Chow Tai Fook Jewellery Co. Ltd. v. Shun Kai Bullion Co. Ltd.

HCMP006992A/1998

HCMP6992/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.6992 OF 1998

---------------------------

-------------------------

-------------------------

Coram: Hon Suffiad J in Chambers

Date of Hearing: 11 August 2000

Date of Ruling: 12 October 2000

-----------------

R U L I N G

-----------------

1. This ruling must be read in conjunction and together with my judgment dated 31 July 2000. This matter first came before me as an appeal from a master's decision in which the master dismissed the plaintiff's mortgage action brought under Order 88 of the Rules of the High Court. I heard the appeal on 1 June 2000 and gave a written judgment handed down on 31 July 2000 in which I dismissed the plaintiff's appeal. On 8 August 2000, the plaintiff issued the present summons asking me to review my judgment dated 31 July on the basis that, in giving that judgment, I had overlooked the fact that the mortgage in question, i.e. the legal charge dated 23 June 1994 ("the Legal Charge") had in fact been registered with the Companies Registry.

2. This matter came about in this way. Without going into all the details of my written judgment dated 31 July, it would be sufficient to say that, in that judgment, the entire case was decided solely on one point, namely, whether the plaintiff had shown that the loan in question came within the exception provided for in paragraph 2 of Part 2 of Schedule 1 of the Money Lenders Ordinance, Cap.163. One of the requirements of bringing the loan within that exception is that the Legal Charge has to be registered under the Companies Ordinance with the Companies Registry.

3. When this matter came before me on 1 June 2000, Mr Chan, who appeared for the plaintiff, indicated to me that he had the original of the Legal Charge showing that it had been registered in the Companies Registry and offered to show me the original. Thinking that what was in the hands of Mr Chan was merely the original of the copy exhibited to the affirmation of Lui Kwok Hung ("Mr Lui") on behalf of the plaintiff. I indicated to Mr Chan that I would work on the copy exhibited. Mr Chan also indicated that he had shown the original to his learned friend and no point would be taken by the defendant that the Legal Charge had been registered in the Companies Registry. Unknown to me at the time in fact what Mr Chan was holding differed slightly from what had been exhibited in that the original held by Mr Chan contained a certificate showing that the Legal Charge had been registered in the Companies Registry. However, the copy exhibited to the affirmation of Mr Lui did not contain a copy of that certificate.

4. In those circumstances, not having seen the original with the certificate indicating that it had been registered in the Companies Registry, when I came to write my judgment and relying on the copy of the Legal Charge exhibited to the affirmation of Mr Lui, I gave judgment against the plaintiff on the basis that the plaintiff had failed to prove that the Legal Charge had been registered in the Companies Registry.

5. The slip or omission that I am now ask to apply stems from the fact that in my judgment I had failed to give effect to the indication by the plaintiff's counsel that no point was taken by the defence as to the Legal Charge being registered with the Companies Registry, which indication was neither objected to by the defendant, through his counsel, nor any submission made in that respect.

6. On the other hand the defendant submits, insofar as this present application is concerned, that since I had given a written judgment and made an order in that written judgment, I am functus and I have no jurisdiction to amend or correct that judgment. The plaintiff's answer to that is that since the formal order had not been drawn up and entered in the sense that the court's seal had not been stamped on the formal order, I still have the jurisdiction to correct or amend any slip or omission in my earlier judgment. It is a fact that the formal order had not been passed and entered or drawn up. I agree with the plaintiff that since the formal order had not been drawn up, passed or entered, I still have jurisdiction to correct or amend any slip or omission brought to my attention.

7. Here the slip or omission is obvious, namely that I should have given effect to a point which was not in issue between the parties. For the reasons given above, I shall and do give effect to correcting or amending the slip or omission referred to above.

8. It was also suggested by Mr Swaine who appears for the defendant at the application by the plaintiff for me to apply the slip rule, that if I should accede to the plaintiff's request to apply the slip rule, then I should afford the defendant a further chance to make further submission since the entire matter has been reopened. Mr Swaine, however, was unable to indicate what sort of further submission he may wish to make in that eventuality. I do not agree with that submission of Mr Swaine. The application by the plaintiff for me to apply the slip rule was limited only to the issue of the Legal Charge being registered in the Companies Registry. The parties have already made full submissions at the appeal proper before me. I therefore do not consider it necessary to hear further submission on other matters even though I accede to the plaintiff's application to apply the slip rule as aforesaid. I shall therefore carry on with my earlier judgment and go on to consider the point of interest raised by the defendant which I had not considered in my earlier judgment.

