KING LIFE DEVELOPMENT LTD v. NG TSUN WEI

1988, No. M.P. 1894

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This is an Originating Motion in which King Life Development Ltd. ("the applicant") seeks the vacation of the registration of a Writ of Summons (in High Court Action No. A4949 of 1987) in the District Land Office as a lis pendens against Lot 1978 in Demarcation District 449 Tsuen Wan ("the property").

2. The history of the matter is as follows:

3. On 29th November 1962, the property was assigned to one Ng Shue Chiu ("the father"). On the same day, the father made a Declaration of Trust in favour of his son Ng Tsuen Wai ("the son") whereby he declared himself to hold the property on trust as to one half of the beneficial interest therein in favour of the son. On 11th December 1962, the assignment to the father was registered. On 14th March 1978, the son issued a writ against the father in an action in the High Court arising out of the Declaration of Trust. On 16th January 1981, the writ was registered as a lis pendens. On 25th November 1985, the Declaration of Trust itself was registered, On 9th June 1987, the parties compromised their differences in the 1978 action and a consent order was made to which I must now refer in detail.

4. The Order provided:

5. When the consent order was made, negotiations were on foot between the father and Winbase Investments Ltd. ("Winbase") a prospective purchaser of the property. On 11th June 1987, the solicitors for Winbase wrote a letter to the solicitors acting for the father. They referred to an agreement for sale and purchase then in draft form, and they asked for an undertaking, in these terms:

"Your undertaking that sufficient funds will be deducted from the balance of the purchase price on completion and paid pursuant to the Consent Summons (a copy of which was forwarded to us with your letter of 4th June 1987), and to provide us with a certified sealed copy of the said Consent Summons and the release referred to in paragraph 2 of the said Consent Summons (approved by us) and to register the same in the Land Office and vacate or discharge the lis pendens filed by Memorial No. 209352 [this related to the 1978 action] and the certified true copy of Declaration of trust filed by Memorial 365495. "

6. On 16th June 1987, the father entered into an agreement for sale of the property to Winbase, On 25th June 1987, the consent order in the 1978 action was registered, On 1st July 1987, the agreement for sale of the property to Winbase was registered. On 13th July 1987. Winbase nominated, as the person to take under the agreement for sale, a company known as Coin Base Ltd. ("Coin Base"). On the same day, 13th July 1987, the property was assigned by the father to Coin Base. On 14th August 1987, the nomination by Winbase in favour of Coin Base appears to have been registered. On 18th August 1987, the son took out another writ against the father, High court action A4949 of 1987, in which the son impugned the compromise which was the foundation of the consent order made in the 1978 action. On 20th August 1987, the assignment by the father to Coin Base was registered at the Land Office. On 6th April 1988, Coin Base agreed to sell the property to Rich Strong Ltd. On 14th April 1988, an agreement for sub-sale was made between Rich Strong Ltd. and the applicant. On 15th April 1988 the agreement of 6th April 1988 was registered. On 16th May 1988, the sub-sale agreement of l4th May 1988 was registered. Shortly after 18th September 1988, only some few days ago, the son caused to be registered, as a lis pendens, the writ in the 1987 action, which he had commenced as long ago as 18th August 1987.

7. It is this registration of which the applicant complains and with which alone these present proceedings are concerned. The writ issued on 18th August 1987 plainly affects the land. It seeks to set aside the compromise arrived in the 1978 action. If the father was still the owner of the legal estate in the property there would have been no difficulty in holding that the writ in the 1987 action was properly registered as a lis pendens, thus giving notice to all the world of the son's claim in the action. But, when this lis pendens was registered, the position in fact was that Coin Base had become the holder of the legal estate. At the date when Coin Base became the holder of the legal estate, the entry at the Land Office in relation to the 1978 writ was still subsisting; so was the entry relating to the Declaration of Trust itself. Nobody had ordered that those entries be vacated; and, for what they are worth, there they were and there they are. It is not a matter for me in these proceedings to construe the consent order, or to decide what its effect was. Nor do I have to decide what is the result of the fact that neither of the entries to which I have just referred I have been vacated. As I have said, I am concerned solely with the entry relating to the lis pendens registered in respect of the son's 1987 action.

8. Now, in the son's 1987 action, he has made as a defendant only the father. So the result of any order made in those proceedings in favour o the son cannot affect the rights of third parties. It is this fundamental difficulty against which counsel for the respondent has so valiantly struggled before me. Even if the son wins on every point in the 1987 action, the declarations made in that action will not bind Coin Base, which was not a party to the action and had no opportunity of being heard. It may be, eventually, that in an action in which Coin Base, or any other successor in title of the father, is a party, the son will succeed in proving that Coin Base, or that successor in title of the father, took with notice of the son's interest and so took the property upon a constructive trust to give effect to the son's interest. That again is not a matter for me.

9. While the position remains as it is, it seems to me that the 1978 action can have no effect whatever upon the interest of Coin Base in the legal estate in the land and that it would be improper to allow the registration of the lis pendens to subsist.

10. In a case in the High Court of Hong Kong heard by Mr, Commissioner Litton, QC, In re Lo's Application [1980] HKLR 910, he expressed some hesitation in deciding that case, which was similar to this, on that ground alone. But for my part, I regard the point as decisive and I base my decision upon it.

11. In the absence of the joinder of Coin Base or any successor in title of Coin Base as a party to the 1978 action, I am satisfied it is wrong to allow the registration to continue to subsist. I say no more about what course it may be open to either party to take as a result of this judgment; for present purposes I say simply that I intend to make the declaration for which the applicant asks.