Konew Capital International Ltd v. Ho Wai Han and Others

DCMP 5961/2025

[2026] HKDC 920

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 5961 OF 2025

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BETWEEN

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REASONS FOR JUDGMENT

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A. INTRODUCTION

1.By way of an Originating Summons issued by the Plaintiff on 27 October 2025 (“the OS”), the Plaintiff seeks:-

(1) A monetary judgment against the 1^st and 2^nd Defendants for outstanding indebtedness secured by a mortgage dated 27 November 2024 between the 1^st Defendant as the mortgagor, the 1^st and 2^nd Defendants as the borrowers and the Plaintiff as the lender (“the Mortgage”) securing the repayment of general credit facilities to the extent of HK$1,500,000. The outstanding indebtedness under the Mortgage arose from loan agreement dated 25 February 2025 between the Plaintiff as the lender and the 1^st and 2^nd Defendants as the borrowers in the sum of HK$300,000 (“the Loan Agreement”) that formed part of the general credit facilities under the Mortgage.

(2) An order for possession of the mortgaged property known as “Flat H on the 11^th Floor of Tower 3, Vienna Gardens, No. 1 Kat Cheung Crescent, Fanling, New Territories” (“the Property”) and an order for sale of the same pursuant to sections 2, 3, and 6 of the Partition Ordinance (Cap. 352) (“PO”).

2.At the hearing on 20 April 2026, having heard the Plaintiff’s submissions and the Defendants being absent, I granted judgment in favor of the Plaintiff and made the order now appearing at paragraph 29 below. I will now give my reasons.

B. FACTUAL BACKGROUND

3.The Plaintiff is and was at all material times a duly licensed money lender under the Money Lenders Ordinance (Cap. 163) (“MLO”).

4.The 1^st and 3^rd Defendants are and were at all material times the registered owners and joint tenants of the Property.

5.By the Mortgage, the 1^st Defendant charged her share in the Property to the Plaintiff to secure the repayment of the general credit facilities to the extent of HK$1,500,000 together with interest thereon.

6.The Mortgage contains inter alia the following relevant terms:-

(1) Clause 3.1 provides inter alia the 1^st and 2^nd Defendants will on demand, by notice in writing of the Plaintiff, pay, make good and discharge to the Plaintiff, all sums of moneys, obligations and liabilities, whether past, present or future, which are then or may at any time thereafter be owing to the Plaintiff;

(2) Clause 7.1 provides inter alia that an event of default includes where the 1^st and 2^nd Defendants default in the payment of any secured sum due and payable to the Plaintiff;

(3) Clause 8.1 provides inter alia that where there is an event of default, other money and liabilities secured under the Mortgage shall become repayable immediately on demand;

(4) Clause 8.2 provides inter alia that in any event of default occurring, the Plaintiff shall have the right to take possession of the Property and/or to sell the Property.

7.By the Loan Agreement, the Plaintiff agreed to make available to the 1^st and 2^nd Defendants a loan in the sum of HK$300,000 (“the Loan”) subject to the terms and conditions therein. The Loan was part of the general credit facilities as secured under the Mortgage.

8.The Loan Agreement further provides inter alia that:-

(1) The interest rate charged on the Loan shall be 28.8% per annum (Clause 2);

(2) The Loan (together with interest) shall be repaid by the 1^st and 2^nd Defendants by 60 monthly instalments (Clause 3);

(3) The 1^st instalment of HK$9,487 shall be payable on or before 25 March 2025 and the 2^nd to 60^th subsequent instalments be payable on or before the 25^th day of each subsequent month (Clause 4);

(4) For any part of the Loan unpaid, the 1^st and 2^nd Defendants shall pay to the Plaintiff interest at the rate of 28.8% per annum until full settlement of the Loan. All outstanding amount, whether due before or after judgment, shall be calculated and charged at the interest rate of 28.8% per annum (Clauses 5 and 6);

