 29 December 2021 in respect of the property situate at Flat C on 25th Floor, St. Louis Mansion, No 20 Macdonnell Road, Hong Kong (“the Property”), being the property forming the subject of this mortgage action. 2.The Property was purchased in 2007 in the name of the 1st Defendant, who executed a mortgage dated 9 March 2007 (“the Mortgage”) over the Property in favour of the Plaintiff to secure a loan of HK$2,112,500. At around the same time, the 2nd Defendant executed a guarantee dated 8 March 2007 in favour of the Plaintiff as additional security for the money owing by the 1st Defendant to the Plaintiff (“the Guarantee”). 3.The 3rd Defendant, the father of the 2nd Defendant, commenced an action in the High Court in HCA 899 of 2012 (“HCA899”) against the 1st and 2nd Defendants claiming that the Property was held by the 1st Defendant on constructive trust for him. By a judgment dated 30 September 2016[2], Recorder Lisa KY Wong SC (as she then was) ruled in favour of the 3rd Defendant. The 1st and 2nd Defendants then sought an extension of time to appeal against the judgment, and for a stay of execution. The applications were dismissed by the Court of Appeal on 28 February 2018. 4.Subsequent to the judgment in HCA 899, the 1st Defendant had defaulted in repayment of the loan since December 2017. This mortgage action was then commenced by the Plaintiff by Originating Summons dated 23 March 2018 for recovery of the outstanding amount under the Mortgage. 5.By the judgment given by Her Honour Judge Winnie Tsui in this action on 28 October 2019[3] (“the Judgment”), the learned judge ordered, inter alia, that (i) the 1st and 2nd Defendants do pay to the Plaintiff the outstanding amount of HK$885,593.05, together with interest thereon, and (ii) the 1st Defendant do deliver up vacant possession of the Property to the Plaintiff. 6.Insofar as the 3rd Defendant is concerned, he was joined in the present action for the purpose of seeking declarations to the effect that the Plaintiff’s legal interest in the Property has priority over, and would rank ahead of the 3rd Defendant’s beneficial interest. The Plaintiff’s claim was not opposed by the 3rd Defendant. Based on her findings, the judge also made the declarations sought. The Plaintiff would thus take the legal estate free of the equitable interest of the 3rd Defendant[4]. 7.Upon the granting of the Judgment, the Plaintiff also undertook that in the event it exercises its power of sale, insofar as there will be any net amount after the sale of the Property and payment of the outstanding indebtedness and expenses owed by the 1st and 2nd Defendants to the Plaintiff, the Plaintiff will pay into court the net sale proceeds[5]. 8.Subsequently the 1st and 2nd Defendants’ application for leave to appeal against the Judgment was dismissed by the judge on 24 January 2020[6], and a further application for leave to appeal was also dismissed by the Court of Appeal on 3 September 2021[7]. 9.Following the disposal of the appeal, the Plaintiff proceeded with the enforcement of the Judgment to recover the outstanding debts, and for taking possession of the Property. The Writ of Possession and Fieri Facias Combined was eventually applied for and issued on 29 December 2021. The present appeal 10.On 17 January 2022, the 2nd Defendant applied for a stay of execution of the Writ of Possession and Fieri Facias Combined. The application was dismissed by Master B Mak. By a Notice of Appeal dated 26 April 2022, the 2nd Defendant lodged the present appeal against that decision. 11.The appeal came before me on 27 May 2022. After hearing the parties, I dismissed the appeal and indicated that I would provide the reasons for my judgment, which I now do. The 2nd Defendant’s arguments 12.The 2nd Defendant filed further evidence for this appeal, updating information concerning her means, or expected means, and consolidating her position. The plaintiff has not objected to the filing of such further evidence, and I proceeded to consider the same under Order 58 rule 1(4) of the Rules of the District Court, Cap 336H (“RDC”) for the purposes of this appeal, which is dealt with by way of a re-hearing (see Hong Kong Civil Procedure 2022, Vol.1, para.58/1/2). 13.According to the 2nd Defendant, she is currently residing at the Property and has no other housing option available. The place is also her major workplace during the pandemic. She has written to the Plaintiff to inform them that as a guarantor of the mortgage loan, she intends to pay off the amount due from the 1st Defendant to the Plaintiff. On 5 January 2022, she did repay an amount of HK$8,800. In the circumstances, she asked for a stay of execution until the end of June 2022 for her to “pay off and settle the outstanding mortgage loan amount and the sums stated in the Writ [of execution] dated 29 December 2021 by 30 June 2022”[8]. In her 2nd Affirmation filed on 14 April 2022 in support of her application for a stay of execution, she proposed the following repayment schedule:-
