Hong Kong Finance (Personal Loan) Ltd v. Cheung Sook Ying Cyrilla and Another

DCMP 3719/2022

[2023] HKDC 272

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3719 OF 2022

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BETWEEN

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J U D G M E N T

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Background

1.The plaintiff is a licensed money lender.

2.The 1^st and 2^nd defendants, as joint tenants, are the registered owners of Flat H, 13^th Floor, Block 5, Prima Villa, No 8 Chui Yan Street, Shatin (the “Property”).

3.By the two loan agreements dated 8^th April 2022 and 30^th May 2022 (the “Loan Agreements”), the plaintiff lent 2 respective sums of HK$550,000 and HK$1,350,000 to the 1^st defendant.

4.The said indebtedness is secured against the 1^st defendant’s interest in the Property under a mortgage dated 8^th April 2022 (the “Mortgage”). In this connection, it has been suggested that the 1^st defendant’s act of tendering her share in the property to be mortgaged amounts to a severance of the joint tenancy: see Ma Wing Sum v Ma Choi Kee [1967] HKLR 177, 195; Konew Capital International Ltd v Lee Chi Man & Anor [2022] HKDC 699, para 19 (per Deputy District Judge Vincent Lung).

5.Despite repeated demands, the 1^st defendant failed to repay the indebtedness owed to the plaintiff.

6.Hence, by the Originating Summons herein dated 30^th September 2022, the plaintiff commenced the present mortgagee action. In gist, the plaintiffs seek monetary judgment against the 1^st defendant and an order that the Property be sold pursuant to the provisions of the Partition Ordinance (Cap 352).

7.Based on the evidence placed before me, I am satisfied that the court documents in the present proceedings were duly served on the defendants. I am also satisfied that the procedural requirements under Order 88 have been complied with.

8.All along, there had been no response from the defendants. They did not even acknowledged service.

9.However, shortly before the present hearing took place, the court received a letter from the 1^st defendant, who also attends the present hearing. In gist, the 1^st defendant said that the plaintiff should remove her unfavourable credit records maintained with the TransUnion, such that she could obtain a fresh loan from another money lender to repay the indebtedness owed to the plaintiff.

Monetary Judgment

10.Putting aside the fact the defendants have not filed any affirmation in opposition, I am firmly the view that they have no defence to the plaintiff’s claims, and there is no reason why the present proceedings should be further adjourned.

11.It is plain that the plaintiff does not owe the 1^st defendant any obligation to improve her credit records maintained with the TransUnion; nor is the plaintiff under any duties to assist the defendants to obtain loans from other money lenders.

12.In the premises, I have no doubt that the plaintiff is entitled to monetary judgment.

13.There is no question that the indebtedness owed to the plaintiff is due and payable.

14.I am satisfied that the Loan Agreements comply with the requirements under section 18 of the Money Lenders Ordinance (Cap 63)  and that the interest charged (ie 20.4% per annum and 24% per annum)  do not exceed the rates stipulated in sections 24 and 25 of the Money Lenders Ordinance.

Order for Possession and Sale

15.Section 3(1)  of the Partition Ordinance (Cap 352)  provides that:-

“Where any property in land is held in the manner referred to in section 2, any person interested in such property may institute proceedings in the court under this Ordinance by way of an action for partition or sale.”

16.There is a line of cases where the court held that a mortgagee who is entitled to possession of the subject property is a “person interested” for the purposes of section 3(1)  of the Partition Ordinance: see Law Chun Wai v Chu Suk Har [2016] 1 HKLRD 224, para 21-23 (per His Honour Judge Andrew Li); Konew Capital International Ltd v Chan Wun Tai [2022] HKDC 515, para 22 (per Deputy District Judge Kenneth Lee); Konew Capital International Ltd v Lee Chi Man & Anor [2022] HKDC 699, para 17 (per Deputy District Judge Vincent Lung).

17.The 1^st defendant’s failure to make repayment constituted an event of default under clauses 5.01 and 5.02 of the Mortgage. Pursuant to the clause 6.01, the plaintiff is entitled to seek possession of the Property and to exercise powers of sale.

18.In the premises, I am satisfied that the plaintiff is a “person interested” for the purposes of section 3(1)  of the Partition Ordinance.

19.The next question is whether I should exercise my discretion to make an order for sale. For the following reasons, I have no doubt that the answer is in the affirmative:-

(1)  Since the Property is a residential unit in a multi-storey building with saleable size of 393 square feet only, it is obviously infeasible to “partition” the Property physically.

(2)  Even if physical partition were possible (which is not the case), the value of the Property will decrease substantially. This is not in the financial interests of the parties.

(3)  It appears to me that the proposed sale of the Property is in the interests of all the parties. Unless the Property is sold, the plaintiff will not be able to recover the indebtedness in question, and it will be left with no remedy. This would be unfair.

(4)  Meanwhile, the interests of the defendants are adequately safeguarded. Whilst the proposed sale will be conducted by the plaintiff’s solicitors who are officers of the court, there will be a reserved price which is based on the valuation of a professional surveyor, namely Mr Raymond Hui of Midland Surveyors.

(5)  Further, there is no evidence before me showing that the defendants will suffer any hardship if an order for sale is made.

20.Taking all the circumstances into account, I am satisfied that the court shall exercise its powers to grant an order for sale.

Order

21.I will make an order in terms of the draft submitted by the plaintiff’s solicitors, which is based on the formulation of the order made by the court in Konew Capital International Ltd v Chan Wun Tai [2022] HKDC 515, para 26.

22.As regards costs:-

(1)  The clauses of the loan agreements as well as the Mortgage provide that the 1^st defendant shall fully indemnify the plaintiff’s reasonable costs and expenses in taking enforcement action.

(2)  In the premises, the plaintiff is entitled to indemnity costs. Pursuant to the request of Mr Cheng (who represents the plaintiff), I conducted a gross-assessment. I order that the 1^st defendant do pay the plaintiff’s costs in the present proceedings (summarily assessed at HK$45,000).

23.I thank Mr Cheng for his helpful assistance.

Mr Brian Cheng, of Foo & Li, for plaintiff

The 1^st and 2^nd defendants were not represented, and the 2^nd defendant did not appear