(5) In the event of default of payment upon the due date of any sum payable to the Plaintiff, whether in respect of principal or interest, the 1^st and 2^nd Defendants shall pay default interest on that sum at the rate of 28.8% per annum from the date of default until full payment (Clause 7);

(6) If the 1^st and 2^nd Defendants fail to pay on the due date any outstanding instalments, the Plaintiff may by written notice demand repayment of the entire outstanding balance of the Loan within 7 days (Clause 8(a));

(7) The 1^st and 2^nd Defendants agreed that the 1^st Defendant’s interest in the Property be charged to the Plaintiff as security for the punctual repayment of the Loan (Clauses 10 and 11); and

(8) If the 1^st and 2^nd Defendants shall fail to comply with any obligations thereunder, the Plaintiff is entitled to take legal action and all legal expenses shall be borne by the 1^st and 2^nd Defendant on a full indemnity basis (Clause 14).

9.Pursuant to the Loan Agreement, the Plaintiff has granted the Loan to the 1^st and 2^nd Defendants.

10.The 1^st and 2^nd Defendants have defaulted to make the monthly repayments due to the Plaintiff since 25 May 2025. By two letters dated 3 October 2025, the Plaintiff (through its solicitors), demanded the payment of the entire balance of the Loan and interest thereon from the 1^st and 2^nd Defendants within 7 days. Despite the demands, the 1^st and 2^nd Defendants still failed and/or refused to repay the outstanding balance of the Loan (together with interest) to the Plaintiff.

C. PROCEDURAL BACKGROUND

11.The OS was taken out by the Plaintiff on 27 October 2025. The OS, the Notice of Appointment to Hear Originating Summons dated 24 November 2025, the Affirmation of Lee Oi Ying (“Lee 1^st”) in support of the OS, and the Notice of Adjournment to Hearing Originating Summons dated 30 January 2026 have been duly served on the Defendants at their last known address. The Defendants have failed to acknowledge service of the OS. The OS was affixed at the entrance of the Property on 31 October 2025 as required by Order 10 rule 4(2) of the Rules of the District Court (“RDC”). The relevant notices of the first hearing on 14 January 2026 and of the present hearing were also posted up at the Property.

12.I am satisfied that the Defendants has been properly served at their usual or last known address in the absence of any evidence suggesting that notice of the same would not have come to their attention: Hou Tsun Tat v Wong Wai Chung (unrep., DCPI 96/2015, 31 October 2017) at §§19-20; Full Gold Development Limited v Wong Tsing [2023] HKDC 423, at §§38-45.

13.In addition, the Plaintiff has also given notice of these proceedings to other incumbrancers of the Property (whose priority ranks below the Plaintiff), although the Plaintiff has not received any response from these informed parties.

14.The Plaintiff has also served these proceedings on the Director of Lands as required by section 3(2) of PO and rule 4 of the Partition Rules. The Director of Lands expressed in his letter to the Plaintiff dated 28 December 2025 that he had no comments on the Plaintiff’s present application.

15.In the circumstances, I am satisfied that all relevant parties have been served with (and/or given notice of) these proceedings and notice of the present hearing. Having regard to the nature of the application, I also found it expedient to proceed with the matter in the absence of the Defendants in accordance with Order 32 rule 5 of RDC (which is applicable for hearing of the OS pursuant to Order 28 rule 1 of RDC).

D. Monetary Claim

16.The OS was issued under both O.83A and O.88 of RDC. Paragraph 1 of the OS seeks a monetary judgment for all outstanding sums under the Mortgage. There is no reference to any claim under the Loan Agreement in the OS. However, it is abundantly clear from the supporting affirmation (i.e. Lee 1^st), and confirmed at the hearing by Ms. Ma of the Plaintiff’s solicitors appearing for the Plaintiff that the outstanding indebtedness under the Mortgage arose entirely from the Loan Agreement. The obligation to repay does not strictly arise under the Mortgage, such that without a breach of the Loan Agreement, the Plaintiff is not entitled to claim under the Mortgage independently. As such, it should properly be regarded as a money lender’s action: see Hong Kong Civil Procedure 2026, Vol.1, commentary 88/1/2. Consequently, before granting any monetary award under O.83A, the requirements thereunder must be satisfied.

