Sun Hung Kai Credit Ltd v. Treasure Profit Ltd and Another

HCMP 1201/2024

[2025] HKCFI 4641

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1201 OF 2024

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BETWEEN

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D E C I S I O N

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1.In these proceedings, the Plaintiff seeks against the 1^st and 2^nd Defendants an order for payment of all moneys due under a mortgage (“the Mortgage”)  and a deed of guarantee respectively.  In addition, the Plaintiff asks for an order for delivery of vacant possession by the 1^st Defendant of a property (“the Property”)  subject to the Mortgage.

2.This is an application by Bright Rising Enterprise Limited and Chengxin Finance Limited (“the Intended Defendants”)  to be joined as additional defendants in these proceedings.  The Intended Defendants contend that they are collectively in current possession of four out of the six units comprising the Property, that they are affected by and oppose the Plaintiff’s claim for vacant possession against the 1^st Defendant, and that they ought to have been joined by the Plaintiff so that they can be heard.  In their skeleton submissions, the Intended Defendants rely on RHC O.15 r.10 and O.15 r.6(2)(b)  to support the joinder application.

3.I shall deal with each of these rules in turn.

A. ORDER 15, RULE 10

4.RHC O.15 r.10(1)  provides that “[w]ithout prejudice to rule 6, the Court may at any stage of the proceedings in an action for possession of land order any person not a party to the action who is in possession of the land (whether in actual possession or by a tenant)  to be added as a defendant”.

5.Any person in actual possession of land who is not made a party to an action for possession of that land is entitled to be added as a defendant under RHC O.15 r.10 before or after judgment, provided he has a bona fide independent claim to be in possession.  If the applicant has no independent claim because his rights are wholly independent upon those of the defendant in the action, he cannot be joined.  See Yu Wing Kan v Lau Shuk Lan [1990] 2 HKLR 583 and 590B-C (Clough JA), citing Minet v Johnson (1890)  6 TLR 417. 

6.It follows that for O.15 r.10(1)  to be engaged, the applicant (the Intended Defendants in the present case)  must show to the satisfaction of the court that he has a bona fide independent claim for possession of the property.

7.The Intended Defendants contend as follows: 

(1)  They were already tenants at the Property by the time the Mortgage was executed on 16 December 2021 and such tenancies came to an end on 31 August 2023.

(2)  On 1 September 2023, they entered into new tenancies with the 1^st Defendant in respect of Units 2301-2303 and Unit 2304 of the Property (“the 4 Units”)  for the period from 1 September 2023 to 28 February 2025 (“the 2023 Tenancies”), and the 1^st Defendant informed them that the Plaintiff had no objection to the 2023 Tenancies.

(3)  On 25 June 2024, they entered into revised tenancies with the 1^st Defendant in respect of the 4 Units for the period from 1 March 2025 to 31 August 2026 (“the 2024 Tenancies”), and the 1^st Defendant (through the 2^nd Defendant)  informed them that the Plaintiff had no objection to the 2024 Tenancies.

8.Even assuming these contentions are to be accepted, I am not persuaded that the Intended Defendants can establish a bona fide independent claim for the possession of the 4 Units. 

(1)  Clause 10.01 (vii)  of the Mortgage provides as follows:

“The Mortgagor [the 1^st Defendant] hereby covenants and undertakes with the Lender [the Plaintiff] that for so long thereafter as the Loan or any other sum owing hereunder remains outstanding:-

(vii)  save with the Lender’s written consent, the Mortgagor will not lease or in any way part with possession or make any arrangement for the sharing of the Property or any part thereof or any interest therein or accept the surrender of any lease or tenancy (except in respect of all existing tenancies, licences and lettings subsisting at the date hereof and the Mortgagor will not save with the Lender’s written consent renew the existing tenancies, let re-let sublet or part with possession or enter into any Tenancy Agreement of the Property or any part hereof);”

(2)  Pursuant to this clause, it is plain that the 1^st Defendant could not renew the tenancies subsisting at the time of Mortgage, or lease any part of the Property, without the Plaintiff’s written consent.