Interest

9. The interest point taken by the defendant was that the plaintiff had variously charged different rates of interest different from the 11% expressly stated in the Legal Charge. These other rates, slightly higher than the 11% agreed, was charged by the plaintiff on the outstanding instalments. The rate charged by the plaintiff ranged from between 12.5% per annum to 13.75% per annum.

10. What was agreed between the parties and contained in writing in the Legal Charge is as follows :-

"... the borrower doth hereby covenant with the lender (1) that the borrower will pay to the lender the sum of $1,500,000.00 with interest thereon in the meantime at the rate of 11% per annum or at such other rate as the lender may from time to time charge from the 23rd day of June 1994, by 120 equal monthly instalments of $20,662.50 each (inclusive of interest) ... "

11. The Legal Charge then goes on to make provision for the borrower to be liable to pay interest on the amounts of any outstanding instalment or instalments which have not been paid on the date that it ought to have been paid "at the rate aforesaid".

12. From the wording contained in the Legal Charge agreed to by the parties and cited above, on its proper construction, I am of the view that the 11% agreed between the parties pertains to the rate of interest charged and included in each of the instalment payment which rate is fixed in respect of all the 120 monthly instalment payments of $20,662.50. The words "or at such other rate as the lender may from time to time charge" refers to the future. As such it can only mean the rate of interest which the lender may charge in respect of overdue or unpaid instalments. That rate would depend on the prevailing market rate at the time when such instalments become outstanding or unpaid. In the circumstances, I can see nothing wrong with the plaintiff charging up to 13.75% per annum interest on the outstanding instalment payments.

13. In any event, the dispute as to the rate of interest charged by the plaintiff goes only to the quantum and not to the liability issue. In so far as quantum is concerned, I am not able to come to a final determination as to the amount owed by the defendant to the plaintiff by reason of the fact that the present evidence adduced by the plaintiff in the form of two affirmations of Mr Lui do not give sufficient detail as to how the amount which the plaintiff claims to be owed by the defendant is worked out. Should the plaintiff wish to pursue a firm determination as to the amount that it is owed by the defendant, I would require further detailed evidence in the form of a detailed Statement of Accounts with full details of the outstanding principal amount as well as how interests is calculated. Until that is done, I am not in a position to quantify what is owed to the plaintiff conclusively. Alternatively, the quantum aspect of the case may be agreed between the solicitors for the parties based on the ruling that I have given above as to the rate of interest.

Decision

14. As already indicated above, I will apply the slip rule as suggested by the plaintiff in its favour in which case it follows that the appeal will be allowed and the order of Master de Souza will be set aside, and judgment will be entered in favour of the plaintiff on liability.

15. In the event that the solicitors for the parties can agree upon the quantum, the matter can then be disposed of based on that agreed quantum. If there is no agreement on quantum, the parties may well have to appear once more before me to have that determined based on the detail Statement of Account to be worked out and filed by the plaintiff. In any event, I should make the following orders-

1. Payment to be made to the solicitors for the plaintiff within four weeks of today's date comprising :

(a) repayment of the principal sum;

(b) payment of interest accrued under the Legal Charge as at today's date, thereafter interest to be at judgment rate less all net receipts as mortgagee in possession.

2. Payment made to the plaintiff's solicitors not to be released to the plaintiff until expiry of the time for appeal from this order, if, by which time, a Notice of Appeal is lodged and served on the plaintiff, such payment not to be released until determination of the appeal by the Court of Appeal or further order.

3. Possession of the mortgaged premises be delivered by the defendant to the plaintiff within 14 days of this order.

4. Liberty to apply for the purpose of implementing this order if necessary.

5. An order nisi that the costs of this appeal including the costs of the application under the slip rule be to the plaintiff.

Representation:

Mr Louis Chan, instructed by Messrs Yung, Yu, Yuen & Co., for the Plaintiff

Mr J. Swaine, instructed by Messrs Tsang, Chan & Woo, for the Defendant