The Daiwa Bank, Ltd v. Shum Shek Chiu t/a Lung Tat Co and Another
Read the full judgment text of HCMP 4020/2000 on BabelCite. This High Court CFI judgment was delivered on 2 February 2005.
1. This is the appeal of the 2 nd defendant, madam Sun Wai Chun, against the Order of Master Hui made on 4 October 2004 dismissing her summons issued on 24 September 2004.
Cited by 1 case · Cites 1 case
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HCMP 4020 of 2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 4020 OF 2000 -----------------------
----------------------- BETWEEN
---------------------- AND BETWEEN
----------------------- (By Original Originating Summons and Order to Carry on Before : Hon Chu J in chambers Date of Hearing : 31 January 2005 Date of Judgment : 2 February 2005 ----------------------- J U D G M E N T -----------------------
1.This is the appeal of the 2nd defendant, madam Sun Wai Chun, against the Order of Master Hui made on 4 October 2004 dismissing her summons issued on 24 September 2004. Background 2.The background facts leading to the present appeal can be summarized as follows. 3.By a Legal Charge dated 30 June 1993 (“the Legal Charge), the original plaintiff in these proceedings, The Daiwa Bank Limited (“Daiwa Bank”), as lender and mortgagee and the 1st defendant, Shum Shek Chiu trading as Lung Tat Company, as borrower and the 2nd defendant as mortgagor entered into an agreement, whereby, inter alia, the 2nd defendant charged the property known as Subsection 31 of Section G of Lot No.4665 in Demarcation District No.104 (No.43, Section G, 1st Street, Fairview Park, Yuen Long, New Territories) (“the Property”) to Daiwa Bank to secure the indebtedness due under the Legal Charge. 4.The Property is a residential property and had been used as the residence of the defendants, who are husband and wife. 5.The defendants defaulted in their payment obligations under the Legal Charge. By two letters of demand both dated 23 June 1999, Daiwa Bank through its then solicitors demanded for payment from the two defendants separately. 6.On 9 August 2000, Daiwa Bank issued the Originating Summons herein claiming against both defendants for payment of all sums due under the Legal Charge. Additionally, Daiwa Bank claimed against the 2nd defendant for vacant possession of the Property. It was stated in the Originating Summons that the 2nd defendant was sued as the mortgagor of the Property. 7.On 25 August 2000, both defendants gave notice of intention to defend the proceedings. 8.The Originating Summons came before Master Ho on 12 October 2000. Both defendants and their daughter, Shum Hau Yuen, were present. The proceedings were conducted in Cantonese. Miss Shum on behalf of her parents indicated they did not object to the application, but wished to have longer period to move out of the Property. Probably because of this, Master Ho in granting judgment for Daiwa Bank (“the 2000 Order”) had granted a stay of 60 days, which is much longer than the usual period of stay. The sealed Order was served on the defendants on 7 November 2000. 9.On 7 March 2001, Daiwa Bank applied for a Writ of possession and fieri facias combined to enforce the 2000 Order. It does not appear that Daiwa Bank had proceeded further with the matter. 10.By an agreement dated 27 March 2002, Daiwa Bank assigned all its interests and rights under the Legal Charge to Merrill Lynch JPNDC. Inc. (“the substituted plaintiff”). On 15 October 2003, Daiwa Bank and the substituted plaintiff entered into a written consent for the latter to be substituted for Daiwa Bank as the plaintiff in these proceedings. 11.By the Order of Master Wolley dated 12 January 2004, the substituted plaintiff was made a party to these proceedings and the proceedings were ordered to be carried on between the substituted plaintiff and the defendants. 12.On 23 August 2004, the substituted plaintiff applied for and was granted a Writ of possession and fieri facias combined (“the Writ of execution”) to enforce the 2000 Order. 13.On 24 September 2004, the 2nd defendant issued the summons in question seeking the following relief:
14.On 4 October 2004, after hearing submissions, Master Hui dismissed the summons with costs to the substituted plaintiff. On the same day, the 2nd defendant filed the Notice for the present appeal. The 2nd defendant’s representation 15.Throughout these proceedings, the 2nd defendant acts in person. At the commencement of the hearing of the appeal, she applied to have Mr Choy Bing Wing to appear and speak on her behalf in the appeal. The substituted plaintiff opposed the application. I refused the application. My reasons are as below. 16.As a matter of law, an individual litigant has a right to appear either by solicitor or counsel or appear in person. For a litigant in person with full capacity, it falls upon him to present his case to the court. In Lobo v. Kripalani [1998] 2HKLRD 325 at 328C-J, Godfrey JA observed:
17.The 2nd defendant explained the reasons for wishing to have Mr Choy to present her appeal as follows:
