MA FAT CHING v. WAN SUI SHANG

HCMP 2640/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2640 OF 2015

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REASONS FOR JUDGMENT

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1.  These proceedings began life as an ex parte originating summons. The applicant and his brother Ma Fat Kwong (since deceased) (“Brother”) as tenants-in-common in equal shares became the registered owners of land known as All That piece or parcel of ground registered in the Land Registry as Lot No 569 of Demarcation District No 22, Taipo, New Territories, Hong Kong (“Property”) by virtue of the Succession to Property dated 2 December 1986 and registered at the Land Registry by Memorial No TP258983 (“Succession to Property”). Since then the applicant held his half share of and in the Property (“App Share”) whereas Ma Fat Kwong held the other half share of and in the Property (“Bro Share”).

2.  The Brother passed away on 9 August 2012, and on 24 October 2014 his daughter Ma King Mui (“Ms Ma”) obtained letters of administration in respect of the estate of the Brother in HCAG012849/2014 (“Bro LA”).  The Bro LA was registered at the Land Registry by Memorial No 14121701530111.

3.  The land search of the Property revealed that it was subject to a Mortgage dated 20 January 1941 made between Ma Cheng Shi (predecessor-in-title of the Property) as mortgagor and Wan Sui Shang (温瑞生, “Wan”) as mortgagee registered at the Land Registry by Memorial No TP11003 (“Mortgage”).  The applicant did not have the original Mortgage.

4.  The applicant and the Brother had been in possession/control of the Property since such property was assigned to them in/about 1986 by virtue of the Succession to Property.  But neither of them and/or Ms Ma had heard of the Mortgage.

5.  According to the Mortgage, (a) the land secured by such mortgage was 1/3 share in the Property, Lot Nos 576 and 783 (“Lot 576” and “Lot 783”) both in Demarcation District No 22, and (b) the loan amount involved was $26.  The Mortgage also provided that “[for] securing payment on the 20^th day of January 1949 of $26.00 with interest at $0.65 per month payable monthly”.

6.  The applicant made enquiries with Ms Ma whether she had knowledge about the Mortgage.  She confirmed to the applicant that she discovered the Mortgage in the course of administering the Brother’s estate, and she had applied for (and on 21 September 2015 obtained) a court order in HCMP1519/2015 for discharging the Mortgage in respect of the Bro Share (“Bro Share Order”).

7.  Since the Bro Share Order concerned the Bro Share and not the App Share, the Mortgage had not been discharged in respect of the App Share. 

8.  The land search in respect of Lot No 576 showed that Lot No 576 had been surrendered to the government on 5 January 1987, but there was no entry showing the Mortgage had been discharged in respect of Lot No 576. 

9.  In respect of Lot No 783, the land search revealed it was owned by Well Stage Limited, and there was a sealed copy of an order dated 8 April 1997 under HCMP4455/1996 registered the Land Registry by Memorial No TP524557 which provided that Wan’s rights as mortgagee in respect of such lot were statute-barred and extinguished, and Wan had no estate/interest therein (“Lot No 783 Order”).  Since such order concerned Lot No 783 only, it was not sufficient to demonstrate Wan’s interest as mortgagee in respect of the App Share had been discharged.

10.  As to Wan’s whereabouts, the applicant’s solicitors conducted a death search and a probate search.  There was no death record of Wan, and no record of any grant of representation issued by the court in respect of Wan’s estate.

11.  The applicant’s solicitors made enquiries with the Land Registry, Taipo District Office, District Lands Office (Taipo) and Tai Po Rural Committee.  But their reply letters in December 2014 and January 2015 showed none of them had any information about Wan.

12.  The applicant also attempted to make enquiries into Wan’s whereabouts through the villagers of the village where the Property was situated, but no one in the village had any knowledge of Wan.

13.  The applicant claimed he had made his best endeavours to try to locate Wan and/or his successor(s) or personal representative, and to ascertain whether he had passed away.  If Wan had died, the applicant also had no information as to Wan’s successor(s) and where they could be located.

