Brave Sky Mortgage Ltd v. Chan Yuk Ping Agnes
Read the full judgment text of HCMP 928/2024 on BabelCite. This High Court CFI judgment was delivered on 4 June 2025.
1. The following matters are before the Court:
Cites 3 cases
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HCMP 928/2024 and HCA 451/2025 (Heard Together) [2025] HKCFI 2665 HCMP 928/2024 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 928 OF 2024 _______________________
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______________________ AND HCA 451/2025 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 451 OF 2025 ____________________
______________________ (Heard Together)
_________________ R E A S O N S F O R J U D G M E N T _________________ 1.The following matters are before the Court:
2.On 27 May 2025, a week prior to this hearing, the Borrower/Plaintiff filed a Notice to Act in Person. 3.On 29 May 2025, the Borrower/Plaintiff informed the Court that she had filed for bankruptcy on 26 May 2025, and attached a copy of her Bankruptcy Petition (HCB 4066/2025) fixed for hearing on 15 July 2025. She also informed the Court that she would not be attending this hearing. Factual background 4.The Borrower purchased the Property on 2 February 2018 with the assistance of a mortgage made with the Mortgagee (the “Previous Mortgage”). Messrs Katherine Or & Co acted for the Borrower in that transaction. 5.The Borrower made regular repayments under the Previous Mortgage until February 2021. 6.The Previous Mortgage was discharged on 22 March 2021 when it was refinanced by the Mortgagee and the Borrower entering into a new facility letter (23 February 2021) and mortgage (22 March 2021) (the “Facility Letter” and “Mortgage”) (collectively, the “Mortgage Loan”). 7.The Borrower (either by herself or her husband, Joseph Chow[3] (“Mr Chow”), made various repayments of the Mortgage between March 2021 and April 2024 as well as rates, government rent and management fees of the Property (collectively, the “outgoings”). Since her purchase of the Property in 2018, the Borrower has repaid a total sum of over $17 million. 8.On 8 January 2024, the Borrower and Mr Chow successfully applied for an extension of the repayment period of the Mortgage for an additional 3 months until 2 May 2025. The Borrower signed the extension letter on 29 January 2024. 9.The Borrower defaulted on 2 May 2024, and following her default, the Mortgagee commenced the HCMP Action on 3 June 2024. The Borrower filed her affirmation in opposition on 19 September 2024 (“Chan 1st”). 10.The Plaintiff commenced the HCA Action the day before the call over hearing of the HCMP Action before the Master on 7 March 2025 and approximately a month before the hearing fixed for 10 April 2025 before this Court. The Plaintiff’s allegations in the HCA Action are largely identical to and, in essence, are a ‘mirror image’ of her defence (as Borrower) in the HCMP Action. 11.By summons dated 31 March 2025, the Borrower applied for leave to file a further affirmation in opposition to the HCMP Action (the “new evidence summons”). The “new evidence” sought to be introduced was a draft affirmation from Mr Chow with exhibits including a medical report by Dr Chong King Yee (“Dr Chong”) dated 21 March 2025 (“the 2nd report”) to supplement her earlier report dated 2 October 2024 (“the 1st report”)[4]. At the last hearing on 10 April 2025, I refused leave and dismissed the new evidence summons for the reasons below. 12.Under the order of Master Ho made on 20 September 2024, inter alia, the Borrower was given leave to file a supplemental affirmation in opposition to supplement her defence on or before 14 October 2024, failing which the Borrower would be debarred from filing any further affirmation in opposition. The rounds of affirmations closed with the Borrower’s 2nd affirmation filed on 5 November 2024 (“Chan 2nd”) and the Mortgagee’s reply affirmation filed on 31 December 2024. 13.The applicable principles in dealing with late applications such as the new evidence summons may be found in the Decision of Coleman J in Chu Hsiao Chu v Ma Jinrui [2020] HKCFI 942:
