HANG SENG BANK LTD v. LAM CHING HAM AND ANOTHER

HANG SENG BANK LTD v. LAM CHING HAM AND ANOTHER

Where a mortgage charge contains no express clause authorising interest on instalments in arrear, the mortgagee cannot charge such interest; however, if a facility letter expressly provides for charging a higher rate on any sum due but unpaid and that right is referable to the outstanding Sum under the charge, the mortgagee may charge that higher rate from the relevant date. If neither the charge nor the facility letter provides for an increased rate on default, such increased interest is not allowed.

Citation
HANG SENG BANK LTD v. LAM CHING HAM AND ANOTHER
Parties
Plaintiff (hcmp 1318/2006): THE HONGKONG AND SHANGHAU BANKING CORPORATION LIMITED; 1st Defendant (hcmp 1318/2006): LEE DARWIN MAN KIT; 2nd Defendant (hcmp 1318/2006): CHAN KA MAN; Plaintiff (hcmp 1589/2006): THE HONGKONG AND SHANGHAU BANKING CORPORATION LIMITED; 1st Defendant (hcmp 1589/2006): YAN KING TAI ALBERT; 2nd Defendant (hcmp 1589/2006): HO PEI YING; Plaintiff (hcmp 2179/2006): HANG SENG BANK LIMITED; 1st Defendant (hcmp 2179/2006): LAM CHING HAM; 2nd Defendant (hcmp 2179/2006): TSOI MEI NOG
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
31 July 2007
Case Number
HCMP2179/2006
Procedural Posture
Mortgage Proceedings Under Order 88 of the Rules of the High Court / Judgment Varying Earlier Money Orders and Determining Entitlement to Overdue (late Payment) Interest
Outcome
Money judgments varied: interest on instalments in arrear disallowed; higher post-default rate allowed for the two HSBC cases where facility letter provided for it and disallowed for the Hang Seng case where no such provision existed; order nisi that there be no order as to costs in respect of the overdue interest...
Legal Topics
Overdue/late Payment Interest, Incorporation of Facility Letter Into Charge, Interpretation of Mortgage Charge, Interest on Outstanding Sum After Default, Judgment Interest
Source Language
EN
Property Law Contract Law Banking Law Civil Procedure Mortgage Law Overdue/late Payment Interest Incorporation of Facility Letter Into Charge Interpretation of Mortgage Charge +2 more

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Parties

THE HONGKONG AND SHANGHAU BANKING CORPORATION LIMITED

Plaintiff (hcmp 1318/2006)

LEE DARWIN MAN KIT

1st Defendant (hcmp 1318/2006)

CHAN KA MAN

2nd Defendant (hcmp 1318/2006)

THE HONGKONG AND SHANGHAU BANKING CORPORATION LIMITED

Plaintiff (hcmp 1589/2006)

YAN KING TAI ALBERT

1st Defendant (hcmp 1589/2006)

HO PEI YING

2nd Defendant (hcmp 1589/2006)

HANG SENG BANK LIMITED

Plaintiff (hcmp 2179/2006)

LAM CHING HAM

1st Defendant (hcmp 2179/2006)

TSOI MEI NOG

2nd Defendant (hcmp 2179/2006)

Procedural Posture

Mortgage Proceedings Under Order 88 of the Rules of the High Court / Judgment Varying Earlier Money Orders and Determining Entitlement to Overdue (late Payment) Interest

Legal Issues

  1. 1 Whether the mortgagee may charge interest on instalments in arrear under the charge
  2. 2 Whether the facility letter entitles the mortgagee to charge a higher rate on the outstanding sum after default
  3. 3 Whether terms of the facility letter are incorporated into or superseded by the charge

Ratio Decidendi

Where a mortgage charge contains no express clause authorising interest on instalments in arrear, the mortgagee cannot charge such interest; however, if a facility letter expressly provides for charging a higher rate on any sum due but unpaid and that right is referable to the outstanding Sum under the charge, the mortgagee may charge that higher rate from the relevant date. If neither the charge nor the facility letter provides for an increased rate on default, such increased interest is not allowed.

Court Disposition

Money judgments varied: interest on instalments in arrear disallowed; higher post-default rate allowed for the two HSBC cases where facility letter provided for it and disallowed for the Hang Seng case where no such provision existed; order nisi that there be no order as to costs in respect of the overdue interest...

Orders

  • HCMP 1318/2006: judgment for $1432452.50; interest at 5.5% p.a. from 1 July 2006 to 4 July 2006 amounting to $835.35; further interest on $1432452.50 at 12.25% p.a. from 5 July 2006 to date of judgment; further interest from date of judgment to full payment at judgment rate.
  • HCMP 1589/2006: judgment for $1184680.95; interest at 6.5% p.a. from 16 July 2006 to 7 August 2006 amounting to $4665.11; further interest on $1184680.95 at 12.25% p.a. from 8 August 2006 to date of judgment; further interest from date of judgment to full payment at judgment rate.