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Wing Hang Bank, Ltd. v Tsang Sze Yin And Others

Judgment Cited authorities 6 Cited in Precedent Map Related
Vincent
Judgment Date30 December 1999
Year1999
Judgement NumberHCMP1689/1998
Subject MatterMiscellaneous Proceedings
CourtHigh Court (Hong Kong)
HCMP001689/1998 XCHRX WING HANG BANK, LTD. v. TSANG SZE YIN AND OTHERS

HCMP001689/1998

HCMP 1689/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1689 OF 1998

____________

IN THE MATTER of Order 88 of the Rules of the High Court

and

IN THE MATTER of ALL THOSE 6 equal undivided 820th parts or shares of and in ALL THAT pieces or parcels of ground registered in the Yuen Long New Territories Land Registry as YUEN LONG TOWN LOT NO. 211 And of and in the messuages erections and buildings thereon known at the date hereof as "FU HO BUILDINGS" ("the Building") TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT FLAT F on the THIRD FLOOR including portion of the Flat Roof on the Third Floor Level of the Building (which said Flat and Flat Roof is shown on the 3rd Floor Plan annexed to an Assignment registered in the Yuen Long New Territories Land Registry by Memorial No. 229001 ("the said Assignment")
BETWEEN
WING HANG BANK, LTD. Plaintiff
AND
TSANG SZE YIN 1st Defendant
LEUNG KWAI CHUN 2nd Defendant
SHING OI WOON 3rd Defendant

____________

Coram: Hon Ribeiro J in Chambers

Date of Hearing: 20 December 1999

Date of Judgment: 30 December 1999

_______________

J U D G M E N T

_______________

The 3rd Defendant's application

1. On 23 December 1998, the bailiff served on Madam Shing Oi Woon ("Madam Shing") at Flat F, 3rd Floor, Fu Ho Building, 5 Kau Yuk Road, Yuen Long ("the premises") a "Notice to Occupiers" stating that pursuant to a Writ of Possession issued in HCMP No. 1689 of 1998 ("the mortgage proceedings"), possession of the premises was to be delivered to the Plaintiff bank ("the bank") on or before 30 December 1998. According to Madam Shing, this was the first that she had heard of the mortgage proceedings and indeed, of the bank's interest in the premises.

2. The mortgage proceedings had been brought by the bank on the basis of a legal charge dated 16 May 1997 ("the charge") granted over the premises by the 1st and 2nd Defendants ("the Defendants") and registered in the Land Registry on 23 June 1997. When the Defendants (who had defaulted in making the mortgage repayments) failed to appear at the hearing on 29 July 1998, Master Ho gave Judgment for the bank and, inter alia, made an Order for possession of the premises in its favour.

3. Madam Shing was then not a party to the mortgage proceedings. After receiving the Notice to Occupiers mentioned above, she obtained legal aid and was granted leave to intervene in the mortgage proceedings by consent, so that she is now named as 3rd Defendant. She claims a beneficial interest in the premises by virtue of a resulting trust and asserts that the bank was sufficiently on notice of such interest to be bound by it. The bank denies that she has any such interest and also denies that it was on notice of her claim when it took the legal charge on the premises.

4. Consent to Madam Shing's intervention was given subject to the Plaintiff's right to contest her alleged entitlement to an interest in the premises. Accordingly, Madam Shing issued a summons dated 15 July 1999 seeking to set aside Master Ho's said Order. Mr Neal Clough, appearing on Madam Shing's behalf, made it clear that he was not then (and was not, on the present appeal) seeking a substantive determination of her asserted rights. He had taken the view (perhaps on analogy with default judgments under Order 13) that it was first necessary for Master Ho's Judgment, the Order for possession and the subsequent Writ of Possession to be set aside to enable Madam Shing to have her substantive claim determined. It was on this basis that the application was argued before Master Ho and before me.

5. Master Ho dismissed the summons so that, unless overturned, Madam Shing is precluded from pursuing her attempt at establishing her claimed beneficial interest in the premises.

6. Given the effect of the proceedings before the Master, I permitted the abovementioned approach to continue to be adopted before me. However, in my view, the three-stage procedure (involving (i) intervention, (ii) setting aside the judgment and orders, and (iii) determination of the parties' substantive rights) adopted in the present case is unnecessary. Only stages (i) and (iii) are required. There is no need for stage (ii) since the intervener is in any case not bound by the judgment against the Defendants. Madam Shing is only concerned with setting aside the order for possession as against herself and, as appears from the line of authorities cited below, the judgment and orders obtained against the Defendants in any event remain in place.

The Plaintiff's procedural objection

7. Mr Yeung resisted Madam Shing's application to set aside on two grounds. He submitted that what the Court was seized of (at this stage (ii)) was an application to set aside a default judgment and, that like any other Defendant seeking to set aside such a judgment, Madam Shing had to meet the requirements established by the Courts in the context of Order 13 rule 9. In particular, since the judgment had been regularly obtained, Madam Shing was required in the first place to explain to the Court's satisfaction why a default judgment was allowed to be entered and secondly, to establish that her claim to remain in possession was not merely arguable but had a real prospect of success, applying Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co Inc, The Saudi Eagle [1986] 2 Lloyd's Rep 221 at 223; and Premier Fashion Wears Ltd v Li Hung Chung [1994] 1 HKLR 377. Mr Yeung submitted that Madam Shing's application falls short on both grounds.

8. The principles mentioned above are of course well-known and are frequently applied in the context of setting aside default judgments where the defendant making the application is a defendant named on the Writ who has been regularly served. However, in the present case, Madam Shing was neither named as a party to the Originating Summons nor was she purportedly served with those proceedings, whether regularly or otherwise. In my judgment, in such circumstances, the default judgment principles referred to above are inapplicable.

9. A line of authorities shows that in cases like the present, the proper approach is for the person claiming the right to remain in possession to apply to be joined as a defendant and to have his claim tried as between himself and the purchaser or mortgagee claiming possession. The substantive rights are determined in the context of the intervener's application to set aside the order for possession as against himself (but not in respect of any other defendants against whom judgment may have been properly entered) : Minet v Johnson (1890) 6 TLR 417, Berton v Alliance Economic Investment Co [1922] 1 KB 742 at 759, Leicester Permanent Building Society v Shearley [1951] Ch 90, In re Wykeham Terrace [1971] Ch 204, McPhail v Persons Unknown [1973] Ch 447.

10. Those authorities do not suggest that the occupier may be denied the right to contest the entitlement of the purchaser or mortgagee unless he can first explain why he did not intervene before judgment was entered (against other defendants), or unless he can first satisfy the court that he has a real prospect of success in upholding his claim to an interest in the property entitling him to remain in possession.

11. The onus rests on the plaintiff claiming possession. He must generally establish his right against all occupiers who assert an adverse claim to possession and who are, or who seek to be, made parties with a view to establishing such claim. This is reflected, for instance, in Order 13 of the High Court Rules in relation to actions begun by Writ. A plaintiff may enter default judgment under O 13 r 4(1) against a defendant where a claim for possession of land is involved. However, under O 13 r 4(5), such judgment "shall not be enforced against any defendant unless and until judgment for possession of the land has been entered against all the defendants."

12. The bank in the present case seeks to enforce an order for possession of the flat presently occupied by Madam Shing. Before it can be allowed to do so, Madam Shing is at least prima facie entitled to be joined as a defendant for...

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