17.Order 83A rule 2(1) provides that every money lender’s action may be begun by writ. It was accepted in Maxcolm Finance Limited v Cheng Chi Man [2019] HKCFI 2928, at §15 that this is not a mandatory requirement and such an action may be commenced by originating summons. This has also been confirmed by the Court of Appeal in Honip Credit Ltd v Leung Tak Sing Paul [2020] HKCA 879, at §4.8. It is not difficult to see from the legislative history of Order 83A rule 2(1) that this must be the case. There is clearly nothing to suggest that the word “may” should in the circumstances be construed as imposing a mandatory requirement. Order 83A rule 2(1) now provides that every money lender’s action “may” be begun by writ, in contrast to the position before the introduction of the Civil Justice Reform where it then provided that every money lender’s action “shall” be begun by writ. The change from “shall” to “may” was a response to Recommendation 12 of the Final Report on Civil Justice Reform published in March 2004 (“Final Report”) where the Chief Justice’s Working Party recommended that “[t]he rules of the RHC making it mandatory to commence certain proceedings by writ or, as the case may be, by originating summons, should be abolished.” The reasoning was discussed at §§160-161 of the Final Report and that is to allow the flexibility of adopting a proper procedure depending on the whether factual disputes are likely to be involved. Order 83A rule 2(1) was amended pursuant to this recommendation and hence it must be clear that Order 83A rule 2(1) now affords a choice to a plaintiff.

18.As discussed above, in the past it was mandatory for a money lender’s action under Order 83A to be begun by writ, and hence it is not surprising that Order 83A rule 3 requires various information to be stated in the statement of claim. An originating summons process does not usually involve the filing of a statement of claim (unless perhaps where pleadings are to be ordered). The Court of Appeal had in Honip Credit Ltd v Leung Tak Sing Paul [2020] HKCA 879, at §4.9, held that the provisions of Order 83 rule 3 would be satisfied if the disclosure required thereunder is made in affirmation in support of the originating summons. In the present case, I am satisfied that these required particulars are contained in Lee 1^st. I am also satisfied that the requirements under O.83A rule 4 have been complied with. The Plaintiff has also compiled with the various requirements under the MLO.

19.The Plaintiff has shown on the evidence that the 1^st and 2^nd Defendants have defaulted repayment of the Loan pursuant to the Loan Agreement and the Plaintiff is entitled to claim all outstanding balance of the Loan together with interest. The 1^st and 2^nd Defendants had only made 2 instalments in the total sum of HK$19,501 (with HK$5,608.62 being apportioned to the repayment of the principal sum and HK$13,892.38 being payment of interest).

20.The Plaintiff had on 3 October 2025 issued demand letters to the 1^st and 2^nd Defendants for the repayment of all outstanding sums within 7 days, and hence the Plaintiff is entitled to charge default interest on the outstanding interest up to 3 October 2025. The amount of outstanding interest from 25 May to 3 October 2025 was HK$34,858. By 19 December 2025, the outstanding accrued interest was HK$55,599.17, and the amount of default interest payable was HK$4,505.66.

21.As at 19 December 2025, the following sums were therefore due and payable by the 1^st and 2^nd Defendants under the Loan Agreement in the total sum of HK$354,496.21 as follows:-

(1) Outstanding principal in the sum of HK$294,391.38;

(2) Accrued interest (from 25 May to 19 December 2025) in the sum of HK$55,599.17; and

(3) Default interest in the sum of HK$4505.66.

22.The Plaintiff is therefore entitled to judgment in the sum of HK$354,496.21 together with:-

(1) Interest on the outstanding principal sum of HK$294,391.38 at the rate of 28.8% per annum from 20 December 2025 until payment; and

(2) Default interest on outstanding interest accrued prior to 3 October 2025 in the sum of HK$34,858 at the rate of 28.8% per annum from 20 December 2025 until payment.

E. ORDER FOR POSSESSION

23.The Plaintiff claims possession of the Property under Order 88 of RDC. I am satisfied that the requirements under Order 88 rules 4 and 5 have been satisfied.

24.It is in my view clear that the 1^st and 2^nd Defendants’ failure to make repayments by instalments constituted an event of default under Clause 7.1 of the Mortgage. This would entitle the Plaintiff to claim possession under Clause 8.2. I also accept the Plaintiff’s submissions that where the whole sum advanced has become due, a mortgagee is entitled as of right to an order for possession of the mortgage premises (unless the mortgage deed provided otherwise): Chekiang First Bank Ltd v Ko Hoi Luen [1999] 3 HKLRD 360.

F. ORDER FOR SALE

25.The legal principles governing orders for sale under section 6 of Partition Ordinance (Cap. 352) are trite. They were referred to by Au-Yeung J in Cheung Wing Kuen Samuel v Ip Chui Sum [2021] HKCFI 2535, at §§9-12, as follows:-

(1) Under section 2 of PO, the court may (i) order a partition of the property under section 4, (ii) order a sale of the property under section 6, or (iii) refuse to make any order;

(2) Under section 6 of PO, where it appears to the court that a partition of the property would not be beneficial to all the persons interested, the court may make an order for the sale of the property, having regards to:-

(a) The nature of the persons interested or presumptively interested;

(b) The number of the persons interested or presumptively interested;

(c) The absence or disability of some of the persons interested; or

(d) Any other circumstances.

(3) The principles for exercising such power are that:-

(a) A co-owner has a basic right to rid himself of the shackles of co-ownership and if he has no other remedy, 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, or that it will result in very great hardship to one co-owner;

(c) Whether an order for sale is beneficial to all the 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.

(4) An order for sale would not be refused unless all the co-owners would be benefitted by its refusal or, in other words an order for sale would be detrimental to all the co-owners, or unless it will result in very great hardship to one co-owner.

26.The Plaintiff, being a mortgagee under the Mortgage with a right to possession, is entitled to apply for an order for sale. The Property is a domestic flat in a mult-storey building. The Property has a saleable area of 478 square feet. I accept that it is impractical for such a flat to be partitioned. In the circumstances, I am minded to grant an order for sale in the absence of any evidence demonstrating why an order for sale would be detrimental to all of the co-owners and/or evidence showing hardship to one of the co-owners.

27.The Plaintiff has adduced a valuation report on the Property. I accept the valuation contained therein, namely that as at 12 December 2025:-

(1) The market value of the Property in its existing state is HK$3,840,000; and

(2) The value for sale under repossession is HK$3,260,000.

28.The Plaintiff has drawn this court’s attention to the fact that, as revealed from the land search record of the Property, apart from the Mortgage, the 1^st and 3^rd Defendant’s interest in the Property is subject to potentially 2 other incumbrances (whose priority, as I am informed, ranks below the Plaintiff) from K Cash Express Limited and Primecredit Limited. The Plaintiff has given notices of these proceedings to the other incumbrancers but has not received any response. In the absence of any objections from other incumbrancers, I am satisfied that it is appropriate in the circumstances to grant an order for sale as sought by the Plaintiff.

G. CONCLUSION

29.For the forgoing reasons, I am satisfied that it would be appropriate to make an order for the sale of the Property. Upon discussion with Ms. Ma on the terms of the order, I granted the following order at the hearing:-

(1) Judgment be entered against the 1^st and 2^nd Defendants for the Sum of HK$354,496.21, together with:-

(a) Interest on the outstanding principal sum of HK$294,391.38 at the rate of 28.8% per annum from 20 December 2025 at the daily rate of HK$232.29 until payment; and

(b) Default interest on the sum of HK$34,858 (being outstanding interest up to 3 October 2025) at the rate of 28.8% per annum from 20 December 2025 at the daily rate of HK$27.50 until payment;

