The Bank of East Asia, Ltd v. Tarjoto Heru Hidajat and Another

HCMP 1190/2024

[2025] HKCFI 1458

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1190 OF 2024

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JUDGMENT

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Introduction

1.On 26^th March 2025, I heard the Plaintiff’s (“the Bank”) Originating Summons (“OS”) dated 11^th July 2024.

2.The Bank’s position as set out in its skeleton submissions is that it sought a summary disposal of the OS.  The Bank’s case could be summarized as follows.

3.On 20^th June 2017, the Bank granted the Defendants (“Ds”) the 1^st Facility Letter [C/14/85] pursuant to which the Bank extended a mortgage loan of HK$21.67M, to be payable by 120 months instalments.

4.The Mortgage [C/16/92] was executed on 18^th July 2017. Some of the more pertinent clauses are set out at clauses 1.10, 3, 7 and 8.2, which I shall not repeat here.

5.On 22^nd March 2023, the Ds applied for refinancing[C/44/392]. To this end, they signed a Declaration [C/44/399] to the apparent effect that the application was subject to the Bank’s final approval.

6.It is suggested that on 29^th March 2023, some kind of approval was given.  Whether, and the extent to which the approval was conditional was disputed, and for reasons to be explained below I did not find the Bank’s evidence to be entirely convincing in that regard.  Nonetheless, it would appear that whatever “offer” (a term I will use loosely in this Judgment, without necessarily suggesting that the “offer” is an offer which is capable of being accepted and thereby constituting a binding and legally effective contract) were not taken up as made clear by the WhatsApp dated 21 April 2023 in [C/247].

7.This however is not the end of the matter.  The Ds’ evidence suggests that there was another offer made on 15^th May 2023, and this was borne out by the WhatsApp in [C/263] dated 15^th May 2023. Indeed, a draft Finance Agreement apparently made on 29^th May 2023 was provided to the Ds: see the drafts at [C/33, 39/332, 365].

8.The drafts were ultimately not signed.  However, the Ds’ evidence, as could be seen from the WhatsApp in [C/21/168], arguably suggests that there could be some form of “acceptance” on 26^th June 2023.  This point has been fairly drawn to my attention by the Bank’s counsel (as well as argued by the Ds) and I will deal with this later.

9.Apparently there were then some negotiations in August 2023 as one could see from [C/23/185]. The Bank’s evidence is that later on 14^th September 2023, it asked for inspection of the property failing which the request for refinancing would be regarded as cancelled [C/22/184, 216].

10.I should also mention the 2^nd Facility Letter on 26^th January 2024 [C/15/90].  The significance of this would be explained below, but it would be useful to point out that, as one could see from [C/91], that the Ds agreed that “save and except the aforesaid, all the other terms and conditions of the Loan as stipulated in the related facility letter(s) with terms and conditions therein duly signed by you previously in respect of the Property shall remain unchanged and shall be in full force and effect”.  This is a point mentioned by the Bank in paragraph 12 of its submissions.

11.The Bank asserted that there was a default, not only of the Mortgage loan, but also non payment of fees owed by reason of the credit card issued to the 2^nd Defendant (“D2”).

12.A demand was previously made and in particular on 6^th June 2024 [C/19/149].

Issues and Decision

13.This is my decision after hearing the parties, including Ms. Yu who has fairly drawn to me the arguments advanced by the Ds.  And I have also considered the submissions dated 21^st March 2025 filed by the Ds.

14.The Ds were acting in person and given the outcome of these proceedings has a direct impact on their home it is understandable that they were concerned.

15.I should mention at the outset, as I had at the hearing, that the only matter before the Court is the OS and hence the factual and legal issues directly arising from the OS.  Whether the Bank has been in breach of other obligations owed to Ds or other codes of conduct is generally speaking not necessarily relevant to the OS.  If that is a matter the Ds wish to take action (and I say nothing about it one way or the other) these may need to be resolved in a different forum at another time.

