TSE CHOI WING AND ANOTHER v. CHAN YAN WING

HCMP 2653 & 2655/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2653 OF 2002

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(Heard Together)

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J U D G M E N T

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1. In these two actions brought by originating summonses the plaintiffs seek declarations from the court to the effect that a mortgage in respect of their respective lots of land is incapable of subsistence or is unenforceable by operation of the Limitation Ordinance, Cap.347.

Background

2. The plaintiffs in HCMP2653 of 2002 ("HCMP2653") are respectively the owners of lots no. 1756A and 1756RP in D.D. 244. In HCMP2655 of 2002 ("HCMP2655"), the 2nd plaintiff is the owner of lot no. 1753A in D.D. 244, whereas the 1st plaintiff is the owner of lot no. 1753RP in D.D. 244. All the four lots of land are situated in Ho Chung Village, Sai Kung, New Territories. They were cast out of lots no. 1753 and 1755 in D.D. 244 by two deed polls, both dated 5 March 1990, as ratified by two deeds of ratification both dated 10 November 1997.

3. The plaintiffs in HCMP2653 acquired their respective lots by two assignments both dated 31 December 1992. As for the plaintiffs in HCMP2655, they acquired their respective lots by assignment dated 30 November and 31 December 1992 respectively. All the plaintiffs are indigenous villagers of Ho Chung Village, but I was told they are currently resident outside the jurisdiction.

4. The plaintiffs acquired the lots in question for the purpose of constructing small houses on them. To this end, they had retained Mr Tse Kin-wah, a chartered surveyor, to carry out the development, and each of the plaintiffs had executed powers of attorney in favour of Mr Tse.

The actions

5. The land records show that a mortgage had been created on lots no. 1753 and 1756, in favour of Chan Yu-kwong, trustee of Chan Luen Hing Tong. There is, however, no record of the original mortgage and nothing is known of the terms involved. The only available evidence before the court is the Schedule of Government Lessees of the Block Government Lease of D.D. 244. In the remarks column against lot no. 1753, it is noted the words "Mortgaged with lot 1756 to Chan Luen Hing Tong trustee, Chan Yu-kwong, for $16 in T.C.P. Mortgagee in possession."

6. I pause here to observe that Mr Lam, who appears for the plaintiffs in the two actions, does not accept that the words "Mortgagee in possession" appear on the record. I accept that that part of the writing is not very legible. But upon reading the other entries in the remarks column on that page of the Schedule of Government Lessees, I am satisfied on the balance that the words "Mortgagee in possession" were being written there.

7. Additionally in the Sai Kung Land Register, there was on 2 August 1974, a registration against lots no. 1753 and also no. 1756 in respect of the appointment of the defendant as the manager of the Luen Hing Tong, also known as Chan Luen Hing Tong, in connection with a mortgage. The reasonable inference is that the mortgage is the one recorded in the Block Government Lease. Further, in all the four assignments whereby the plaintiffs acquired the lots in question, the recitals all recite that the assignments were subject to a mortgage in favour of Chan Luen Hing Tong.

8. As I have said, there is no evidence of the exact date of the creation of the mortgage. But given the fact that the mortgage is recorded in the Block Government Lease, a reasonable inference must be that the mortgage was created prior to the granting of the government lease. That effectively means it is more than a century ago.

9. On 6 June this year the plaintiffs' solicitors herein wrote to the defendant, requesting to discharge the mortgage. The letters were sent to the address stated in the memorial for the appointment of manager (memorial no. 87102). The address is also that recorded in the record maintained by Sai Kung District Office. No reply has been received from the defendant. Therefore on 8 July 2002 the plaintiffs commenced these two actions for declaratory relief as set out in the originating summonses. The defendant has entered no appearance, despite having been served with the proceedings.

Reasons for decision

10. Under sections 19(1) and (2) of the Limitation Ordinance, a mortgagee cannot bring an action to recover the principal sum secured by the mortgage and/or foreclose the property after the expiration of 12 years from the date when the right to receive the money and/or foreclosure accrued, provided that time shall not begin to run until the mortgagee ceases to be in possession of the land, if the mortgagee was in possession of the land at the creation of the mortgage.

11. On the evidence before the court it is not known when the mortgage in question was created, and how repayments were to be made, and when they were due. It is therefore not possible to invoke section 19(5) of the Limitation Ordinance, which provides for a statutory bar to an action to recover arrears of interest payable under a mortgage after the expiration of six years from the date from which the interest became due.

12. It is the plaintiffs' case in both actions that the lots in question had gone through several successions since the granting of the Block Government Lease in 1898, and there is nothing to show that the mortgagor had ever been in possession of the two lots. On that basis, the plaintiffs ask this court to infer that the mortgage was an old one and that it was discharged long ago.

13. As noted before, it would appear from the remarks in the Block Government Crown Lease that the mortgagor was in possession at one time. However, evidence has been led from Mr Tse that at least since 1989 when he went on a site visit to Ho Chung Village the lots in question were left vacant and unoccupied. Mr Tse has, since 1989, been closely involved with property development and small houses construction projects in the Ho Chung Village area, including the lots in question.

14. On this evidence of Mr Tse, I am prepared to infer that from at least 1989 the lots have not been occupied. This impliedly means that the mortgagee have ceased to be in possession at least as from 1989. That being the case I am satisfied that the plaintiffs are able to bring themselves within the terms of section 19(1) and (2) of the Limitation Ordinance.

15. Mr Tse's evidence also suggests that the address of the defendant is within Ho Chung Village, and Ho Chung Village is very close to the lots in question. According to him, the small houses built by the plaintiffs had been completed. In the circumstances, it is likely that the defendant is aware of the development and construction work that had been going on and will or should have notice of the activities undertaken on behalf of the plaintiffs. This is in addition to the fact that he had been served with papers of these proceedings.

16. For all the matters that I referred to, I consider that the plaintiffs in both actions are entitled to the relief sought in their respective originating summonses. Accordingly, in each of the two actions, I make a declaration that the mortgage in question is incapable of subsistence or is unenforceable by operation of section 19(1) and (2) of the Limitation Ordinance.