Overseas Trust Bank Ltd v. Ngai Yiu Ming and Another
Read the full judgment text of DCMP 2780/2000 on BabelCite. This District Court judgment was delivered on 28 November 2000.
1. This case raises an issue of whether or not the District Court has jurisdiction to give an order for payment of monies due under a mortgage in excess of the sum of $600,000.
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DCMP002780/2000
IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO.2780 OF 2000 -----------------
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----------------- Coram: Miss Queeny Au Yeung, Acting Registrar in chambers Date of hearing: 20 November 2000 Date of handing down judgment: 28 November 2000 ----------------- JUDGMENT ----------------- 1. This case raises an issue of whether or not the District Court has jurisdiction to give an order for payment of monies due under a mortgage in excess of the sum of $600,000. The Facts 2. This is a typical mortgage action in which the Plaintiff mortgagee seeks payment of monies due under a mortgage and delivery of possession in default. The affidavit in support shows that as at the date of the Originating Summons, the amount due to the Plaintiff was $1,969,880.65.. The total debt owing as at the date of the supporting affidavit was $1,979,225.82 with interest accruing. The Defendants are still in possession of the property. No proof as to the rateable value of the suit premises has been submitted. 3. The Plaintiff applied by summons to transfer the proceedings to the Court of First Instance pursuant to section 41 of the District Court Ordinance on the ground that there is reasonable ground for supposing that the amount recoverable in respect of the Plaintiff's claim to be in excess of the amount recoverable in the District Court. At the hearing, the Plaintiff sought to withdraw this summons on the ground that similar reliefs claimed in other cases were held to be within the jurisdiction of the District Court. Despite my invitation to the Plaintiff's solicitors previously in a similar case to make submissions on the law, they have not produced any authorities on the present issue. Having researched the law myself, I transferred the case to the Court of First Instance. I now give my reasons in writing. What is a Mortgage? "A mortgage consists of two things, namely a personal contract for payment of a debt and a disposition or charge of the mortgagor's estate or interest as security for the repayment of the debt; in equity the estate or interest so transferred is no more than a pledge or security. Every mortgage implies a debt and a personal obligation by the mortgagor to pay it. If there is a covenant or bond for its payment it is a specialty debt; if not, it is a simple contract debt." Words and Phrases Legally Defined, third edition, Volume 3, page 177, quoting Halsbury's Laws, 4th edition, paragraphs 410-2. 4. In Quarrel v. Beckford 1 Mad 278, Plumer VC says, "What is a mortgage? Everybody knows, it consists of two things: it is a personal contract for a debt secured by an estate; and, in equity, the estate is no more than a pledge or security for the debt - the debt is the principal; the estate is the accident. Whether the mortgagee is, or is not, in possession of the pledge, his right is precisely the same, with this difference, indeed, that he has never any right in equity to the estate except as a fund to pay him his debt; for every other purpose the estate is the estate of the mortgagor, and when the debt is paid all the mortgagee's right and interest in the estate ceases; he has then the legal estate only and not a beneficial interest in it. If the mortgagee has chosen to take possession and help himself he becomes then a bailiff without salary and is accountable for the profits, which are applicable, in the first instance, to pay the principal and interest of his debt and all other mortgagee allowances; but he is bound to be an accounting party - taking the estate in possession upon the principle and upon the obligation to account with the mortgagor for all the rents he receives. He is bound to keep the account - and to be ready with it, to apply it regularly to pay his principal and interests - and to be ready to surrender up the pledge as soon as it has answered its purpose. All the cases treat the mortgagee, as soon as he is paid, as becoming a mere naked trustee, holding the legal estate for the benefit of the cestui que trust, the mortgagor." Jurisdiction of the District Court in a Mortgage Action 5. When the mortgagee sues for monies due under the mortgage, he is in fact enforcing the personal contract for payment of a debt. As such, the jurisdiction of the District Court in contract law applies, namely, $600,000: section 32 of the District Court Ordinance, Cap. 336. 6. When seeking to recover possession, section 35 of the District Court Ordinance applies. That section provides that the Court has jurisdiction to hear and determine any action for the recovery of land, where the annual rent, or the rateable value of the land, determined in accordance with the Rating Ordinance (Cap. 116), or the annual value of the land, whichever is the least, does not exceed $240,000. Evidence on the annual rent, rateable or annual value must be adduced. Does Section 37 of the District Court Ordinance Extend the Jurisdiction of the District Court in Monetary Claims Under a Mortgage? 7. Section 37 entitled "equity jurisdiction" provides that:
8. This section only deals with the equity jurisdiction of the District Court. It does not cover the jurisdiction of the District Court in monetary claims under a mortgage. In the claim in question, the amount owing under the mortgage does not exceed $3,000,000. However, the reliefs sought are not for "foreclosure or redemption of a mortgage". Nor, in the light of the definition of mortgage in the authorities quoted above, is it one for enforcing the equitable rights under a charge. Section 37(1)(c) is therefore not applicable to the present claims. Conclusion 9. I am of the view that the District Court has no jurisdiction to entertain a mortgage action in which the claim for debt due thereunder exceeds the amount of $600,000. The claim is therefore transferred to the Court of First Instance.
Representation: Plaintiff: represented by Mr. K. Chan of Messrs. Johnson, Stokes and Master 1st named Defendant: in person 2nd named Defendant: absent |