14.In her 3rd Affirmation filed on 26 April 2022, the 2nd Defendant indicated that the 1st and 2nd Defendants were preparing for an account-taking hearing in May 2022 in the High Court concerning monetary contributions paid by them in relation to certain properties including the Property in the present case, and that they were expecting a return of some HK$1.19 million to them as “legal cost charged as an Absolute Charging Order in the sale of Unit 24A…within 7 days in the account taking hearing on 16-18 May 2022”. On such claim, the 2nd Defendant asked for a stay of execution until 30 July 2022, or at least 30 June 2022, for her and the 1st Defendant to fully settle the outstanding sum under the Mortgage. 15.By her 4th Affirmation filed on 18 May 2022, the 2nd Defendant provided a further update of her position, indicating to the court that closings submissions will be heard at the account-taking hearing in HCA 899 fixed on 2 June 2022. It is said that the 1st and 2nd Defendants have the intention and ability to settle the outstanding amounts due to the Plaintiff as soon as the Master has made a decision in the High Court. 16.The 2nd Defendant also indicated that she would be able to repay HK$300,000 to the Plaintiff first as soon as her bank approves a business loan for her company, Newstrak Intl Company Limited (“Newstrak”). According to her, the loan was applied for in early April 2022 and is expected to be forthcoming by the end of May 2022. She also submitted at the hearing a copy of a “Revised repayment schedule” dated 5 May 2022 issued by HSBC to Newstrak being a schedule showing repayable monthly amounts from 28 May 2022 to 28 August 2025 for the outstanding balance of HK$96,799.08 of a loan due from Newstrak to HSBC. I asked the 2nd Defendant at the hearing as to the significance of this repayment schedule, and was given to understand that this is the loan account that was used to apply for a top-up loan from the HSBC, and the amount of the top-up loan expected to be forthcoming is in the region of HK$325,000. I further asked the 2nd Defendant whether the loan has been formally approved yet, and whether she has produced the loan application documents she or her company has submitted, to which she responded by stating that the loan application has not yet been approved, and she has not arranged for a copy of the application to be made at the time, so that no such copy was available. She then asked for an adjournment of the hearing to allow her to liaise with HSBC to obtain a copy of the loan application. I did not accede to the application for adjournment, bearing in mind that (i) it is up to a party as to the manner in which the evidence for a hearing is to be compiled well before the hearing, and (ii) the loan application in question was, according to the 2nd Defendant, made in early April 2022, and she has had ample time to obtain a copy of the application and produce it for the purpose of both the hearing before the Master, and this appeal. That was not done. I therefore disallowed her ad hoc application for an adjournment made in the middle of the hearing. The plaintiff’s submissions 17.Ms Hung for the Plaintiff submitted that since the Judgment was granted on 28 October 2019, the Defendants have only repaid a meagre amount of HK$8,800, whereas the total outstanding sum currently stands at over HK$1.2 million, with interest accruing on a continuous basis. Even if the 2nd Defendant is able to procure repayment of what she described as the first batch of HK$300,000 by the end of May 2022, it is only a part of the outstanding amount. Any further delay in the execution process would be tantamount to an unjust curtailment of the Plaintiff’s right to have the fruits of the litigation, being the successful party who is entitled to enforce the Judgment (see e.g. China Citic Bank International Limited v Durrant Patrick Michael [2014] HKCU 1694; CACV 127 of 2014, 21 July 2014, Chu JA). 