Konew Capital International Ltd v. Wong Kai Yin Ivo and Another

DCMP 4103/2025

[2026] HKDC 99

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4103 OF 2025

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DECISION

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A.  INTRODUCTION

1.This is an application by the plaintiff, commenced by Originating Summons filed on 23 July 2025:

(1)  against the 1^st defendant for money judgment pursuant to Order 83A of the Rules of District Court (Cap 336H) (“RDC”); and

(2)  against the 1^st and 2^nd defendants for an order for the sale of the mortgaged property known as Flat D on 28^th Floor of Tower Block No 10, No 19 Greig Crescent, Nan Fung Sun Chuen, Hong Kong (the “Property”) pursuant to Order 88 of the RDC and sections 2, 3 and 6 of the Partition Ordinance (Cap 352) (the “PO”).

2.At the hearing on 14 January 2026, the plaintiff was represented by Mr Cheung. Both the 1^st and 2^nd defendants were absent. Although the 1^st defendant filed an acknowledgement of service dated 13 August 2025, he did not file any affirmation in opposition to the plaintiff’s application. The 2^nd defendant filed neither an acknowledgement of service nor any affirmation in opposition to the plaintiff’s application. Being satisfied that notice of the proceedings and of the hearing on 14 January 2026 had been given to them, I proceeded to hear the Originating Summons in their absence.

B.  BACKGROUND

3.The plaintiff is a licensed money lender. The 1^st and 2^nd defendants were, at all material times, and remain the registered owners of the Property as tenants in common in equal shares.

4.By a Loan Agreement dated 18 September 2020 (the “Loan Agreement”), the plaintiff agreed to lend the principal sum of $1,500,000 (the “Loan”) to the 1^st defendant at an interest rate of 24% per annum, to be repaid by 120 installments.

5.The Loan Agreement provides, inter alia, that the 1^st defendant shall use the Property as security for the Loan and shall execute a mortgage or other necessary documents over the Property in favour of the plaintiff to secure repayment of the Loan and interest thereon (Clauses 10 and 11 of the Loan Agreement).

6.By a Second Mortgage dated 18 September 2020 executed by the 1^st defendant in favour of the plaintiff and registered in the Land Registry under Memorial No 25061900480056 (the “Second Mortgage”), the 1^st defendant mortgaged the Property to the plaintiff as security for repayment for all sums of moneys which might from time to time be or become payable by the 1^st defendant to the plaintiff, up to the extent of $1,800,000, together with interest and legal costs on a full indemnity basis. This was subject to the first mortgage executed by the 1^st defendant in favour of DBS Bank (Hong Kong) Ltd (the “First Mortgagee”) dated 14 January 2010 and registered in the Land Registry under Memorial No 10020202320139 (the “First Mortgagee”) (Clauses 3.1(ii)(c), 6.1 and 7.1 & Schedule I of the Second Mortgage).

7.In breach of Clause 8(h) of the Loan Agreement and Clause 6.1(a) of the Second Mortgage, the 1^st defendant created a second legal charge dated 29 May 2025 in favour of Wings Finance Limited without the prior consent of the plaintiff.

8.As an event of default under Clause 7.1(d) of the Second Mortgage has occurred, the plaintiff commenced the present proceedings against the 1^st and 2^nd defendants.

9.The plaintiff gave notice of these proceedings to the First Mortgagee through letter dated 19 August 2025. By letter dated 1 September 2025, the First Mortgagee, through its solicitors, expressed a “neutral stance” towards this application. By letter dated 19 August 2025, the plaintiff also gave notice of these proceedings to Wings Finance Ltd but has not received any response.

C.  DISCUSSION

C1.  The plaintiff’s application for money judgment against the 1^st defendant

10.The 1^st defendant has failed to file any affirmation in opposition to the plaintiff’s application for money judgment. I am of the view that the plaintiff is entitled to judgment against the 1^st defendant as claimed.

11.In this context, I have also considered the terms of the Loan Agreement and am satisfied that the plaintiff has duly complied with s 18 of the Money Lenders Ordinance (Cap 163). I am further satisfied that the Originating Summons was duly issued under Order 83A, rule 3 and Order 88, rule 5(6) of the RDC.

12.I shall now proceed to address the plaintiff’s application for an order for the sale of the Property.

C.2  The plaintiff’s application for an order for sale of the Property against the 1^st and 2^nd defendants

13.Neither the 1^st defendant nor the 2^nd defendant has filed any affirmation in opposition to the plaintiff’s application for an order for the sale of the Property.

14.Under section 2 of the PO, where any property in land is held by two or more persons, whether as joint tenants or as tenants in common, the Court may make an order for partition or sale of the property, or may refuse to make any order at all.

15.Section 3(1) of the PO provides that “any person interested in such property may institute proceedings in Court under this Ordinance by way of an action for partition or sale”.

16.A legal charge or mortgagee of a partial interest is entitled to apply for an order for partition or sale of the entire land. The rationale is that, upon an event of default, such chargee or mortgagee would be entitled to possession of the property, thereby qualifying as a “person interested” within the meaning of section 3(1) of the PO: Law Chun Wai v Chu Suk Har [2016] 1 HKLRD 224 at §23 per HH Judge Andrew Li; Konew Capital International Limited v Tsang Shar Wing & Another, DCMP 3893/2019 (unrep, 8/3/2021) at §30 per HH Judge Harold Leung.

