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The Hongkong And Shanghai Banking Corporation Ltd v Tai Yue For And Another

Judgment Cited authorities 10 Cited in Precedent Map Related
Vincent
Judgment Date26 November 2019
Neutral Citation[2019] HKCFI 2888
Judgement NumberHCMP6983/1999
Citation[2020] 1 HKLRD 178
Year2019
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
HCMP6983/1999 THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD v. TAI YUE FOR AND ANOTHER

HCMP 6983/1999

[2019] HKCFI 2888

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 6983 OF 1999

_____________

BETWEEN
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED Plaintiff

and
TAI YUE FOR 1st Defendant
KOK CHING WAN 2nd Defendant

____________

Before: Hon G Lam J in Chambers
Date of Hearing: 19 June 2019
Date of Judgment: 26 November 2019

_________________

J U D G M E N T

_________________

Background

1. This is an appeal against a master’s decision. The ultimate question is whether the charging order obtained by the plaintiff (“Bank”) on the property in question, namely, a flat in Sincere House, 83 Argyle Street, Kowloon (“Sincere House Property”), of which the 2nd defendant (“Mdm Kok”) is the sole registered owner, should be discharged. The two principal issues raised are, first, what is the correct procedure for Mdm Kok to challenge the charging order, and, secondly, whether a letter written by her solicitors contained an acknowledgment of the Bank’s claim within the meaning of the Limitation Ordinance (Cap 347).

2. These proceedings date back a very long time. The main primary facts are not in dispute. The 1st defendant (“Mr Tai”) and Mdm Kok were married in 1986. Together they brought up a daughter Mdm Kok had from a previous marriage (to whom I shall refer simply as the “daughter”). In 1997, they sold their previous flat and purchased a flat in Three Island Place in North Point (“Island Place Property”) with the help of a mortgage loan in the amount of $4.71m and a bridging loan in the sum of $1.2m from the Bank (“the Loans”). After the financial crisis in 1997, their trading business collapsed and they became unable to service the Loans. In November 1999, the Bank commenced the underlying proceedings herein, namely, HCMP 6983/1999, against the couple, and on 17 February 2000, Master Jones gave judgment ordering Mr Tai and Mdm Kok to repay the outstanding balance of the Loans and deliver vacant possession of the Island Place Property to the Bank (“Judgment”).

3. Mdm Kok said that they were evicted from the Island Place Property in March 2000 and were living on comprehensive social security payments and that there was a real prospect the family would be rendered homeless or forced to live in a “cage home”. This is disputed by the Bank, but nothing turns on this.

4. In any event, the Bank managed to procure the sale of the Island Place Property in September 2000 for $3.25m, which left an outstanding balance of the Loans in the sum of approximately $1.3m at the time.

5. The family then moved to different successive addresses and, according to Mdm Kok, as a result they did not receive the various letters sent by the Bank to them at other addresses between 2001 and 2008 seeking repayment of the balance of the Loans. She said that none of the Bank’s staff they had dealt with had ever suggested that they would still owe money to the Bank after surrendering the Island Place Property, and that there was no reason for Mr Tai and herself to believe that the proceeds of sale of that property would be insufficient to cover the outstanding balance.

6. This is disputed by the Bank, who said that one of the addresses to which a letter was sent by the Bank was provided by Mr Tai when he agreed to surrender possession of the Island Place Property. The Bank also stated that one of the letters was sent to the Bank’s banking centre after telephone conversations between an employee of the Bank and Mr Tai in February 2001, in which Mr Tai was informed that he was still indebted to the Bank and confirmed that he would collect the demand letter at the banking centre. I need not resolve this factual dispute for the purpose of this application.

7. Meanwhile, the daughter began to have mental problems and was diagnosed with schizophrenia in around 2003, as evidenced by various medical documents. Mdm Kok said that the daughter often had to be placed in the care of psychiatric ward in hospitals.

8. In January 2006, the Sincere House Property — the property directly affected by this appeal — was purchased for $1.76m in the name of the daughter. According to Mdm Kok, this was financed by (i) money lent by their relatives and acquaintances, including Mdm Kok’s ex‑husband who is the natural father of the daughter, who agreed to help so that the family would be able to provide a more stable home for the daughter, and (ii) money that Mr Tai and Mdm Kok had saved up by then. Mdm Kok said that the property was initially purchased in the daughter’s name at the insistence of her ex‑husband.

