Credit One Finance Ltd v. Hung Yee Lai Isis and Another

DCMP 4005/2023

[2024] HKDC 742

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4005 OF 2023

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DECISION

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1.This is an order for sale under the Partition Ordinance. There are two defendants in this action. They are the co-owners of the property in question and they are both absent today. The plaintiff is a licensed money lender.

2.I am satisfied that relevant documents have been served to both defendants and there is an Affirmation provided in the hearing bundle, page 195 and 196, giving evidence of proper service on 1^st and 2^nd defendants. 

3.The plaintiff has already obtained a money judgment against the 1^st defendant and the guarantor.  The 1^st defendant is the borrower in this case, Hung Yee-lai Isis, and this judgment is enclosed in the bundle on page 116. The judgment has been obtained on the date of 1 March 2023, that is over a year ago.  The original of this sealed judgment has also been disclosed to the court and inspected by the court. 

4.So there is no dispute in the calculation of the sum owed by the 1^st defendant to the plaintiff and I am satisfied that plaintiff has been trying to obtain payment of this judgment sum from the 1^st defendant but without success and therefore the plaintiff have to proceed to the current application to seek the sale of the property. 

5.It is also of note that the 2^nd defendant in this application, the co-owner of the relevant property, has already agreed to the terms as evidenced by a consent summons on page 28 to 34 in the hearing bundle, and his consent summons, it contains the usual term regarding enforcement of the judgment debt under the judgment as I said before dated 1 March 2023.  And just for information, the action number was DCCJ 4119/2022. 

6.I am satisfied that the 2^nd defendant, as a co-owner of the relevant property, agreed to the consent order and the content has been translated and informed and explained to the 2^nd defendant by the plaintiff’s solicitors before the 2^nd defendant signed the consent which was dated 22 December 2023.  The 2^nd defendant was also aware that he has the right to seek independent legal advice, so on and so forth. 

7.Now, the court would come to the current application.  Both defendants did not attend the hearing nor presented any evidence in defence of this application.  The usual defence to oppose such application, as stated by Mr Cheung, counsel of the plaintiff, is very great hardship if the court were to exercise its discretion to order the sale.  A very great hardship under some special unusual circumstances that would amount to this very great hardship.  But the court is satisfied that no such evidence were produced by either defendants.  Of course, the 2^nd defendant as a co‑owner already consented to the sale or at least as stated on paragraph 2 of page 29 of the hearing bundle. 

8.The consent order seeks the usual order seeking the 1^st defendant to enter into a binding and enforceable agreement duly signed by all parties for the purchase of reporting, etc, to do payment under the mortgage and to deliver to the plaintiff vacant possession, etc, and title deed, etc.  So clearly the 2^nd defendant is not advancing any evidence or argument of severe or undue hardship for the sale of property. 

9.I was also shown a proper valuation report for the property valued at HK$5.95 million and I have also seen the original of that valuation report. 

10.Next, we come to whether there was any problem with compliance with the statutory requirement under the Money Lender Ordinance.  I have looked at the relevant documents including original documents, the memorandum, and the mortgage.  I am satisfied that the plaintiff is full compliance of any statutory compliance. 

11.Mr Cheung has raised one particular feature of this case in that it involved a third-party agent.  I am satisfied that the presence of that agent was properly disclosed and the plaintiff has sought the relevant confirmation from the police, the Commissioner of Police, that there was no problem in the appointment of this agent and this third‑party agent was indeed registered by the plaintiff in compliance of the relevant statutory requirement. 

12.So in conclusion, the court find for the plaintiff that indeed there is that discretion to order the sale of property should be exercised. 

13.Firstly, the 1^st defendant the borrower was not co‑operative in repayment of the money judgment obtained over a year ago, so there is no other solution but for the plaintiff to enforce or to try to obtain an order for sale to obtain repayment of the money owed. 

14.Secondly, there is consent from the other co-owner, the 2^nd defendant, and so there is no issue of prejudice nor any evidence of undue hardship raised by the 2^nd defendant. 

15.Thirdly, the 1^st and 2^nd defendants are the co-owners of the property.  The only solution is for the property to be sold with the valuation report. 

16.Another consideration is whether the character of the property means that it is impracticable to partition it between the two co-owners. I am satisfied that the evidence show that the property is a residential unit in a multi-storey building with a sellable area of around 650 square feet.  It would be impracticable nor beneficial to the co-owners to make an order for its partition.  And even if that is possible, it would devalue the property and prejudice the 1^st and 2^nd defendant’s financial interest.  That was part of the consideration of the sale. 

17.Anyway, no such objection was raised by either of the co‑owners and therefore the only solution is for the property to be sold and we have, as I said before, we have a valuation report of HK$5.95 million.  And finally, I find no problem with compliance with the required statutory requirements. 

18.Mr Cheung also referred the court to the draft order and also page 90 of the hearing bundle and this is a matter concerning the order of priority in case there is competing interest.  And I can see that in page 90 of the hearing bundle, the third schedule here refers to $2 million as the priority under that agreement.

19.So if we go back to the draft order, I think it is probably wise to amend on page 4, subparagraph (d), that is paragraph 5, subparagraph (d), to reflect that priority in case there is any next encumbrancer. 