(3)  The Intended Defendants are unable to show that the Plaintiff has ever given written consent in respect of the leasing of any part of the Property.  The fact that the Plaintiff has not taken any steps to disavow the tenancies between the 1^st Defendant and the Intended Defendants does not in my view give rise to any independent claim on the part of the Intended Defendants against the Property.  It would be wrong to infer merely from the fact that the mortgagee allowed the tenant to remain in possession, having knowledge of the tenancy, that the mortgagee consented to take the tenant as his own: Hong Kong Finance Co Ltd v Wah Fung Forest Resources Ltd [2023] HKCFI 1548 at [49(3)] (A Chan J).  See also Po Sang Bank Ltd v Luxton Development Ltd [2000] 3 HKLRD 231 at 239H-J (Recorder Kotewall SC).

(4)  I do not think the Intended Defendants’ reliance on Leicester Permanent Building Society v Shearley [1951] Ch 90 takes the matter any further.  In that case, the mortgagee applied for possession of a property under the old RSC O.55 r.5A naming the mortgagor as the sole defendant.  It later transpired that the property was in possession of persons claiming to hold under a tenancy.  Wynn-Parry J decided that the proper practice was for the matter to be referred back to the master, with a direction that the plaintiff should be ordered to give notice to the persons in actual possession of the property, and that the order for possession would be made unless any occupier applied to be added as a defendant to the proceedings within 14 days of the service of the notice.  It seems to me that the authority at most supports the proposition that the person claiming the right to remain in possession should apply to be joined as a defendant. It does not say anything about when an occupier should be properly joined as an additional defendant in an action where a mortgagee seeks possession of the property from the mortgagor.

9.For these reasons, I do not consider it appropriate to join the Intended Defendants under O.15 r.10.

B.   ORDER 15, RULE 6(2)

10.RHC O.15 r.6(2)(b)  provides that the court may, on such terms as it thinks just, order either of two classes of person to be added as a party to the proceedings.  The first class covers “any person who ought to have been joined as a party or whose presence before the court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon” (“Limb (i)”).  The second class covers “any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter” (“Limb (ii)”).

11.The Intended Defendants rely on both limbs to seek to justify their joinder.

12.As Chu JA said in Chen Hongqing v Asia Cement Corporation [2022] HKCA 1086 at [27], “[t]he test to be applied in an Order 15 rule 6(2)(b)  application is whether there is a bona fide claim and a proper question to be tried between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the proceedings”.

13.As far as Limb (i)  is concerned, the Intended Defendants submit that it is engaged because their rights of possession are directly affected by the Plaintiff’s claim for possession.  They therefore assert that they are parties whose presence before the court is necessary to ensure that all matters in dispute may be effectually and completely determined and adjudicated.

14.I reject this submission.

(1)  The mere fact that relief may affect someone who is not a party in respect of his rights or obligations is not enough to give rise to jurisdiction under Order 15 rule 6(2)(b): Settlement Corporation v Hochschild (No 2) [1969] 1 WLR 1664 at 1672D-E (Buckley J).

(2)  Accordingly, under O.15 r.6(2)(b)(i), the question of necessity for a party to be present is not to be determined by reference to whether or not that party’s rights or obligations are affected.  If there is no proper question to be tried between the plaintiff and the intended defendant, it cannot be necessary for the intended defendant to be joined.

(3)  As mentioned earlier, the Intended Defendants have neither suggested nor adduced any prima facie evidence to suggest that the Plaintiff has ever given written consent in respect of the leasing of any part of the Property. 

(4)  Further, it is not the Intended Defendants’ case that the Plaintiff ever made any representation directly to them.  It is therefore difficult to see how the Plaintiff can be said to be estopped from denying the 2024 Tenancies in relation to the Intended Defendants.