9. In August 2008, however, the Sincere House Property was assigned by the daughter to Mdm Kok. Although the Assignment was stated to be for the consideration of $2m, on Mdm Kok’s case the price was not actually paid, since (she said) the Assignment was made because the daughter’s mental condition caused her to engage in compulsive attempts to sell her possessions from time to time, and that it was considered safer for the family for the property to be kept in Mdm Kok’s name.

10. To her surprise, Mdm Kok and Mr Tai received a letter from the Bank in January 2013 asking for repayment of about $2.2m, failing which legal proceedings would be commenced.

11. On 7 February 2013, almost 13 years after the Judgment, the Bank submitted an application ex parte by way of an affirmation made by an assistant manager, seeking a charging order nisi on Mdm Kok’s interest in the Sincere House Property on the strength of the Judgment. On the question of limitation, the affirmation specifically stated:

“ I was advised by Mayer Brown JSM, the Plaintiff’s solicitors herein, and verily believe that S.4(4) of the Limitation Ordinance, Cap. 347 applies only to the enforcement of judgments by suing on them and does not apply to the execution of judgments including execution by way of charging orders. In this regard, I was being referred to the case Lowsley v. Forbes [1998] 3 WLR 501.”

As explained below, this was not an entirely accurate statement of the legal position on the state of the authorities at that time, and was indeed shown to be incorrect by a later Court of Appeal authority. It is right to point out at once, however, that the Bank’s evidence was that the misstatement was not intentional and there is no suggestion from Mdm Kok to the contrary.

12. On 20 February 2013, Master Levy granted the charging order nisi sought by the Bank upon consideration of the papers alone (“Charging Order”).

13. On 15 March 2013, at the hearing to show cause, attended by the Bank by solicitors and by Mdm Kok in person, Master de Souza made absolute the Charging Order. It is common ground that, at that hearing, Mdm Kok did not make any submission that the application was time‑barred.

14. In June 2013, Mr Tai and Mdm Kok applied for legal aid for the purpose of contesting the Charging Order but were refused. In January 2015, when the Bank threatened to apply for an order for sale, Mdm Kok wrote to the Legal Aid Department again asking them to reconsider their decision, but apparently did not receive a reply. In March 2016, Mr Tai was referred to the Free Legal Advice Scheme organised by the Department of Law of the University of Hong Kong (“Scheme”), which made representations on the couple’s behalf to the Legal Aid Department which eventually decided to grant legal aid to them on 20 July 2017. Mr Tai died from illness on 27 July 2017.

15. In October 2017, Messrs Y K Lau & Chu was appointed as her legal representatives. On 4 December 2017, the solicitors wrote a letter to the Bank (“Letter”), drawing attention to the arguments based on limitation, and invited the Bank to make a “constructive reply” for the purpose of resolving the matter by negotiations. As there is a dispute whether there was an acknowledgement of liability by this letter, I set out the relevant passages:

“ We are instructed by our Client that the circumstances of the Incident are, inter alia, as follows:-

1. In or about June 1997, our Client and her late husband Mr. Tai Yue For (“Mr. Tai”) jointly purchased a property at Flat E, 27/F, Three Island Place, Island Place, No. 61 Tanner Road, Hong Kong (“the Island Place Property”). To finance the purchase, Mr. Tai and our Client borrowed from HSBC: (a) a Home Mortgage Loan of $4,710,000 and (b) a Bridging Loan of $1,200,000 on or about 15th May 1997 (“the Mortgage”), with legal charge over the Island Place Property as security for the above loans.

…

3. HSBC then commenced mortgagee proceedings HCMP 6983 of 1999 under Order 88 of the Rules of the High Court to recover possession of the Island Place Property and obtained an Order on 17th February 2000 against Mr. Tai and our Client for (a) payment of the outstanding sum under the Mortgage and (b) possession of the Island Place Property …

4. HSBC then exercised its power of sale under the Mortgage and sold the Island Place Property on 28th September 2000 for $3,250,000. The net proceeds were not sufficient to fully repay the outstanding indebtedness. As at 22nd February 2001, Mr. Tai and our Client were still indebted to HSBC in a sum of $1,688,687.71.

…

6. In the period after the sale of the Island Place Property, HSBC issued two further demand letters to Mr. Tai and our Client …

7. None of these letters were received by Mr. Tai and our Client because the letters were not addressed to their residence.

8. As a result, the outstanding indebtedness remained unpaid and interest continued to accrue thereon. HSBC took no further steps to enforce the Mortgage until 2013 and it issued a demand letter dated 29th January 2013 to the Sincere...

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