17.The relevant principles governing the Court’s exercise of discretion under section 2 of the PO were succinctly summarized by Mr Recorder Fok SC (as Fok PJ then was) in Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825 at §18:

“18. …

(a) A co-owner has a basic right to rid himself of the shackles of co-ownership and ask for an order for partition or sale.

(b) When it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner (s)) that such an order will not be beneficial to all the co-owners. ________________________

(c) whether an order for sale is beneficial to all co-owners is not determined by the dissent of the opposing co-owners or the assertion by them that it is not beneficial. It has to be determined by the court objectively.”

18.While the relevant principles stated by the learned Recorder concerned the right of a co-owner to apply for an order for partition or sale of a co-owned property, these principles have consistently been applied to applications for partition or sale brought by a trustee in bankruptcy of a co-owner (see: Re Cheung Chan Hong (a bankrupt) [2015] 2 HKLRD 1; Re Leung Pui Pui Maggie (a bankrupt) [2017] HKLRD 83), as well as by a legal chargee or mortgagee of a partial interest (see Konew Capital International Ltd v Lai Siu Fun & Ors, DCMP 1143/2016 (unrep, 24/3/2017) at §50 per HH Judge MK Liu; Konew Capital International Ltd v Wong Lik Hoi & Ors [2022] HKDC 883 at §16 per DDJ Kenneth Lee).

19.Further, the Court must also consider whether an order for sale would cause very great hardship to any co-owner. For present purposes, “hardship” includes both pecuniary and practical detriment: Re Leung Pui Pui Maggie (a bankrupt) (supra) at §23 per Peter Ng J.

20.Applying the above principles to the present case, I am satisfied that it is appropriate to make an order for the sale of the Property for the following reasons.

21.First, the Property is a 516 sq. ft. residential unit in a multi-storey building. Partition of the Property is impracticable and would not be beneficial to the co-owners of the Property, namely the 1^st defendant and the 2^nd defendant.

22.Second, the 1^st and 2^nd defendants have failed to file any affirmation demonstrating that an order for the sale of the Property would cause them great hardship. I am satisfied that no such hardship exists.

D.  ORDER

23.In the premises, I order as follows: -

(1)  The 1^st defendant shall pay the plaintiff the sum of $1,239,227.71 being the outstanding principal, interest, and default interest due and owing by the 1^st defendant as at 5 September 2025, together with daily interest of $773.24 from 6 September 2026 until payment.

(2)  Subject to the rights and powers of any prior encumbrancer(s), the 1^st and 2^nd defendants shall, within 28 days after service of this Order upon them, deliver to the plaintiff vacant possession of the Property together with all title deeds and documents in their possession (if any).

(3)  The Property shall be sold by the plaintiff, either by public auction or private treaty in open market, with a reserved price at $4,930,000.

(4)  The plaintiff’s solicitors, Messrs Au Yeung, Lo & Chung, are appointed to conduct the sale.

(5)  Each of the 1^st and 2^nd defendants shall do such acts and things, including executing any documents, necessary to give effect to this Order.

(6)  Should either of the 1^st or 2^nd defendants neglect or refuse to execute any document in respect of the Property within 7 days of service of this Order upon them, or should either of them not be found after reasonable inquiry, Mr Chung Man Wing, a partner of Messrs Au Yeung, Lo & Chung, is authorized to execute any and all such document(s) in place of the 1^st and 2^nd defendants  pursuant to Section 38A of the District Court Ordinance (Cap 336). Such execution shall, for all intent and purposes, be valid and effective as if performed by the 1^st and 2^nd defendants themselves.

(7)  The proceeds of sale of the Property shall be paid to the plaintiff’s solicitors and be applied in the following manner and order of priority:-

(a)  in discharge of all government rent, taxes, rates, and other outgoings due and affecting the Property, if any;

(b)  in discharge of all encumbrances having priority over the Second Mortgage (including all costs and disbursements incurred in discharging such encumbrances);

(c)  in payment of all reasonable costs and expenses in connection with the execution of this Order and the sale of the Property;

(d)  1/2 of the remaining proceeds relating to the 1^st defendant's interest/share in the Property shall be applied in the following manner and priority:-

(i)  in discharge of the Second Mortgage;

(ii)  the balance, if any, shall be paid to the next incumbrancer, if any, ranking immediately after the Second Mortgage;

(e)  the other 1/2 of the remaining proceeds relating to the 2^nd defendant’s interest/share in the Property shall be applied in the following manner and priority: -

(i)  in discharge of all incumbrances affecting the 2^nd defendant’s interest in the Property, if any, including costs and disbursements incurred in discharging such encumbrances;

(ii)  the balance, if any, shall be paid to the 2^nd defendant; and

(iii)  if the 2^nd defendant cannot be located after reasonably enquiry, such balance, after deduction of the costs and disbursements incurred in handling the same, shall be lodged in Court to the credit to this action until further order of the Court.

(8)  Upon such sale, the plaintiff is authorised to do all acts necessary for vesting the Property in the purchaser(s).

(9)  Liberty to apply.

(10)  The 1^st defendant shall pay the plaintiff the costs of this action summarily assessed at $90,000.

24.Finally, I wish to thank Mr Cheung for his able assistance.

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

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