14.The Borrower had legal representation and acted through counsel. There was no explanation as to why the new matters (including the 2nd report) could not have been dealt with in Chan 1st and 2nd such that the Mortgagee could have responded in its reply affirmation. In fact, the draft affirmation regurgitates the same events already deposed to in Chan 1st and 2nd. Mr Chow’s draft affirmation was hearsay in nature. Mr Chow is not qualified to opine on the Borrower’s mental condition. There was no explanation for the delay in seeking leave for a further round of evidence made at this late stage. Hence its dismissal. This hearing 15.Mr Adrian But, counsel for the Mortgagee in the HCMP Action and D1 and D2 in the HCA Action submitted that the Court should proceed with the scheduled hearing despite the Borrower’s absence. 16.Section 14 of the Bankruptcy Ordinance, Cap 6 (“BO”) empowers the Court after the presentation of a bankruptcy petition to stay the action against the property or person of the debtor or allow it to continue on such terms as it may think just. 17.So far as the HCMP Action is concerned, the Mortgagee is a secured creditor and a bankruptcy order, even if made, would not affect secured creditors and their rights. Section 12 (2) of the BO expressly preserves “the power of any secured creditor to realise or otherwise deal with his security”. In those circumstances, the Court should proceed to hear the HCMP Action. 18.The Borrower’s affirmations (namely, “Chan 1st and 2nd”) set out her defences which in summary are that:
19.The HCA Action is the mirror image of those defences. On that basis, if the Court were to conclude that there are no triable issues in the HCMP Action, it would follow that the Court should also strike out the HCA Action. Applicable legal principles 20.Dynamic Assets Management Limited v Choi Chau Chung [2021] HKCFI 1334 decided that to set aside a contract based on mental incapacity, the counterparty to the contract must either have actual knowledge of the mental incapacity of patient (the person with whom he contracted)[6], unless the mental incapacity of the patient was ‘apparent’[7] or ‘ostensible’[8]: see §§51-69 where the relevant authorities are considered. 21.In Imperial Loan v Stone, Lord Esher expressed the rule in these terms:
22.But in Dunhill v Burgin [2014] UKSC 18 at [31], Baroness Hale asked:
23.It is not entirely clear on what basis Lord Esher’s statement is thought to extend to ‘ought to have known’ situations. As far as it could be construed as an extension, as noted in Chitty at §12-079, there is little direct support in the English authorities for such an extension. As DHCJ Maurellet SC noted in Dynamic Assets (at §60), to import ‘constructive knowledge’ into the mix significantly complicates matters. He further noted (at §68) that if Burgin was not adopting a new test, the ‘ought to have known’ limb could be treated as “a short form for saying a party ought to have known because it was apparent or ostensible”. 24.It is well-established that one of three restrictions, namely, affirmation of the contract, lapse of time or the acquisition by third party of rights in the subject matter of the contract may bar a claim for rescission. They are discussed in Chitty at §§10-143 to 10-150. For present purposes, the more salient principles are highlighted below:
25.Where a person enters into a contract under duress, then if after the duress has ceased he takes no steps to set aside the transaction, he may be found to have affirmed it[12]. The HCMP Action 26.The Mortgagee seeks a monetary judgment in respect of what is due and owing under the Mortgage (including interest) as of the date of the hearing and delivery up of vacant possession of the Property. 27.That the Borrower has defaulted is common ground. Unless the Borrower has raised triable issues, the Mortgagee would be entitled to the relief that it seeks. I turn to consider whether the Borrower has raised triable issues. A. Whether the Borrower can set aside the purchase of the Property on 2 February 2018 and so resist enforcement of the Mortgage made on 22 March 2021 28.The Borrower acquired the Property in 2018 with the assistance of the Previous Mortgage. 29.The Borrower now contends that the Agreement should be set aside on the basis that the estate agents made fraudulent and/or negligent misrepresentations to her at the time relating to “Rebatement Provisions”. 30.She also seeks to set aside the Previous Mortgage on non est factum grounds. She claims that Yoyo agreed to help her seek the cancellation of the Agreement in late 2017/early 2018[13] but that she (the Borrower) had to sign some “procedural documents” first. It was on that basis that she came to sign the Previous Facility Letter and the Previous Mortgage, believing them to be “procedural documents”. 31.Other than her own bare allegations, there is no evidence before the Court to substantiate them. Not only did the Borrower have separate legal representation[14] for the acquisition of the Property, it is also noteworthy that the complaints regarding misrepresentations allegedly made by the estate agents did not surface until Chan 1st, more than 6 years later. 32.Moreover, the reliability/credibility of the Borrower’s allegations is dubious. 33.In Chan 2nd (at §40), the Borrower exhibited “CYPA 8” comprising, inter alia, a police report card (HH 17040349)[15] relating to an incident[16] on 1 November 2017. The Borrower’s evidence is that shortly after signing the PSPA[17] for the Property, on around 1 November 2017, Yoyo convinced her to purchase a 3rd property located directly above the Property. When Mr Chow discovered that, he allegedly reported Yoyo to the police for defrauding a person suffering from a mental condition and thwarted that transaction. 34.However, on 6 May 2025, when the estate agents and a member of Ricacorp’s Legal Department attended the police station at Hung Hom Division and requested the officer to provide any information relating to them under HH 17040349, the officer told them that there is no information recorded. The police have never requested Yoyo to make any statement in relation to that case reference or to provide any information. 35.In the circumstances, the Borrower’s prospects of setting aside the Agreement, the Previous Facility Letter and the Previous Mortgage are virtually nil. 36.Further, the Borrower claims that her bipolar disorder affected her mental capacity not only when she signed the Agreement, the Previous Facility Letter and the Previous Mortgage, but also the Facility Letter and the Mortgage. She also seeks to invalidate the Facility Letter and the Mortgage on the basis that she signed them under economic duress[18]. 37.The evidence shows that since its purchase in 2018, the Borrower has been exercising her rights and obligations as owner of the Property by
38.Viewed against that backdrop, it is clear that the Borrower’s conduct is only explicable as rational acts of ownership exercised over the Property rather than random acts of a person under disability. Nor are those acts consistent with any intention on her part to rescind any of the documents she now seeks to impugn. The notion that she did not know she had become the owner of the Property simply defies belief. 39.As earlier noted, the Mortgage formed part of the refinancing arrangement made at the Borrower’s request in March 2021 with the Loan applied to discharge the Previous Mortgage. After the execution of the Mortgage, the Borrower (or Mr Chow) made regular payments under it from March 2021. Then on 8 January 2024, the Borrower and Mr Chow requested an extension of the tenor of the Mortgage The Mortgagee granted the Borrower an extension for a period of 3 months to 2 May 2024. 40.When the parties entered into the Mortgage,
41.The Mortgagee submitted that as it had no notice of the circumstances the Borrower now claims entitle her to set aside the sale in 2018, the Mortgagee was a bona fide mortgagee for value. As such, the Mortgagee submitted that it would take free of any equity the Borrower may have to rescind the sale. I can see the force of that submission. 42.In short, in my view, the defence of the Borrower that she can resist enforcement of the Mortgage by impugning the earlier transactions is ‘practically moonshine’. B. Economic duress 43.The Previous Mortgage was for a term of 3 years, maturing on 2 February 2021. 44.It is the Borrower’s case that the Mortgagee’s representatives contacted her in early 2021 about the need for the Facility Letter and Mortgage. 45.Contemporaneous emails show that on 28 December 2024, the Borrower made an application for a “Mortgage Extension” and requested a meeting to discuss the terms. At the same time, she threatened to make a complaint to the authorities about the Mortgagee’s non-compliance with the Residential Properties (First-hand Sales) Ordinance, Cap 621. 46.By her email of 27 January 2021, the Borrower accepted the Mortgagee’s terms for refinancing the Previous Mortgage (set out in the Mortgagee’s letter dated 12 January 2021) and thanked the Mortgagee for approving her ‘application for mortgage loan extension’[19]. 47.It is impossible to discern from the events disclosed by those email exchanges that the Borrower was ‘pressured’ into refinancing the Previous Mortgage. Rather, she expressed her thanks not once but twice for the refinancing. The allegation of economic duress remains an unsubstantiated allegation and raises no triable issue. C. The Borrower’s mental capacity 48.Apart from her own evidence in Chan 1st and 2nd (which is entirely at odds with her conduct highlighted in §37 above), the Borrower exhibited the 1st report based on Dr Chong’s review of the Borrower’s medical record in Dr Chong’s clinics, with collateral information from Mr Chow and the Borrower’s children. 49.Dr Chong saw the Borrower for the first time on 3 January 2018. The Borrower’s family brought her to see Dr Chong because of alleged ‘manic symptoms’ since July 2017. 50.The report stated that the Borrower’s “symptoms further worsened in October. She was found to have paranoid delusion since October 2017”. As Dr Chong did not meet the Borrower until 3 January 2018, those statements do not evidence any medical diagnosis carried out by a doctor. 51.In any event, after examining the Intervener, Dr Chong’s diagnosis was bipolar affective disorder that required medication, continuous management and observation. Thereafter, the Borrower regularly attended follow-up sessions between 2018 and 2022, duly complied with psychiatric treatment “so that her mental illness is maintained under control”. Dr Chong then opined that the Borrower’s bipolar disorder