(Discussion re order)

20.So we should add after (d)(i), “in discharge of the mortgage and then “(together with (ii), limited to HK$2 million)”.  And then under (ii), “(together with (i), limited to HK$2 million)”. 

21.Also in subparagraph (iii), before “the balance of, if any”, we should add, for avoidance of doubt, “(i) and (ii) above be limited to the maximum of HK$2 million with the balance (if any) be paid to the next encumbrancer; or if there is no such encumbrancer, to the 1st defendant.” 

(Discussion re order)

22.I have no other problems with the draft, the terms of the draft order and then I come to consider paragraph 7 which is the costs of the proceedings to the plaintiff. 

23.There is no dispute, I accept from Mr Cheung, that it is usual for such costs to be taxed on a full indemnity basis.  I have assessed the statement of costs provided and I am satisfied that there is no unreasonable costs stated there and therefore I would assess, summarily assess the costs on an indemnity basis to be HK$112,986, inclusive of item (f), counsel’s fee briefed at HK$22,000. 

24.So I will also approve paragraph 7, which I agree is not unreasonable. 

Order

25.So I will give order in terms of the draft order as amended:

a.  Subject to paragraph 2 hereof, the property known as ALL THAT 1 equal undivided 496^th parts or shares of and in Section F of Kowloon Inland Lot No. 1445 (Flat No.11 on 7^th Floor of Block A, Chung Hwa Building, Nos.3A-3C, 5, 5A-5F Ma Hang Chung Road, Nos.55-65 Pau Chung Street, Kowloon) (“the Property”) be sold by the plaintiff PROVIDED that attempt for sale be first made to HUNG YEE LING at a price not less than HK$5,950,000.00;

b.  Unless within 28 days after service of the Order, HUNG YEE LING do enter into a binding and enforceable Agreement duly signed by all parties for purchase of the Property as referred to in paragraph 1 above, or the 1^st defendant do make payment of the following sums being the judgment debts under the Judgment dated 1 March 2023 in DCCJ 4119/2022 as secured by the Mortgage dated 6 April 2022 (“the Mortgage”): -

i.  The sum of HK$2,085,257.04;

ii.  Interest on the sum of HK$1,700,000.00 at the rate of 16.00% per annum (i.e. daily interest of HK$745.21) from 20 October 2023 until payment; and

iii.  Interest on the sum of HK$12,000.00 being the assessed costs in DCCJ 4119/2022 at Judgment rate from 20 October 2023 until payment,

the 1^st and 2^nd defendants do deliver to the plaintiff vacant possession and title deeds and documents in their possession (if any) of the Property, and the plaintiff be at liberty to sell the Property by public auction or private treaty in open market at a price not less than HK$5,950,000.00;

c.  The conduct of the sale of the Property shall be committed to the plaintiff’s Solicitors Messrs. Au Yeung, Lo & Chung;

d.  Upon such sale, the 2^nd defendant shall do all acts and things necessary for the transfer of the legal title and beneficial interest in the Property to the purchaser, failing which Mr. Chung Man Wing, a partner of Messrs. Au Yeung, Lo & Chung, Solicitors for the plaintiff be appointed under s.38A of the District Court Ordinance, Cap.336. to execute the necessary conveyance or assignment to give effect to this Order;

e.  The proceeds of the sale of the Property shall be paid to the plaintiff’s Solicitors and be applied upon completion in the following order of priority: -

i.  In discharge of all government rent, taxes, rates and other outgoings due and affecting the Property;

ii.  In discharge of all encumbrances affecting the Property having priority to the Mortgage, if any;

iii.  In payment of the costs and expenses in connection with the sale of the Property;

iv.  50% of the remaining proceeds relating to the 1^st defendant’s interest in the Property be applied as follows :-

(1)In discharge of the Mortgage (together with (2) limited to HK$2,000,000.00);

(2)In payment of the plaintiff’s costs of these proceedings (together with (1) limited to HK$2,000,000.00);

(3)(for avoidance of doubts, (1) and (2) above be limited to the maximum of HK$2,000,000) the balance (if any) be paid to the next encumbrancer; or if there is no such next encumbrancer, to the 1^st defendant;

v.  the other 50% of the remaining proceeds relating to the 2^nd defendant’s interest in the Property be applied as follows :-

(1)In discharge of all encumbrances affecting such 2^nd defendant’s interest in the Property, if any; and

(2)The balance, if any, be paid to the 2^nd defendant.

f.  Upon the 1^st defendant paying to the plaintiff the money hereby ordered to be paid and all other moneys (if any) secured to the plaintiff by the Mortgage, the plaintiff (subject and without prejudice to the due exercise of any power of sale for the time being vested in it) do redeliver to the 1^st and 2^nd defendants possession and title deeds and documents of the Property and release to the 1^st defendant the security constituted by the Mortgage as the 1^st defendant may agree or the Court may direct but without prejudice to the validity of any contract made prior to or without notice of such redemption and payment;

g.  The 1^st defendant do pay the costs of these proceedings to the plaintiff on a full indemnity basis to be summarily assessed at HK$112,986.00; and

h.  There be liberty to apply.

Mr Tommy Cheung, instructed by Au Yeung, Lo & Chung, for the plaintiff

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