Ego Finance Ltd v. Loak Kam Chuen and Another

DCMP 638/2022

[2022] HKDC 932

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 638 OF 2022

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BETWEEN

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Before:  Deputy District Judge B Mak in Chambers

Date of Hearing:  26 Aug 2022

Date for Decision:  1 September 2022

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DECISION

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Introduction

1.At the hearing on 26 August 2022, I granted an order in terms of the reliefs sought by the plaintiff.  Here are my reasons.

Service

2.The originating summons was served on the 1^st and 2^nd defendants by insertion into the letter box of their usual and last known address on 18 February 2022.

3.The notice of appointment to hear originating summons was served on the 1^st and 2^nd defendants by ordinary post at their usual and last known address on 22 July 2022.

4.I am satisfied that the 1^st and 2^nd defendants have had due notice of these proceedings and hearing and they have chosen not to take any action nor to appear.

The plaintiff’s case

5.The plaintiff is a licensed money lender.

6.The 1^st and 2^nd defendants are the registered owners as joint tenants of Flat C, 5^th Floor, Block 1, Fu Fai Garden, No 28 On Shing Street, Shatin, New Territories, Hong Kong (“the property”)

7.By a Second Mortgage dated 31 May 2021 (“the 2^nd Mortgage”), the 1^st defendant as borrower of one part and the plaintiff as the lender of the other part, the 1^st defendant charged his interest in the property to the plaintiff to secure the repayment of the general credit facilities to the extent of HK$3,000,000.

8.By a loan agreement dated 14 September 2021, the plaintiff lent the sum of HK$1,850,000 to the 1^st defendant at the interest rate of 24% per annum.

9.The 1^st defendant defaulted in repaying the monthly instalment punctually.  The outstanding principal as at 15 July 2022 is HK$1,784,715.18.

Money judgment

10.The plaintiff’s case is not controverted and I accept it at its face value.

11.I am satisfied that the plaintiff has in form and in substance complied with the requirements of a moneylender’s action under Order 83A.  The plaintiff is entitled to recover the outstanding principal of $1,784,715.18 and interest.

Order for possession

12.Clause 5.01 of the 2^nd Mortgage provides, inter alia, that if the Borrower makes default in the payment on the due date of any principal or interest or other moneys outstanding and payable by the Borrower under any term loan account (whether demanded or not), an event of default shall have occurred.

13.Clause 6.01 of the 2^nd Mortgage provides that if an event of default has occurred, the Lender shall have the right, inter alia, to enter into and upon and take possession of the property and for that purpose to take any legal proceedings and thenceforth to hold possess and enjoy the property and to receive the rents and profits thereof without any lawful interruption or disturbance by the Borrower or any other person.

14.I am satisfied that the requirements of Order 88 have been complied with.

15.By reason of the default of the 1^st defendant, the plaintiff is entitled to an order for possession of the property.

Order of sale

16.As the 1^st defendant had made default in payment, the plaintiff as mortgagee became a person holding an interest in the property under s 3 of the Partition Ordinance and may institute the present proceedings: see Maxcolm Finance Ltd v Cheng Chi Man and another [2019] HKCFI 2928 and Moneysq Ltd v Liu Kit Ling and another [2019] HKDC 860.

17.The property is a residential flat in a multi-storey building with a saleable area of approximately 570 sq ft with only one entrance.  I accept that it is impracticable to divide the property into two halves and construct a separate entrance.  Moreover, neither the 1^st nor the 2^nd defendant has tendered any reason by affidavit as to why an order for sale under the Partition Ordinance should not be granted; why it is not impracticable to physically partition the property into two halves; why a sale of the property would not be beneficial to all the parties or that significant hardship would be caused to the 2^nd defendant.

18.In any event, the 2^nd defendant shall be entitled to half of the proceeds of sale.

19.Accordingly, I am satisfied that an order for sale ought to be made and I so order.

Reserved price

20.The plaintiff has produced a valuation report which opined that the value for sale of the property under repossession as at 15 June 2022 is in the order of HK$6,200,000.

21.I accept the said valuation and direct that the property shall be sold with a reserved price of HK$6,200,000.

Costs

22.By summary assessment, I order the 1^st defendant to pay the plaintiff the costs of this action in the sum of HK$50,716.33.

Mr B. Cheng of Foo & Li, for the plaintiff

The 1^st and 2^nd defendants were not represented and did not appear.