52.If the Borrower’s bipolar disorder symptoms were so serious and apparent to anyone dealing with her, it could not have escaped the notice of the solicitors who acted for her in the acquisition of the Property. Obviously, that was not the case as the transaction proceeded. 53.Nor can one discern from the communication records exchanged between the Borrower and Yoyo from July 2016 to March 2025[20] that the Borrower was suffering from any mental incapacity. 54.In relation to the Borrower’s requests for time extensions and indulgence for repayment culminating in the Mortgage Loan, the Borrower’s various emails[21] were clear and rational and displayed no signs of compromised cognitive abilities. The email she and Mr Chow sent to the Mortgagee on 8 January 2024 seeking further time to sell the Property was equally coherent and articulate. Someone who is mentally incapacitated could not have authored those communications. 55.Even assuming that the Borrower was suffering from some mental illness, it was “maintained under control” through medication, monitoring and treatment[22]. Under the principle stated in Imperial Loan v Stone, for the Borrower to set aside the Previous Mortgage or the Mortgage, she has to show that her medical conditions were apparent and obvious to the Mortgagee at the relevant time. There is no evidence that the Mortgagee was aware of the Borrower’s alleged mental incapacity. In the absence of such evidence, there is simply no prospect of the Borrower setting aside the Mortgage. D. Affirmation of ownership and bars to rescission 56.Given the matters highlighted in §37 above, the Borrower has unequivocally affirmed her ownership of the Property and the validity of the Previous Mortgage and the Mortgage. It is now far too late for her to attempt to rewind the clock by seeking rescission that would affect the interests of the Mortgagee who, in that context, is a third party. Disposition
57.As the Borrower has failed to raise any triable issues, there must be judgment for the Mortgagee. 58.At the conclusion of the hearing, I made an order in terms of the OS and directed that the Mortgagee submit a draft order for approval.
59.As the HCA Action is the mirror image of the Borrower’s defence to the HCMP Action, it follows that the Plaintiff has no reasonable cause of action against D1 and D2. The Plaintiff’s claims are scandalous, frivolous and/or vexatious and an abuse of process. I ordered that they be struck out.
60.Ms Shannon Leung, counsel for D3 to D5 invited attention to the fact that while the Plaintiff has joined D3 to D5 as defendants, she did not seek any relief against them. 61.Since I have reached the conclusion that the Plaintiff has not raised any triable issues in her attempt to set aside the purchase of the Property in 2018, Previous Facility Letter, the Previous Mortgage and the Mortgage Loan, D3 to D5 must succeed in their striking out summons. 62.At the conclusion of the hearing, I directed that the Defendants (D1 to D5) submit a draft order for approval. Costs 63.The successful parties i.e. the Mortgagee in the HCMP Action and the Defendants in the HCA Action sought an adjournment for further submissions on the outstanding question of costs in view of the Borrower/Plaintiff’s bankruptcy petition and the Court’s concern regarding making costs orders while the bankruptcy petition is pending. The costs hearing took place on 27 June 2025. 64.Ms Leung referred the Court to First Asia Finance Limited v Tsoi Tin Kwan Fanny CACV 149/2015, unrep., 18 September 2017. In that case, after the appellant lodged appeals against the respondent, the appellant was adjudged bankrupt and as the Official Receiver did not adopt the appeals, Lam VP dismissed the appeals for want of prosecution. At issue was whether the respondent should be entitled to costs for dismissal of the appeal including costs incurred before the appellant was adjudged bankrupt. 65.Lam VP referred to Lo Shing King v Sy Chin Mong Stephen [2015] 2 HKC 30 where Tang PJ held that if a party’s liability for costs was the result of any liability to which he became subject by reason of any obligation incurred before the date of the bankruptcy, the amount of such costs could be proved in bankruptcy. This is because by engaging in litigation, a litigant incurred an obligation to pay costs should the court make an adverse costs order against him: see Lo Shing King at §§6-10 applying In Re Norbel GmbH [2014] AC 209. 