Hang Seng Bank Ltd v. Chan Wah Kung and Another
Read the full judgment text of HCMP 166/2020 on BabelCite. This High Court CFI judgment was delivered on 6 January 2026.
1. The Plaintiff (“ the Bank ”) made 3 loans to Mr Chan (“ Mr Chan ”) secured by legal charges over properties owned by Mr Chan. Upon Mr Chan’s default in repayment on the loans, the Bank brought an action to recover the outstanding principal and interest and possession of the Properties. D2 is Mr Chan’s mother (“ Mother ”). She claimed to have a beneficial interest in the Properties based on constructive trust and was thus joined as a party pursuant to the Amended OS.
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HCMP 166/2020 [2026] HKCFI 135 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 166 OF 2020 ____________
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_______________ J U D G M E N T ______________ A. OVERVIEW 1.The Plaintiff (“the Bank”) made 3 loans to Mr Chan (“Mr Chan”) secured by legal charges over properties owned by Mr Chan. Upon Mr Chan’s default in repayment on the loans, the Bank brought an action to recover the outstanding principal and interest and possession of the Properties. D2 is Mr Chan’s mother (“Mother”). She claimed to have a beneficial interest in the Properties based on constructive trust and was thus joined as a party pursuant to the Amended OS. 2.This is the hearing of the Bank’s claim only for monetary judgment against Mr Chan under the Amended Originating Summons re-filed on 28 January 2022 (“Amended OS”) pursuant to the order of DHCJ Andrew Li on 14 May 2025. The rest of the Banks’ claims, for possession of the Properties, and D2’s allegations of constructive trust, will be dealt with at the substantive hearing from 18 to 22 May 2026. B. BACKGROUND 3.The Bank is a licenced bank in Hong Kong. 4.Mr Chan was and is the registered owner of (1) Flat H, 5th Floor, Block 2, Parkside Villa, No. 23 Town Park Road South, Yuen Long, New Territories and (the “Flat”) (2) Carpark No. 71 on Basement 2/F, Parkside Villa, No. 23 Town Park Road South, Yuen Long, New Territories (collectively, “the Properties”). 5.The Bank made 3 Loans to Mr Chan, each secured by a legal charge upon the Properties:
6.The interest on each of the 3 Loans was to be stipulated by the Bank from time to time in accordance with the terms of each of the Facility Letters. 7.Mr Chan defaulted in making instalment payments due since 9 September 2019; 13 August 2019 and 25 August 2019 under the 3rd Loans respectively. 8.Following Mr Chan’s default, the Bank sent a letter through its solicitors (then known as Mayer Brown) dated 23 December 2019, demanding repayment of the whole outstanding amount under the 3 Loans plus default interest at a rate of 4.75% per annum. As of 29 December 2021, the outstanding amount under the 3 Loans was HK$3,513,021.62. 9.Mr Chan only paid a further sum of HK$7,940, and failed to settle the rest of the sum demanded. The Bank therefore commenced these proceedings on 9 March 2020. 10.D2 alleged that she has been an occupant of the Flat and that the Properties are held by Mr Chan on trust for her as the beneficiary. C. SERVICE ON MR CHAN 11.Mr Chan has not filed an acknowledgement of service to the Amended OS, but he has filed various affirmations, indicating his knowledge of these proceedings. 12.I am also satisfied that Mr Chan has been served by the Bank by ordinary post in June 2025 and the letters were not returned; and by a Chinese advertisement in Sing Tao Daily on 30 October 2025 pursuant to the substituted service order obtained by the Bank on 23 October 2025. The Court has also sent a Notice of Hearing dated 24 June 2025 to Mr Chan’s address at the Flat. Mr Chan has not responded. So I proceeded in his absence. D. LEGAL PRINCIPLES 13.The principles governing summary disposal of proceedings commenced by originating summons are similar to those governing applications for summary judgment under Order 14 of the RHC. 14.Once the Bank has shown a prima facie entitlement to summary judgment based on the evidence, the burden falls on Mr Chan to show that he has a defence to the claim (Bank of China (Hong Kong) Ltd v Twin Profit Ltd [2010] 2 HKLRD 1065, Fok J (as he then was) at §8. 15.The Court will apply the following principles when considering whether a defendant has a defence to a prima facie case for summary judgment:
See Yung Wai Man v Leung Kwok Pong [2021] HKCFI 896, Ng J at §9. E. THE BANK’S CASE 16.There is no dispute that Mr Chan has defaulted in repayment under each of the 3 Loans. Under the 1st, 2nd and 3rd Legal Charges:
17.According to Clause 2 of the 1st Facility Letter, Clause 14 of the 2nd and 3rd Facility Letters, the default interest rate is 4.75% per annum over the Hong Kong dollar prime rate quoted by the Bank from time to time (“the Prime Rate”), to be calculated from the date of default. 18.The Bank has established, with evidence, that it is prima facie entitled to judgment against Mr Chan for the outstanding principal and interest under the 3 Loans, together with default interest at the rate of 4.75% per annum over the Prime Rate (together, the “Debt”). F. MR CHAN’S CASE 19.Mr Chan has, through his 5 affirmations, raised the following issues that:
G. ISSUE 1: BREACH OF NATIONAL SECURITY LAW 20.Mr Chan alleges that his default in repayment of the loans was caused by Xinhua News Agency’s wrongful withholding of salary from him. The PRC has a ‘national law’ guaranteeing the trustworthiness of the country. Allowing the Bank to enforce the Debt and the legal charges, despite the Ex-Employer’s default, would be to undermine the social contract and citizens’ general expectation that those who study and work hard will have a good livelihood. Mr Chan makes a sweeping statement that the Court has a general duty to ‘nullify any incident which damages the credibility of the PRC as a country’ and so the Court should reject the Bank’s claim because it would cause Mr Chan and his family allegedly unwarranted economic hardship. In addition, Mr Chan made vague references to PRC public policy on alleviating poverty. 21.However, Mr Chan has not identified which aspect of national security law that he is relying on. PRC national security law as it applies to Hong Kong takes effect through the Safeguarding National Security Ordinance (the “SNSO”), Instrument A305. However, the SNSO does not seek to regulate the enforcement of civil legal rights between civilians. Its main operative part provides for various specified offences and penalties, such as the theft of state secrets, insurrection, and treason, none of which apply in this case. 22.There is no provision in the SNSO that relate to the enforcement of a loan and mortgage between private individuals, nor does the SNSO impose any general duty on banks to guarantee individual citizens’ livelihoods. 23.There are no grounds to engage national security law in this case. This line of defence is neither real or bona fide nor triable. H. ISSUE 2: MR CHAN’S EMPLOYMENT DISPUTE WITH EX-EMPLOYER WHICH CAUSED HIS DEFAULT IN REPAYMENT 24.Mr Chan asserts that but for his Ex-Employer’s failure to pay his salary, he would not have defaulted in repaying the 1st, 2nd and 3rd Loans. 25.This allegation, even if true, is plainly irrelevant because there is nothing to show that the Bank had caused the Ex-Employer to default in paying salary to Mr Chan. It does not constitute a real or bona fide defence to the Bank’s claim. I. ISSUE 3: MR CHAN BEING “MISLED” IN RELATION TO THE INTEREST CHARGED ON THE LOANS 26.Mr Chan alleges that the Bank “misled” him in relation to the interest charged on the loans, in that he expressed to the Bank a wish to use the HIBOR rate, but the Bank’s “professional team” told him that the traditional prime rate based interest scheme would be “more reasonable and provide better value” for Mr Chan. 27.The onus is on Mr Chan to show how he was misled and that he acted in reliance on the misrepresentation: Chitty on Contracts (35th ed), §10-006. As the Bank is a corporation, Mr Chan must also show that the representation was either (1) made by the corporate entity or by its agent acting within the scope of his authority or (2) that the corporate entity has either actual or constructive notice of the representation in order for the corporate entity to be held liable for misrepresentation: Bank of China (Hong Kong) Limited v Leung Wai Man [2011] 4 HKLRD 707 at §§40-44. 28.The interest rates were clearly and prominently stated on the 1st, 2nd and 3rd Facility Letters which were all countersigned by Mr Chan. Furthermore, in relation to the 3rd Legal Charge, Mr Chan had signed a confirmation dated 22 April 2013 confirming that he fully understood the nature of the matter in the transaction and the legal effect of all incidental documents signed or executed by him. It is difficult to see how the Bank has “misled” Mr Chan about the interest rates. 29.Mr Chan has not given particulars as to who were in the “professional team” of the Bank that made representations to him and the capacity of that person(s). Nor has Mr Chan submitted any evidence about the Bank’s actual or constructive knowledge of these representations. 30.Mr Chan has also failed to show the difference between HIBOR and the scheme based on traditional prime rate or that the Bank’s alleged representation was false. 31.This line of defence is not real or bona fide or triable. J. ISSUE 4: MR CHAN BEING MISLED INTO EXECUTING MULTIPLE LEGAL CHARGES 32.Mr Chan alleges that he asked for one single transaction with one legal charge, but the Bank split it into three and therefore charged him additional fees and interest. 33.For a start, these loans were granted at different years – in 2004, 2012 and 2013 respectively and for different amounts, but secured by the same Properties. 34.Each of the 3 Facility Letters stated the loan amount clearly on the first page. There was no evidence of any other amounts mentioned before or at the time each of the 3 loans was granted. 35.Furthermore, Mr Chan has not explained, nor is it evident from the documents before the Court, what “additional fees” he was charged. Mr Chan has not identified any features of the loans and interest that are unusual or unconscionable, or how he was misled into 3 transactions. 36.Mr Chan’s allegations could not amount to a real or bona fide, triable defence. K. ISSUE 5: CHARGING THE PROPERTIES INSTEAD OF HAVING A PERSONAL LOAN 37.Mr Chan alleges that he only wanted to take out a personal, unsecured loan but the Bank “misled” him into charging the Properties. 38.Once again, these are but bare assertions. Mr Chan has not given the particulars of how he has conveyed the message that he only wanted a personal loan to the Bank and how he was misled into getting a secured loan. Furthermore, his allegation contradicts his own statement that he “re-charged” (轉按) the Properties to the Bank. In Mr Chan’s affirmations, he repeatedly refers to ‘charging’ the Properties, indicating his awareness that he was providing security for his loans. It is well within a bank’s rights, and indeed common practice, to require security when lending to individuals. There is no evidence of improper conduct by the Bank. 39.This line of defence is not real or bona fide or triable. L. QUANTUM OF CLAIM 40.The Bank has provided a breakdown of the amount claimed. Amongst the items are 2 problematic ones:
41.Accordingly, the computation proposed by the Bank and accepted by the Court is:
M. CONCLUSION AND COSTS 42.For the above reasons, I find that Mr Chan has not raised any real or bona fide defence to the Bank’s claim and make an order in the following terms:
43.I make an order nisi for costs to be borne by Mr Chan, on solicitor and own client basis, based on clauses 19.01(b) of the 3 Legal Charges, to be taxed if not agreed, after disposal of the possession issue referred to in paragraph 2 above. This costs order will become absolute within 14 days in the absence of a summons for variation. 44.I thank Mr Ng for his assistance.
Mr Ng Cheuk Yiu Johnson, solicitor advocate of Johnson Stokes & Master, for the Plaintiff The 1st Defendant was not represented and did not appear | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment