Good Time Finance Ltd v. Silva George and Another

DCCJ 5220/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5220 OF 2006

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Coram: H.H. Judge Chow

Hearing date : 28^th and 31^st December 2007

Date of handing down Decision: 13^th March, 2008

Decision

1.This is an appeal lodged by the 1^st Defendant against the order made on 14^th December, 2007 by Registrar S.T. Poon who dismissed the application of the 1^st Defendant by way of summons filed on 11^th December 2007, by refusing to grant leave to set aside the judgment and to stay execution of the order.

2.On 25^th October 2007, the Plaintiff applied for final judgment against the Defendants for possession of the property known as Flat E, 6/F of Hang Yue Building, Nos. 334-350 Des Voeux Road West (“the Property”).

3.On 9^th November 2007, Master Poon made the following orders:-

Background

4.The Plaintiff is a licensed money lender.  By a legal charge dated 6^th August 2004 and the 1^st and 2^nd Defendants as the mortgagor and as the borrower mortgaged/charged the Property to the Plaintiff to secure loans advanced to them by the Plaintiff, which 1^st and 2^nd Defendants covenanted to pay under the legal charge.  Clause 8.01 (k) of the legal charge provides:-

“if at any time the power of sale herein contained shall become exercisable by the Lender the Borrower will upon being given notice so to do by the Lender forthwith quit and deliver up vacant possession of the Property to the Lender or to whomsoever the Lender may nominate or direct;”

5.By a loan agreement dated 6^th August 2004 entered between the Plaintiff as lender and the 1^st and the 2^nd Defendants as borrower, and in consideration of the Plaintiff’s advancing to the 1^st and 2^nd Defendants a loan in the sum of $450,000, the 1^st and 2^nd Defendants agreed to and undertook to repay to the Plaintiff the loan together with interest thereon at the rate of 33.15% per annum by 60 monthly instalments of $19,931 per each instalment.

6.In breach of the loan agreement, the 1^st and 2^nd Defendants failed to pay the loan in the sum of $704,289.50 as at 18^th October 2006 together with interests and claimed in the Statement of Claim dated 19^th October 2006, particularized as follows:-

7.Section 51(1) of the Conveyancing and Property Ordinance Cap. 219 (“the Ordinance”) provides, inter alia, that there shall be implied in any legal charge or equitable mortgage by deeds, the powers exercisable by the mortgagee mentioned in the Fourth Schedule of the Ordinance.  Clause 8 of the Fourth Schedule of the Ordinance empowers the Plaintiff to sell and assign the mortgaged land, subject to any prior estates, interests and rights to which the mortgaged land is subject, but free from the mortgage and all other estate, interests and rights to which the mortgage has priority, in such manner and subject to such lawful conditions as the mortgagee or receiver thinks fit; the Plaintiff is also empowered to vary or rescind any contract for sale, buy in at any auction and to resell without being answerable to the Defendant for any loss occasioned.

8.Clauses 11(a) and (b) of the Fourth Schedule to the Ordinance provides, inter alia, that the powers mentioned in paragraphs 2 to 9 shall not be exercisable unless (a) notice requiring payment of the mortgagee money has been served on the mortgagor, and default has been made in payment of the mortgage money or part thereof for one month after such service; or (b) interest under the mortgage is in arrear and unpaid for one month after becoming due.

9.By a letter dated 14^th February 2005, the Plaintiff informed the 1^st and 2^nd Defendants that up to 14^th February 2005 the Plaintiff had not yet received the following payments:-

Instalment No.	Payment Date	Amount of payment
5	6.1.2005	$19,931
6	6.2.2005	$19,931

10.The Plaintiff notified the 1^st and 2^nd Defendants that unless within 14 days make the above payments and accrued interests, the Plaintiff would, inter alias, exercise its contractual rights and sell the mortgaged property without further notice.  Despite the reminder contained in this letter, no payment has been made.  By sending the said letter and the non-payment of money as demanded, the requirements of Clauses 11(a) and (b) of the fourth schedule to the Ordinance have been satisfied.

11.The 1^st Defendant contests the present application, saying that the Plaintiff made wrong calculations on the interests.  Every time he wanted to settle the case the Plaintiff increased the amount.  On 13^th October 2004 he was informed by Danny Lau & Co., the then solicitors for the Plaintiff, that the outstanding amount is $658,123, and the principal sum was $450,000.  In 2 months’ time the interest charged is $208,123 ($658,123 - $450,000).  On 18^th October 2004 the Plaintiff’s solicitors sent him another letter and the amount was changed to $732,123.  The second redemption sum was $732,123 and the principal sum was $450,000. The interest charged is $282,123.  In 6 days’ time the Plaintiff increased the interest to $74,000 ($282,123 - $208,123).  The interest is over 80% per annum.

12.Having read the affirmation of the 1^st Defendant, dated 31^st January 2007, I am satisfied that the Plaintiff did err in charging the amounts of interests.  The present solicitor for the Plaintiff is unable to explanations regarding such errors.

13.What the Defendant put up as a defence is that he borrowed in October 2004 a loan from G E Capital, in order to pay off all the loans (with interests) to the Plaintiff.  But the amounts shown by the then solicitors for the Plaintiff were wrong, because the interest rates charged well exceeded the contractual rate of interest of 33.15% per annum, and he was not able to pay off the loans and the interests.  So his plan to pay off the loan was defeated.  It is up to the 1^st Defendant to sue against the Plaintiff if he suffers any loss, because of the mistakes made by the Plaintiff in calculating the amounts of interests.  But still he is under a contractual obligation to honour his obligations under the loan agreement which was then still effective.  He was still under an obligation to pay the monthly instalment of $19,931.  But he did not do so, despite the notice contained in the letter 14^th February 2005.  The fact that the Plaintiff informed him the incorrect sums of interests would not and did not relieve him from honouring his contractual obligations.  The Plaintiff is entitled to exercise their rights (including clause 8.01(k)) under the legal charge, and under the said loan agreement.  Therefore there is no defence against the Plaintiff’s application for summary judgment.  The order made by Master Poon is correct.  I therefore dismiss the Defendants’ appeal against the said order.  The 1^st Defendant told me that he needed 2 months for the stay of execution so that he could seek legal advice.  The order made by Master Poon on 9^th Nov., 2007 is that the 1^st and 2^nd Defendants are to deliver vacant procession of the Property with 28 days from the date of the service of the that order.  That period of time would be sufficient for the 1^st Defendant to final alternative accommodation.  By the time this order is made, 4 months have already elapsed since the making of the order by Master Poon.  Therefore, I dismiss the 1^st Defendants’ application for stay of execution.

Costs

14.I make an order nisi, to be made absolute in 14 days’ time, that the 1^st Defendant do pay the Plaintiff the costs of this application, to be taxed, if not agreed.

The Plaintiff : represented by Mr. Yuen of M/S. Raymond Chan, Kenneth Yuen & Co., Solicitors.

The 1^st Defendant:  appearing, in person, unrepresented.