Hang Seng Finance Ltd v. Ho Yuen Chak

DCCJ  772  /2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL JURISDICTION ACTION NO. 772 OF 2006

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BETWEEN

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Coram: Deputy District Judge M. Chow

Date of Hearing: 30th November, 2006

Date of Handing Down Decision: 7th December, 2006

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DECISION

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1.This is an application by the Plaintiff to strike out the Defendant’s defence and counterclaim on the ground that it discloses no reasonable defence and/ or it is frivolous or vexatious.

2.The Defendant is the registered owner of the property located at Flat B, 4/F, Caine Mansion, 384-388, Lockhart Road, Hong Kong.

3.In the present proceeding, the Defendant is over 80 years of age, due to his poor health and old age, he is represented by his son.

4.The Plaintiff is the mortgagee bank of the Property pursuant to a mortgage dated 17^th May, 1977 and a further charge dated 11^th August, 1983.

5.The Property is a security for repayment of overdraft facilities in a sum of HK$165,000 to the Defendant through his current account maintained with the Plaintiff.  There was no periodical payment, however, the Plaintiff is entitled to demand for full payment.  On 15.10.2005, the Plaintiff through its’ instructing Solicitors demanded full payment.

6.The terms of the mortgage at P.34: -

“the Mortgagor will on demand in writing of the Bank made to the Mortgagor or left on some part of the premises hereinafter described and intended to be hereby assigned or left at the last known place of abode or business of the Mortgagor pay to the Bank all sums of money which at the date of such demand may be outstanding and according to the books of the Bank payable by the Mortgagor to the Bank in respect of any account whatsoever between the Mortgagor and the Bank together with interest ……”

7.In the Defence and Counterclaim, the Defendant does not dispute that the Defendant has not made “installment payment”.  What the Defendant is disputing is the calculation of the outstanding amount was “seriously wrong and incorrected”. 

8.In the Defence’s affirmation dated 29-11-2006, he said that: -

“On or about 10th July 2006, I repaid to the Plaintiff the sum of HK$43,750.00 leaving the balance of HK$137,192.69 payable to the Plaintiff …”

9.And he also said that: -

“It was at the material times and still is an agreed term between the Plaintiff and the Defendant that the interest rate payable by the Defendant would be 8.25% per annum if the sum overdrawn being under $165,000.00 and any sum overdrawn being under $165,000.00 and any sum exceeding $165,000.00 be at the rate of 14% per annum, Thus the Plaintiff wrongly charged the interest at the flat rate of 16% even for the overdrawn sum under $165,000.00.  which was wrongfully and over claimed/ annum charged against the defendant and the market rate was only 3.18% annum.”

10.In respect of interest, it is calculated at 11.5% per annum for the amount up to HK$165,000 and 16% per annum for the amount exceed HK$165,000 (both rates are subject to fluctuation at the Plaintiff’s discretion).  The Plaintiff’s latest affirmation stated that interest is at HK$47.39 per day for the amount of HK$153,768.72 being overdrawn. 

11.The total: -

The amount remaining due under the Mortgage as at 29th November 2006:
Under Current Account No.256-******-001
Amount Overdrawn	HK$	153,768.72
Overdraft Interest	HK$	473.90
Interest per day (30/11/2006 – 7/12/2006) $47.39 x 8 days	HK$	379.12
		------------------
	HK$	154,621.74

12.The other terms of the Mortgage at P.34: -

“as the bank may from time to time charge such interest to be calculated with the usual monthly rests ……”

13.The Plaintiff in fact has taken into account of the Defendant’s part-payment of HK$43,750 on 10th July 2006 as partial settlement of the indebtedness due to the Plaintiff.  And, interest is calculated with monthly rests and the interests for each month is charged and added to the current account No. 256-******-001 as the principal on the 20th day of each month.

14.Paragraph 4 of the Defence’s latest affirmation dated 29^th November, 2006 stated that: -

“In the view of the fact that total sum overdrawn is now HK$137,192.69 being within the limit of banking facilities of $165,000.00 granted by the Plaintiff, the Plaintiff is not entitled to take possession of the mortgaged property.”

15.In fact, according to the terms of the mortgage, when the Defendant default payment upon demand, “it shall be lawful for the Bank at any time or times thereafter without any consent on the part of the Mortgagor or of any other person to enter into and upon and take possession of the said premises.”  Therefore, it is wrong for the Defendant to assume that if the amount falls below $165,000.00, the Plaintiff is not entitled to take possession of the property.

16.In the present case, Mr. Ho alleged that there is a charging order from another case in this property since July, 2006.  The Defendant therefore is unable to raise any fund. 

17.Mr. Ho asks this Court to exercise discretion in the Defendant favour not to impose a possession order because this property is to house his family.  He understands that the Plaintiff is exercising its’ right in accordance to the mortgage terms.  Mr. Ho said that he might be able to raise some money within a period of 2 to 3 months.

According to para.88/5/11, Hong Kong Civil Procedure 2006,

“Suspending orders for possession – The ordinary rule is that a mortgagee is entitled as of right (unless the mortgage deed provides otherwise) to possession of the mortgaged premises, and the court has no power to adjourn an application for possession or to make a suspended order, with the exception of an adjournment for a short time to afford to the borrower a chance of paying off the mortgage in full, which should only be granted if there is a reasonable prospect of such payment occurring (Checking First Bank Ltd v. Ko Hoi Luen & Another [1999] 3 H.K.L.R.D. 360; Birmingham Citizens P.B.S. v. Caunt [1962] Ch.883).

18.In fact, the Plaintiff has commenced legal proceeding by issuing the writ in February, 2006.  The Defendant has enough time to do what he should do but he elects to wait until the last minute.  I, therefore refuse to adjourn this matter any further.

19.Apart from the defence, the Defendant also counterclaimed against the Plaintiff for “breach of the contract of sale” without any particulars.  In accordance to para. 88/5/12, Hong Kong Civil Procedure 2006, the counterclaim is no defence to the Plaintiff’s claim for possession.

88/5/12 Counterclaim – Because a mortgagee is entitled to possession of the mortgaged premise a counterclaim by the borrower for damages or a liquidated sum is no defence to the claim for possession (National Westminster Bank v. Skeleton [1993] 1 W.L.R. 72).

20.For the above reasons, I conclude that the Defendant has raised no defence/ cause of action in his pleading.  Accordingly, I have to strike out his defence and counterclaim and enter judgment for the Plaintiff:

Order: -

i) an order for payment by the Defendant to the Plaintiff HK$154,621.74 as at 7^th December 2006.  Thereafter, at judgment rate until payment.

ii) an order for the delivery up by the Defendant to the Plaintiff of vacant possession of the premises within 28 days after service upon him of this order.

iii) Upon the Defendant paying to the Plaintiff the money hereby ordered to be paid, an order for the redelivery-up by the Plaintiff to the Defendant of vacant possession of the premises in the event of the Defendant paying to the Plaintiff all the sums secured by the mortgage and the further charge, though that order for redelivery-up is subject and without prejudice to the due exercise by the Plaintiff of the power of sale for the time being vested in it.

iv) Costs of this application be to the Plaintiff, to be taxed if not agreed.  Order nisi, 14 days to become absolute.

Ms. R. Lee of Messrs. Li, Kwok & Law李郭羅律師行for the Plaintiff.

The Defendant, in person, represented by Mr. Ho Kwok Wa何國華.