14.  On 20 October 2015, the applicant commenced the present proceedings on an ex parte basis by way of originating summons (“OS”) for an order that the App Share be discharged from the Mortgage upon his payment into court of such sum of money as the court deemed fit pursuant to section 12A of the Conveyancing and Property Ordinance Cap 219 (“CPO”).  On the same day, the applicant filed his own affirmation in support of the OS.

15.  On 20 November 2015, I granted leave for the applicant to inter alia (a) join Wan as the defendant, (b) amend the OS by naming the applicant as the applicant and Wan as the defendant, (c) serve the Amended OS on Wan by substituted service by way of newspaper advertisement, (d) pay into court a sum of $611 within 7 days thereof.

16.  On 23 November 2015, the applicant filed the Amended OS naming Wan as the defendant.  On 24 November 2015, the applicant paid the sum of $611 into court.

17.  By an affirmation of service filed on 18 January 2016, the applicant’s solicitors confirmed that the Amended OS was served pursuant to my order dated 20 November 2015 by placing an advertisement in a local Chinese newspaper on 11 December 2015.

18.  No notice of intention to defend was filed by the Wan.  At the adjourned hearing of the Amended OS on 25 January 2016, I granted the following order: (a) the sum of $611 that the applicant paid into court pursuant to paragraph 1 of my order dated 20 November 2015 was paid into court as principal and interest due in respect of the Mortgage created in favour of Wan in respect of the Property, (b) such sum of $611 having been paid into court on 24 November 2015, a declaration be made that the App Share be freed and discharged from the Mortgage, and (c) there be no order as to costs of the present proceedings (including all costs reserved).  I now give my reasons.

19.  Considering the affirmations and the documentary evidence, I am satisfied this was a case where despite considerable efforts, Wan could not be found or, in case where Wan had died, his successor(s) were unknown or uncertain.  The circumstances were such that it was proper for the matter to be proceeded with initially on an ex parte basis.[1] That said, the applicant did take the precaution of turning the OS into an inter partes application, and applying for leave for substituted service of these proceedings.  The applicant did so by way of advertisement in a local newspaper. 

20.  In view of the land search records, it appeared that the Mortgage was subsisting for the purpose of the application under section 12A of the CPO.  Considering the applicant’s claim as an action for redemption of the Mortgage, this court had jurisdiction to entertain the application in the Amended OS under section 12A of the CPO.[2]

21.  In the circumstances, I am satisfied that leave should be granted for the applicant to make payment into court of a sum sufficient to redeem the Mortgage.  The principal sum under the Mortgage was $26 in 1941.  The Mortgage provided that interest accrued thereon at $0.65/month (or 3% pa).  The total principal and interest calculated up to February 2016 would be $611: (a) principal sum of $26 and (b) interest accrued thereon from 1941 to February 2016 ($0.65 x 12 months x 75 years = $585).  This method of calculation was in line with the decided cases.[3] I am satisfied that this sum of $611 would be sufficient for the purpose of section 12A(1) of the CPO in the present proceedings, and such sum had already been paid into court.

22.  Coming to the next stage as to whether a declaration that the App Share be freed and discharged from the Mortgage ought to be granted, section 12A(2) of the CPO provides inter alia that upon payment into court, the court may, if it thinks fit, and either after or without notice to the encumbrancer, as the court thinks fit, declare the land to be free from the encumbrance.

23.  Given that, practically speaking, in the present case there was really no basis to believe in any likelihood of any interested party or new material emerging, and bearing in mind (a) Ms Ma as administratrix of the estate of the Brother had obtained an order to free and discharge the Bro Share from the Mortgage, (b) the Lot No 783 Order also extinguished Wan’s rights as mortgage in respect of Lot No 783, and (c) the relatively small amount already paid into court in the present case, there was no practical need for adjournment of the hearing for any direction under section 12A(2) of the CPO for the retention, investment or application of any income from the sum so paid.[4]It would be more appropriate that the sum paid into court be retained by the court pending any application by any interested party pursuant to section 12A(3) of the CPO.

24.  Therefore, at the hearing of the Amended OS, I granted the order set out in paragraph 18 above.