18.In relation to HCA 899, it is submitted on behalf of the Plaintiff that that is strictly a dispute of the 1st and 2nd Defendants with the 3rd Defendant, and that by the Judgment the court has already made a declaration that the Plaintiff’s interest shall have priority over the 3rd Defendant’s interest in the Property. As such, the outcome of HCA 899 is irrelevant to the present proceedings for the enforcement of the Judgment. 19.It was further submitted by the Plaintiff that the 3rd Defendant may also have an interest in the proceeds of sale of the Property as a result of the judgment in HCA 899. As such, any further delay in execution in the present case would also have an impact on his interest at large. The applicable principles 20.Order 45 rule 11 of the RDC provides:
21.Order 47 rule 1(1), which is only applicable to writs of fieri facias, provides:
22.The reference in Order 45 rule 11 to “matters which have occurred since the date of the judgment” is a reference to “matters which went to the validity of the judgment and which, if established before the Court, might justify the Court in saying that this was a judgment which on the material now before it, it would not allow to be executed” – see the judgment of Hunter J in Tam Ho Man v Wong Kwok Tai, HCA 4736 of 1985, 20 October 1986, at paragraph 3. 23.Tam Ho Man v Wong Kwok Tai was referred to in Credit Lyonnais v SK Global Hong Kong Ltd, CACV 167 of 2003, 30 July 2003 where Ma CJHC (as he then was) gave a useful exposition on the exercise by the court of its jurisdiction to stay execution under Order 45, rule 11, Order 47, rule 1 and Order 59, rule 13, being the corresponding rules in the High Court:
24.Further, the court preserves an inherent jurisdiction to order a stay of execution in suitable cases quite irrespective of the express rules of the court. Whilst the list is not exhaustive, in order for the jurisdiction to be activated and a stay ordered, the circumstances must be that an injustice would otherwise be caused, or that a stay would prevent abuse, preserve the dignity of the court or facilitate the administration of justice[9]. 25.Bearing the above principles governing the exercise of the court’s jurisdiction in mind, I would proceed to consider the 2nd Defendant’s contentions. Discussion 26.In HCA 899, judgment has already been granted in favour of the 3rd Defendant (being the plaintiff in that case) for, inter alia, the transfer of the Property by the 1st Defendant to him, who has been held to be the beneficial owner under a constructive trust[10]. As mentioned at the outset, the 3rd Defendant was subsequently joined in the present action to cater for his interest. The taking of accounts described by the 2nd Defendant is apparently related to two other properties the subject of HCA 899 that have been held to be beneficially owned by the 3rd Defendant, and referred to in the relevant judgments in HCA 899 as the “Kam Fai Flat” and “St Louis Flat 1D”, the proceeds of which are to be accounted for by the 1st and 2nd Defendants[11]. For present purposes, it is uncertain as to the amount, if any at all, the 2nd Defendant allegedly claims she would be entitled to have returned to her as her “contributions to the Mortgage Loan”[12], upon the taking of such accounts. It is not a matter for this court to decide on, suffice for me to say that there are no materials before this court to substantiate her allegation. In fact, I note that the relevant order made by the court in HCA 899 was that “[the 1st and 2nd Defendants] should pay [the 3rd Defendant] the sums found to be due on the taking of such accounts”[13]. 27.The 2nd Defendant also referred in her written submissions to a sum of HK$1,195,441.21 being the amount of a cheque drawn in favour of the Director of Legal Aid (who was acting for the 3rd Defendant) in HCA 899, said to be out of the proceeds of sale of “Unit 24A”. That would appear to me to be a reference to the proceeds derived from the sale of a property owned by the 2nd Defendant, referred to in the judgment in HCA 899 as the “St Louis Flat 24A” (i.e. Flat A, 24/F St Louis Mansion[14]), under a Charging Order Absolute dated 9 April 2019. The Charging Order Absolute was made as a result of the 2nd Defendant’s failure to pay the assessed costs of the 3rd Defendant in HCA 899 of 2012[15]. However, it has not been clearly pointed out by the 2nd Defendant as to what the amount drawn under the cheque mentioned above in favour of the Director of Legal Aid represents, and whether the Director of Legal Aid is to return the amount, or any part of it, to the 2nd Defendant. It is not for me to make any conjecture in this regard. 