16.Leaving aside the various offers made in 2023 and the possibility of a new or extended/refinanced loan, it would appear that the Bank’s evidence on the default of the pre-existing Mortgage loan was either undisputed or indisputable.  There was a default, and if and insofar as a demand was necessary such a demand had been made.  The original of the mortgage document had also been brought to Court.

17.The more contentious questions are as follows.

Credit Card Issue

18.First, while the Bank’s position is that the Mortgage could somehow cover D2’s debt under the credit card obligations, such that (a) the covenant to pay allegedly has the effect of requiring the 1^st Defendant to pay D2’s credit card debt, and (b) a failure to pay off the credit card debt might amount to an event of default. Paragraph 14 of the Bank’s submissions suggests that clauses 1.10 and 3 of the Mortgage covers the debt arising by reason of the credit card.  I am not persuaded that this is indeed the case.

19.Indeed, the “Borrower”, in singular, is defined as both of the Ds [C/92].

20.The “facilities” is defined in clause 1.2, and it made clear that it covers only facilities to the “Borrower”, and if the Borrower consists of more than two persons and at least one of which is an individual – which is the case here – then “only those … facilities granted or to be granted to those persons jointly”.  It is also instructive to look at the definition of “secured sum” in clause 1.10.

21.While I have also considered clauses 2.1 and 2.2, I do not consider that the phrases “borrower”, “facilities” or “secured sum” in clauses 3 or 7 are to take on a meaning different than those defined in clauses 1.2 and 1.10.

Ds’ Other Heads of Complaints

22.I then move on the Ds’ various complaints and arguments as evidenced in Ds’ affirmations and as highlighted by the Ds in their written and oral submissions.

23.I have already explained that whilst the Ds may have suffered from a genuine sense of grievances by reasons of being “pushed around” (to use a colloquial expression) and were on the receiving end of what they consider to be commercially unfriendly or excessively bureaucratic requests by the Bank, this may or may not sound in any actionable remedies let alone any defence to these proceedings.  One may even have a degree of sympathy for the predicament the Ds have found themselves in but the Court can only deal on the evidence accordingly to the law and apply it on the matter before it.

24.Insofar as the complaints about the Ds’ ownership and right of privacy is concerned, I am not satisfied that these complaints give rise to any triable defence to the Bank’s claim, which is based on the loaned amount and the Mortgage.

25.The matter of fire insurance has been dealt with by the Bank, particularly in its 2^nd affirmation in reply, and I am not satisfied that it amounts to any triable defence in these proceedings.  The same also applies to the HK$84,500 between the Ds and a particular firm of solicitors, which seems to be a separate matter inter se.

26.In any event, insofar as the aforesaid complaints are concerned, it would not appear that the Bank’s assertion of right under the Mortgage arises from a direct consequence of the aforesaid complaints (even if one is to assume that those complaints amounted to an actionable wrong or breach of contract).

Duty Re Refinancing

27.This however is not the end of the matter as the Ds have advanced other defences.  The first “group” of defences relates to the Bank’s conduct of the re-financing negotiation with the Ds.

28.I do note that the Bank at one point repeatedly “apologized” to the Ds for the way in which the matter was handled: see C/183-185. But this does not necessarily translate into any actionable cause of action; nor does it create any anterior duty on the part of the Bank in the first place.

29.Rather, as made clear in Citibank NA v Days Properties Ltd [2013] 4 HKLRD 264 cited by the Bank, it would be difficult to super-impose any duty on the part of the Bank in the first place.  The Bank is in the usual course entitled to elect or decide whether to grant a new or refinancing loan.  This is a business decision for it. I appreciate the Ds’ argument that it was odd or bizarre for the Bank to behave in the way it did but on the facts of this case and based on the contractual matrix I regret I am unable to identify any legal defence to the claim of the Bank based on it.

30.On the facts of this case, this is reflected by the declaration [C/44/399] signed by Ds in March 2023 to the effect that the application was subject to the bank’s final approval.

Earlier Offer and Acceptance in March?

31.But this is not their only point.  A substantial part of the Ds’ evidence concerns the various offers allegedly made by the Bank.