(5)  There is therefore no cogent material before the court to give rise to a proper quesiton to be tried as to whether the 2024 Tenancies are binding on the Plaintiff or whether the Plaintiff is estopped from denying the 2024 Tenancies.

15.As far as Limb (ii)  is concerned, the Intended Defendants submit that it is engaged because 3 common issues have arisen which involve the existing parties and the Intended Defendants, namely (1) whether, and if so how, consent was given by the Plaintiff to the 1^st Defendant’s grant of the 2024 Tenancies, (2)  whether the 2024 Tenancies are binding on the Plaintiff and (3)  whether the Plaintiff is entitled to possession of the 4 Units occupied by the Intended Defendants.  And they submit that depending on the findings to be made in relation to the common issues, a further claim may be made by the Intended Defendants against the 1^st and 2^nd Defendants.  Therefore, they submit that it is just and convenient for the common issues to be determined in these proceedings.

16.I also do not accept these submissions.

(1)  In Wong Chun Loong Tony v Ada Ltd [1991] 1 HKC 86, Clough JA at 94E-F accepted that for the purpose of r.6(2)(b)(ii), “[a] mere commercial interest in its outcome, divorced from the subject matter of the action, is not enough”.

(2)  I repeat what I said earlier: it is not the Intended Defendants’ case that the Plaintiff has ever given written consent in respect of the leasing of any part of the Property, or ever made any representation directly to them.  In other words, the Intended Defendants have not established even a prima facie case that the 2024 Tenancies are binding on the Plaintiff.

(3)  In these circumstances, there is nothing to suggest that any of the so-called common issues may be resolved in favour of the Intended Defendants.  As K Yeung J observed Chen Hongqing v Liu Yiu Keung Stephen [2021] HKCFI 440 at [28], the court “will not exercise its discretion in favour of joinder if it is plain and obvious that the joinder of the proposed intervener would be pointless and futile”.

(4)  The Intended Defendants further suggest that their joinder may assist to advance their potential claim(s)  against the 1^st and 2^nd Defendants even if the so-called common issues are all resolved against them.  I do not consider that it would be just and convienient to join the Intended Defendants in these proceedings so that they may have some procedural or evidential advantages in their potential litigation against the 1^st and 2^nd Defendants.  A joinder for such a purpose appears to me to be contrary to most of the underlying objectives in RHC O.1A, r.1.

17.Accordingly, I am not satisfied that either limb of O.15 r.6(2)(b)  is engaged. 

18.Throughout the Intended Defendants’ submissions, it is said that they should be joined so that they are given the opportunity to be heard in the substantive hearing of the Plaintiff’s Originating Summons.  It seems to me that the Intended Defendants have put it the wrong way round.  If the Intended Defendants cannot satisfy the court that they should be joined as parties in the proceedings, it follows that there is no good reason for them to be heard at the substantive hearing of the Originating Summons.  

C.  CONCLUSION

19.For the reasons given, I dismiss the Intended Defendants’ joinder summons dated 13 December 2024.

20.I will now hear the parties on costs.

(Submissions on costs)

21.The costs of and occasioned by the joinder summons (including any reserved costs)  are to be paid by the Intended Defendants to the Plaintiff to be summarily assessed.

22.Looking at the matters in the round, I make a reduction in relation to items in Sections C1, C3, D2, D3 and D4 of the Plaintiff’s Statement of Costs.  The costs for the preparation of the Plaintiff’s Statement of Costs are also disallowed pursuant to paragraph 13 of Practice Directions 14.3.

23.The Plaintiff’s costs are summarily assessed at HK$220,000.

Mr Vincent Chen, instructed by Arthur Hong LLP, for the Plaintiff

Ho & Partners, for the 1^st and 2^nd Defendants, attendance excused

Mr Brian Fan, instructed by CLKW Lawyers LLP, for the Intended 3^rd and 4^th Defendants