18.None of these reasons afford the 2nd defendant with exceptional circumstances that justify permitting Mr Choy to conduct the appeal for the 2nd defendant. The 2nd defendant had prepared a full written submission together with authorities for the appeal. Her daughter, Miss Shum, was in court to assist her. In the circumstances, I can see no necessity for having Mr Choy to argue the appeal for the 2nd defendant and/or that there will be any miscarriage of justice by not granting the 2nd defendant’s application. With no objection from the substituted plaintiff, I had exercised some flexibility and had permitted Miss Shum to address the court. The 2nd defendant’s argument 19.The 2nd defendant’s summons was issued pursuant to Order 45 rule 11 of Rules of the High Court. It appears from the two affirmations of Choy Bing Wing filed on behalf of the 2nd defendant in support of the summons and the 2nd defendant’s written submissions that there are two broad grounds in the 2nd defendant’s application. Firstly, it is said that the Order 88 procedure should only be used in litigation involving mortgagor and mortgagee and in respect of mortgaged property. The 2nd defendant contends that she was only a guarantor to the 1st defendant’s borrowings, and Daiwa Bank should not have invoked the Order 88 procedure. The 2nd defendant further argues that Master Ho did not have jurisdiction to make the 2000 Order and the 2000 Order therefore did not have to be obeyed and could not be enforced. Secondly, the 2nd defendant said that the Property is an illegal structure and the subject matter of, what Mr Choy called “a massive fraud” in that there had been a failure to comply with the procedures under the Buildings Ordinance, cap.123 and the Property was allowed to be occupied without the issue of an occupation permit. On this basis, the 2nd defendant said that the contract she had with Daiwa Bank has become unenforceable. 20.Mr Choy asserted in the affirmations that there was a massive fraud between the government and the developer and the management company of Fairview Park. He also claimed that the Courts have “conspired” with the government over the so-called massive fraud. The 2nd defendant has made no submission on this claim of conspiracy at the appeal hearing. I take it that the point has been abandoned. It is in any event a wild and unfounded allegation. Validity of the 2000 Order 21.In my view, what is fatal to the 2nd defendant’s application to discharge or stay the Writ of execution is that while the grounds relied upon by the 2nd defendant all go to challenge the validity or propriety of the 2000 Order, there is no appeal against the 2000 Order. The 2000 Order is a valid and binding order of the court, which the substituted plaintiff is entitled to enforce by process of execution, including by means of a Writ of possession and fieri facias combined. There is thus no impropriety in the issue of the Writ of execution. It also follows that there is no basis at all for discharging the Writ of execution. 22.The 2nd defendant refers to O’Connor v. Issacs and Others [1956] 2 Q.B. 288 and argues that the case is authority for the proposition that an order made without jurisdiction needs not be obeyed. For reasons that I will come on, the 2000 Order is not an order made without jurisdiction. That aside, O’Connor v. Issacs does not support the 2nd defendant’s contention that she is at liberty not to comply with the 2000 Order it was made without jurisdiction. 23.In O’Connor v. Issacs, the plaintiff brought an action against a justice in damages for false imprisonment and for payment paid over under the order of the justice. There was no dispute between the parties that the justice had no jurisdiction to make the orders in question, and the issues turned on whether the plaintiff could claim against the justice for loss arising out of the orders and whether the plaintiff’s claim was time barred. In the context of analysing the plaintiff’s cause of action, Morris LJ said obiter (at 363), “It is not the mere making of the order that constitutes the cause of action. If the order is one for the payment of money and if it is made without jurisdiction, then it need not be obeyed. Appropriate steps can be taken to quash it or to reverse it on appeal.” 24.Reading it in context, what Morris LJ was saying is that the payment made by the plaintiff was not an act of the justice because he was not without recourse in that he could have taken step to quash or appeal the orders of the justice. Properly understood, Morris LJ’s statement is no authority for the proposition that if an order is made without jurisdiction, a party can on his own accord and without doing more, ignores the order or acts in defiance of it. If the 2nd defendant indeed takes the view that Master Ho had no jurisdiction to make the 2000 Order, to which I do not agree, she should have appealed against the order. Without successfully overturning the 2000 Order, she has no ground for applying to discharge the Writ of execution. The 2nd defendant has not been able to explain why she has taken no step to challenge the 2000 Order in the first place and even after her present summons had been dismissed. 25.As for the application for stay of the Writ of execution, it is based on Order 45 rule 11 of Rules of the High Court. The relevant part of the Rule reads:
26.The matters alluded to in the two affirmations leading the application and in the written submissions all took place before October 2000 when the 2000 Order was made. They are not matters, which have occurred since the making of the 2000 Order. The application for stay is therefore misconceived. 27.The above analysis would have been sufficient to dispose of this appeal. But for completeness purpose, I will also deal briefly with the other arguments raised by the 2nd defendant. Order 88 procedure 28.Order 88 rule 1(1) of Rule of the High Court provides:
29.Under rule 1(2), mortgage includes a legal charge. 30.In the present case, it is clearly pleaded in the Originating Summons and elaborated in the supporting affirmation that the claim against the 2nd defendant was based upon the Legal Charge. Daiwa Bank sued in its capacity as mortgagee and the 2nd defendant was sued in her capacity as mortgagor. The claim was to seek payment of the indebtedness due under the Legal Charge and also delivery up of possession of the Property charged under the Legal Charge. Prima facie the action falls squarely within Order 88. 31.The 2nd defendant relies on the case of National Westminster Bank v. Kirch [1996] 1 WLR 1316 and says that she is a mere guarantee such that the claim is outside the scope of Order 88. In my view, the case does not assist the 2nd defendant for two reasons. Firstly, unlike in National Westminster Bank case where the bank had chosen not to rely on the mortgage in claiming against the defendant, Daiwa Bank’s claim was expressly based upon the Legal Charge. Secondly, clause 1.01(e) of the Legal Charge defines “secured indebtedness” to include all sums payable by the 1st and 2nd defendants. Even though the mortgage loan had been fully paid and what remain due to Daiwa Bank are borrowings incurred by the 1st defendant, the indebtedness remains an indebtedness under the Legal Charge. The distinction between “specialty debt” and “simple contract debt” referred to in Schiemann LJ’s judgment in National Westminster Bank therefore has no relevance. 32.For the same reasons, the argument that the 2nd defendant merely acted as the 1st defendant’s guarantor is irrelevant. Additionally, clause 27.01 of the Legal Charge provides:
Plainly, the 2nd defendant is not only a guarantor under the Legal Charge. She also contracts as a principal debtor. The argument that because she is a guarantor, the action is not a mortgage action and is outside the scope of Order 88, is therefore untenable. Validity of the Legal Charge 33.It is unnecessary for the present purpose to deal with the assertions that the Property is an illegal building or structure. As appears from the exhibits to Mr Choy’s affirmations and as I understand it, this topic has been the subject matter of various litigations, complaints and disputes. The point is: Even if the assertions are substantiated, it does not follow automatically that the Legal Charge is, as the 2nd defendant contends, unlawful and unenforceable as a matter of law. This is a huge quantum leap. Costs 34.For the above reasons, the Master is correct in dismissing the summons. The appeal therefore fails. 35.Applying the rule of costs follow event, the 2nd defendant is to pay the substituted plaintiff the costs of this appeal. The substituted plaintiff seeks costs on indemnity basis for two reasons. Firstly, it is said that the Legal Charge provides for all the legal costs in connection with the Legal Charge to be paid by the defendants. Secondly, it is said that this is a groundless and frivolous appeal and the 2nd defendant should be visited with a higher costs order. 36.Though invited to address on costs, the 2nd defendant had advanced no specific arguments on the matter. 37.The only provision in the Legal Charge dealing with legal costs is clause 23.01. Under clause 23.01(ii), it provides that the 2nd defendant is to pay “all reasonable expenses (including legal expense)” incurred in connection with the Legal Charge. This is insufficient to cover costs on indemnity basis. 38.However, under the common law, the authorities have long recognized that costs is a matter of court’s discretion and the discretion to award indemnity costs in appropriate cases is unfettered. In Choy Yee Chun (The Personal Representative of the estate of Chan Pui Yiu) v. Bond Star Development Ltd [1997] HKLRD 1327, the Court of Appeal held that indemnity costs could properly be awarded where the proceedings were scandalous and vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner, or in such circumstances as to constitute an affront to the court. 39.As this judgment shows, the 2nd defendant’s application is wholly devoid of merits. This is particularly so in view of the fact that the 2000 Order was made unopposed and she has throughout never sought to challenge the 2000 Order. As the transcript of the hearing before Master Hui shows, the reasons for the dismissal of the summons had been canvassed at the hearing. Notwithstanding this, the 2nd defendant launched the appeal on the same day. None of the matters argued at the appeal is properly grounded. The appeal is clearly frivolous and vexatious and is brought unreasonably in view of the history of the case. In the circumstances, the substituted plaintiff is justified in seeking costs on indemnity basis, and I so order. Conclusions 38. For the above reasons, the appeal is dismissed with costs to be paid by the 2nd defendant to the substituted plaintiff on an indemnity basis, to be taxed if not agreed.
Mr Law Man Chung instructed by Messrs Deacons for Merrill Lynch JPNDC INC. Sun Wai Chun, unrepresented, appeared in person. Shum Hau Yuen, the daughter of Sun Wai Chun, also present. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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