32.One must start with March 2023.  While the Bank’s evidence is that the offer was conditional, including upon condition of obtaining a legal opinion demonstrating a good title, I have to say that the Bank’s evidence, particularly those in [C/23/188] [C/217] might, to uncharitable eyes, be seen as somewhat self-serving.  In particular, I have to say that I am not particularly impressed with paragraph 3 [C/188] of the Bank’s email dated 6^th November 2023, or the rather convoluted argument in the Bank’s email dated 24^th July 2024 [C/217], where the Bank on the one hand admitted that “the exact wordings of ‘legal opinion’ were not used in the relevant communication”, but on the other hand went on to argue that the Bank has “repeatedly stated the relevant requirement by rephrasing as ‘execute further charge through solicitor firm’”.  There is also no affidavit evidence from Mr. Mak, previously of the Bank but who has now left the employ of the Bank, and who at one point corresponded with the 1^st Defendant, including by WhatsApp.

33.Having said that, I do note that in [C/247] one of the Ds unequivocally said “yes” to the question “cancel the applications” or “so you mean you will not take the offer” in WhatsApp on 21^st April 2023, apparently due to the issue of inspection.  Accordingly the question of whether the March offer is conditional upon legal opinion does not appear to be material, at least insofar as the state of play on 21^st April 2023 is concerned.

Earlier Offer and Acceptance in May/June?

34.However, the matter later developed further.  On 15^th May 2023, Mr. Mak of the Bank via WhatsApp communicated to the 1^st Defendant what Mr. Mak described as the “final offer” [C/263], which was expressly said to be with “no inspection”.

35.Apparently this was followed up by the draft and ultimately unsigned Finance Agreement made in late May or early June 2023.

36.While the draft was ultimately not signed, on 26^th June 2023, the 1^st Defendant did reply to Mr. Mak of the Bank via WhatsApp that “I presume I cannot get 15 years. Can I still get your final offer of May 15 without the insurance?” [C/249].

37.This gives rise to the question of whether there was a binding contract to renew or refinance the pre-existing loan, and if yes whether this gives rise to a triable defence on the part of Ds.

38.I have given this issue, which the Ds developed in their written submissions (particularly at paragraphs 5-6) as well as oral submissions, anxious consideration.  The Bank has not, for the purpose of complying with O.88, r.5(3) sought to adduce evidence to show what the position would have been had the May/June communication amounted to a binding contract to refinance the pre-existing loan.

39.Indeed, the renewed loan was said to be such as to “deduct the existing outstanding loan” [C/249].  In short, if there is a triable question on whether there was a binding contract to renew or refinance the pre-existing loan, then it would appear that this triable point might actually become relevant to the Bank’s claim in these proceedings.

40.So I circle back to the question of whether there is a triable question on whether the May/June exchanges amounted to a binding contract.  I do note that one might see a number of points in the Ds’ favour:-

(a)  While, as one could see from point 4(d) in the email on 24^th July 2024 [C/215], the Bank is keen to say it has previously attached certain conditions, such as the condition of obtaining a legal opinion, to its various quote-and-quote “offers” (including the 15^th May offer), the 15^th May offer was expressly said to be not subject to the condition of inspection, and I am not impressed with the Bank’s evidence on the condition of legal opinion, as previously explained.

(b)  In cases where the parties communicated not only formally via formal documentation but also informally such as by WhatsApp messages, the question of whether there was a binding offer and acceptance may become a matter for cross examination at trial.

(c)  While Ms. Yu placed great weight on the declaration signed in March 2023, there is no clear statement in that declaration to the effect that there would not be any contract between the Ds and the Bank unless and until the parties put pen on paper.

(d)  It could also be said in favour of the Ds, that the question of formation of contract can sometimes be a heavily fact-sensitive one and might not be amenable to summary determination.  There is no clear “written variation clause” in the 1^st Facility Letter precluding any informal variation.