(2) Unless the 1^st and 2^nd Defendants do pay up the sums as mentioned in paragraph (1) herein above and the costs of these proceedings as mentioned in paragraph (7) below within 28 days after the service of this Order on them, the 1^st and 3^rd Defendants do within 28 days after service of this Order on them deliver to the Plaintiff vacant possession and title deeds and documents in their possession (if any) of the Property;

(3) Subject to the delivery of vacant possession of the Property by the 1^st and 3^rd Defendants as stated in paragraph (2) above, the Property be sold pursuant to section 6 of the Partition Ordinance (Cap. 352) either by public auction or private treaty, subject to a reserve price of HK$3,260,000;

(4) The conduct of the sale of the Property shall be committed to the Plaintiff’s solicitors, Messrs. Siao, Wen and Leung (“SWL”);

(5) In relation to such sale as referred to herein, the 1^st and 3^rd Defendants shall do all acts and things necessary for the transfer of the legal title and beneficial interest in the Property to the purchaser, and in default of which either Mr. Leung Tat Kin Anthony, Miss Au-Yeung Suk Foon Ellen or Miss Lam Yee Ling, a partner of SWL, be authorized pursuant to section 38A of the District Court Ordinance (Cap. 336) to sign and execute such necessary agreement(s), conveyance(s), assignment(s), and all other necessary document(s) on behalf of the 1^st and/or 3^rd Defendant(s) (as the case may be) to give effect to this Order and to convey the Property and all interest therein to the purchaser;

(6) The purchase price of the Property (including any deposits and part payments) shall be paid by the purchaser to SWL in the first instance. SWL shall, upon receipt of the purchase price in full, apply the proceeds of the sale in the following order and priority:-

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

(b) In discharge of all encumbrances affecting both the 1^st and 3^rd Defendants’ interests in the Property having priority to the Mortgage, if any;

(c) In payment of reasonable costs and expenses of the sale, including:-

(i) All auctioneers’ remuneration and/or estate agent’s commission not exceeding 1% of the purchase price;

(ii) conveyancing legal costs not exceeding HK$18,000, and

(iii) all other reasonable expenses payable or incurred in connection with the sale;

(d) As to 50% of the remaining proceeds relating to the 1^st Defendant’s interest in the Property:-

(i) In discharge of all encumbrances affecting only the 1^st Defendant’s interest in the Property having priority to the Mortgage, if any, including costs for discharge of such encumbrances;

(ii) In payment of the Plaintiff’s costs in this action in the sum of HK$70,000, being the total amount of costs payable by the 1^st Defendant to the Plaintiff pursuant to paragraph (7) below;

(iii) In payment to discharge the Mortgage registered in the Land Registry under memorial no. 24112801120026 in favor of the Plaintiff;

(iv) The balance, if any, after deduction of the costs and disbursements for handling the same, be paid to the next incumbrancer of the encumbrance affecting the 1^st Defendant’s interest in the Property and ranking immediately after the Mortgage, or if there is no such next incumbrancer, to the 1^st Defendant.

(e) As to the other 50% of the remaining proceeds relating to the 3^rd Defendant’s interest in the Property:-

(i) In discharge of all incumbrances affecting the 3^rd Defendant’s interest in the Property after deduction of the costs and disbursements for handling the same, or if there is no such next incumbrancer, be paid to the 3^rd Defendant; and

(ii) If the 3^rd Defendant cannot be located after reasonable enquiry, such balance, if any, after deduction of the costs and disbursements for handling the same, be lodged in Court to stand credit to the 3^rd Defendant until further order of the Court;

(7) The costs of these proceedings be paid by the 1^st and 2^nd Defendants to the Plaintiff, summarily assessed at HK$70,000. There be no order as to costs as between the Plaintiff and the 3^rd Defendant; and

(8) There be liberty to apply for further directions, if necessary, as to the manner of the sale of the Property and generally;

Ms Annie Ma, of Siao, Wen and Leung, for the Plaintiff

The 1^st to 3^rd Defendants were not represented and did not appear