28.In relation to the 2nd Defendant’s contention that she is in the process of an application for a business loan through her company, Newstrak, and once the loan comes through, she would be able to repay an amount of HK$300,000 first to the Plaintiff, I am not with the 2nd Defendant. The lack of clarity as to the likelihood of success of the loan application, as well as the amount that would be approved apart, the 1st or the 2nd Defendant has obviously not sought to take the step to make any loan applications for the entire time after the date of the Judgment until April this year. Whatever the reason, the inaction on the part of the 1st and 2nd Defendants was not conducive to relief from their situation. 29.In short, there is nothing to suggest that there have been any circumstances or evidence emerging after the Judgment that would suggest that the Judgment is invalid, or that the 1st or 2nd Defendant has any claim against the Plaintiff that is yet to be determined. Any alleged amount due to be returned to the 1st or 2nd Defendant, which is unrelated to the Plaintiff’s claim for recovery of the mortgage debt here, would not constitute a special circumstance to justify a stay (see Hong Kong Civil Procedure 2022, Vol.1, at paragraph 47/1/1; Yu Michael Tse Lim v Ngai Tik Yu, DCCJ 3211 of 2007, 31 December 2007, HH Judge Au (as he then was)). 30.Further, the 2nd Defendant has put forward her submissions in a way that she has or will shortly have, together with the 1st Defendant, the ability to repay the adjudged amount. But even if her application had been on the ground of an inability to pay pursuant to Order 47 rule 1(3), she has not provided the required evidence disclosing her income, the nature and value of any of her property, and the amount of any other liabilities of hers, in compliance with rule 1(3). On the materials before me, and on the analysis of the factors stated above, I am unable to conduct any realistic assessment of a stay of execution of the writ of fieri facias[16] on condition of any payment by instalments or the repayment schedule proposed by the 2nd Defendant. Thus, to the extent that the 2nd Defendant’s application is based on Order 47 rule 1(3) on the ground of inability to pay, she has not succeeded either. 31.Lastly, insofar as the inherent jurisdiction of the court is concerned, nothing can be discerned in the circumstances of this case that a stay would prevent a potential abuse of the process of the court, preserve the dignity of the court, or that the administration of justice would otherwise call for a stay. Conclusion 32.For the reasons stated above, I accept the Plaintiff’s submissions, and reject the contentions of the 2nd Defendant. The appeal is therefore dismissed. 33.In relation to costs, I ordered that the 2nd Defendant shall pay the Plaintiff’s costs of this appeal on an indemnity basis pursuant to the terms contained in Clause 1(c) of the Guarantee, which provides for the recovery of legal costs on an agreed indemnity basis. The Plaintiff’s costs were summarily assessed at $11,000. 34.As the 3rd Defendant has not participated in this appeal, no costs order has been made as between him and the 2nd Defendant or the Plaintiff.
Ms B Hung, of Gallant for the Plaintiff The 1st Defendant was represented by Ms Wong Po Ling The 2nd Defendant was not represented and appeared in person The 3rd Defendant was not represented and was absent [1] By Notice of Appeal taken out in her name on 26 April 2022. [2] Wong Yuk Tung v. Wong Po Ling and Another, HCA899/2012, 30 September 2016. [4] See paragraph 37 of the Judgment. [5] See paragraph 38 of the Judgment. [7] CAMP 36/2020; [2021] HKCA 1254. [8] Affirmation of Wong Po Ling dated 17 January 2022, paragraph 10. [9] Credit Lyonnais v SK Global Hong Kong Ltd at paragraph2. [10] Judgment of Recorder Lisa Wong SC dated 30 September 2016, at paragraph 96. [11] See, e.g. the Decision of Lisa Wong J dated 27 June 2018, [2018] HKCFI 1482; and the Decision of Lisa Wong J dated 5 May 2021, [2021] HKCFI 1267. [12] Page 2 of the “Skeleton Submission of the 1st and 2nd Defendants” dated 24 May 2022. [13] Judgment of Recorder Lisa Wong SC dated 30 September 2016, at paragraph 96. [14] Which is in the same building where the Property is. [15] See the Decision of DHCJ Leung dated 8 August 2019, [2019] HKCFI 1947. [16] Order 47 rule 1 only applies to execution by writs of fieri facias. | |||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under DCMP 878/2018