41.I have not lost sight of the fact that there are also a few technical or forensic points which might assist the Bank– for example, the 26^th June 2023 WhatsApp (in the form of a question) might be said to be ambiguous, or that it is unclear how D2 is able to affirm in D2’s affirmation that D2 accepted the offer when there is no evidence that the WhatsApp was sent with D2’s authority, or that after 15 May the Bank had provided the draft FA which might be said to have superseded the earlier communication, or that the 26^th June 2023 WhatsApp did not comply with the mode of acceptance envisaged by the draft Finance Agreement.  Indeed, it might be said that:-

(a)  First, there is no evidence of any clear evidence of “acceptance” (by both of the Ds) of any refinancing, whether prior to or after the evidence being filed in these proceedings. Indeed, Ms. Yu in her oral submissions drew my attention to the last page of [C/379], stating that the written “offer” in the form of the draft facility letter would “automatically lapse” with the Ds signing and returning the same to the bank within “[30] days from the date of this facility letter”.

(b)  Second, on 26^th January 2024, the parties signed the 2^nd Facility Letter, and as one could see from [C/91], the Ds agreed that “save and except the aforesaid, all the other terms and conditions of the Loan as stipulated in the related facility letter(s) with terms and conditions therein duly signed by you previously in respect of the Property shall remain unchanged and shall be in full force and effect”.  Whilst the Ds may have been signing this with some reluctance they are bound by it.  The Ds did not produce any evidence of duress (which was briefly raised by them in oral submissions) in their affirmation evidence, and while Ds may feel they were unhappily singing it I do not think that any “duress” in the legal sense (or indeed economic duress) has been made out on the evidence (I would add for completeness that even if the 2^nd Facility Letter is somehow said to be voidable due to duress, the Ds will still have to elect to rescind the same and to potentially give counter-restitution of the benefits they received pursuant to the 2^nd Facility Letter, and there is no evidence to the effect that they have done so).

42.The 2^nd Facility Letter is not merely a piece of contextual evidence (if and insofar as it is admissible as such in the first place): it is a subsequent legal agreement between the parties delineating their legal rights and obligations, and by entering into the 2^nd Facility Letter, the Ds confirmed and contractually bound themselves, to a legal state of affairs whereby the parties’ rights and obligations are such that “save and except the aforesaid, all the other terms and conditions of the Loan as stipulated in the related facility letter(s) with terms and conditions therein duly signed by you previously in respect of the Property shall remain unchanged and shall be in full force and effect”.

Conclusion

43.In all, the exchanges in May/June 2023 could not avail the Ds.

44.As explained above, whether Ds are able to rely on the Bank’s conduct and other grievances into separate actionable causes of action is a matter for them to consider and this will have to be considered in a different forum.

45.In the circumstances, I am prepared to summarily determine paragraphs 1 and 2 of the OS in the Bank’s favour, save that I am not satisfied that the credit card debt should be included as against either Ds, when paragraph 1 of the OS is confined to the sum due under the mortgage.I will therefore make an Order in terms of the second version of the Order adduced by the Bank (i.e excluding the Credit Card indebtedness), save that I will allow 70 days for there to be vacant possession (as opposed to the 28 days sought by the Bank) since the Ds have been living there for many years and it would require some time for them to make alternative arrangements especially taking into account their age.

46.I will make an Order granting the Bank 80% of the costs of the proceedings on an indemnity basis based on the contractual clauses identified by the Bank.  This is to reflect the fact that (1) the Bank has failed on the credit card issue and (2) to some extent the Ds have been confused by the manner in which the Bank’s officer(s) had communicated with the Ds and this has contributed to how Ds have understood the position.  I do not think it fair or appropriate they should bear all of the costs.  I will accede to summary assessment of costs.  The Bank is to file a costs assessment schedule no more than 2 pages within 7 days, the Ds will have leave to file a statement of no more than 2 pages in reply on quantum only 7 days thereafter and the Bank will have leave to file any statement in reply 5 days thereafter no more than 1 page.  The assessment will be done by me on the papers only.

Ms Christine Yu, instructed by Liu, Chan & Lam, for the Plaintiff

The 1^st and 2^nd Defendants appeared in person