66.In First Asia Finance, when the Court of Appeal dealt with the issue of costs, the appellant had already been adjudged bankrupt. If a costs order were made, the respondents would need to obtain leave under section 12 (1) of the BO for taxation. If leave were granted, the taxed costs would become a provable debt in the bankruptcy. If the Court of Appeal were to decline to make an order for costs, the respondents would have no right to recover their costs at all even assuming that there are assets for distribution to the bankrupt’s creditors. 67.The Court of Appeal decided, as a matter of principle, that there was no justification for not giving costs to the respondents. 68.In the present case, the Borrower/Plaintiff’s liability for costs relates to obligations incurred before the date of any bankruptcy order that may be made on her petition. Costs awarded to a party in respect of litigation that predates a bankruptcy petition are debts provable in bankruptcy: section 34 (3) of the BO[23]. Therefore, there is no reason for not awarding costs to the successful parties in respect of the HCMP Action and the HCA Action pending the outcome of the Borrower/Plaintiff’s bankruptcy petition. 69.The successful parties seek summary assessments of their costs. As the bankruptcy petition is still pending, I see no reason why the costs should not be summarily assessed. That was not an option in First Asia Finance as the appellant had already been adjudged bankrupt by the time the Court of Appeal had to deal with the issue of costs. 70.The Mortgagee in the HCMP Action and D1/D2 in the HCA Action have submitted their respective Revised Statement of Costs for Summary Assessment and D3 to D5 in the HCA Action have submitted their Statement of Costs for Summary Assessment. 71.I consider this an appropriate case for costs to be summarily assessed. The Mortgagee in HCMP Action and D1/D2 in the HCA Action are entitled to indemnity costs that are reasonably incurred pursuant to clause 21.01(b) of the Mortgage. 72.The Plaintiff’s conduct in HCA 451/2025, joining D3 to D5 as parties but seeking no relief against them is an abuse of process. For this reason, I consider it appropriate to also award costs to D3 to D5 on an indemnity basis. 73.I make the following orders: HCMP 928/2024
HCA 451/2025
The Defendant (in HCMP 928/2024) and Plaintiff (in HCA 451/2025) was absent Mr Adrian But, instructed by Grandall Zimmern Law Firm for the Plaintiff (in HCMP 928/2024) and the 1st and 2nd Defendants (in HCA 451/2025) and Ms Shannon Leung, instructed by Cheung & Choy for the 3rd, 4th and 5th Defendants (in HCA 451/2025) [1] The descriptions "Borrower" and "Plaintiff" refer to Chan Yuk Ping Agnes. [2] D3 and D4 (collectively, the “estate agents”) were employees of Ricacorp, the Developer’s property agent at the time the Property was purchased. [3] Mr Chow is a professional chartered accountant and is the founder of KTC Partners CPA Limited ("KTC"). [4] Dr Chong’s 2024 report is considered in §§48-51 below. [5] The PSPA and the SPA are dated 5 October 2017 and 10 October 2017 respectively. The assignment of the Property took place on 2 February 2018. [6] Molton v Camroux (1848) 2 Ex 487; Imperial Loan v Stone [1892] 1 QB 599; Hart v O'Connor [1985] AC 1000. [7] See Chitty on Contracts, Vol. 1 at §§12-081 and 12-088 [8] See Hart v O'Connor at 1027 [9] Chitty at §10-145. [10] Chitty at §10-147. [11] Chitty at §10-148. [12] Chitty at §11-077. [13] According to the Plaintiff, it was some time after the cancellation of the purchase of the 3rd property: see §33 below. [14] See §9 of the affidavit of Lam Wai Chung dated 8 July 2024 (“Lam 1st”) filed on the Mortgagee's behalf. [15] No police report nor any statement from the complainant accompanied the card which merely recorded the relevant police station, the case number, the name of the case officer and his contact number. [16] The allegation is that Yoyo convinced Chan to purchase a 3rd property being the flat directly above the Property. [17] In fact, the Borrower signed the PSPA on 5 October 2017 and the SPA on 10 October 2017. [18] Economic duress is considered in §§43-47 below. [19] Chan repeated her thanks again in her email of 1 February 2021. [20] The transcript exceeds 100 pages. [21] See the Borrower’s emails dated 28 December 2020, 27 January 2021, 1 February 2021 and 17 February 2022. [22] See p 2 of the 1st report. [23] Provable debts described in section 34 includes "… all debts and liabilities, present or future, certain or contingent, to which the bankrupt is subject at the date of the bankruptcy order, or to which he may become subject before his discharge by reason of any obligation incurred before the date of the bankruptcy order …" | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCMP 928/2024