FINANCIAL AND INVESTMENT SERVICES FOR ASIA LTD v. BAIK WHA INTERNATIONAL TRADING CO LTD

               A company owned property mortgaged to Banker 1. The plaintiffs, Banker 2, with a view to becoming first mortgagee of the property, was prepared to fund the discharge of Banker 1's mortgage by a reassignment to the company followed by the grant of a new mortgage by the company to the plaintiff. On 23rd February 1982 the plaintiffs put up the necessary funds. The necessary documentation, a reassignment by Banker 1 to the company which recorded the absolute discharge of Banker 1's mortgage, and a new mortgage by the company to the plaintiffs was completed on and dated 13th March. Both documents were registered thereafter. In the interim, on 1st March, defendants obtained Charging Order nisi over the same property which was registered the next day. An Order Absolute was later made and registered. On a question of priority between plaintiffs and defendants, held that plaintiffs ranked prior to defendants in respect of the sums put up on 23rd February because:-

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This case raises issues of no little importance and difficulty under the Land Registration Ordinance (L.R.O.) Cap. 128.

2. The facts can simply be stated. Leung Ying Limited (the company) have a leasehold interest in a property known as Hamburg Villa (the property). On 23rd January 1981 the company mortgaged the property to its then bankers Wayfoong Finance Limited (Wayfoong). This was followed by two further advances. All three were registered at the Land Office. But towards the end of that year the company decided to chance bankers, to the plaintiffs, who were prepared to advance sufficient monies to discharge the Wayfoong mortgage and take a mortgage for themselves on the same property.

3. From the outset the plaintiffs' intentions were to become first legal mortgagees of the property in place of Wayfoong. They could have taken a transfer of the Wayfoong mortgage, but this is not the normal practice of bankers. Bankers prefer to use their own documentation, and a transfer may not be free from hidden risk or hazard. Both the plaintiffs, and the solicitors (the solicitors) whom they are instructed in November 1981, aimed to achieve the plaintiffs' said intention by funding the discharge by the company of the Wayfoong mortgage, and at the same time taking a new legal mortgage from the company.

4. All might have been well had the defendants not intervened at a critical moment. On 26th February 1981 the defendants obtained judgment against the company in a sum exceeding $286,000. This was not satisfied. Accordingly they applied for and obtained a charging order nisi over the property for the amount of this judgment, interest and costs. The property is now quite insufficient in value to satisfy both claims and I have to decide which takes priority.

5. It is necessary first to set out the chronology over the critical period in a little more detail. It was as follows:-

6. Two points are not in dispute. First it is the Charging order nisi not the Order absolute which governs the defendants' priority, Haly v. Barry (1868) LR 3 Ch. 452. Secondly: "the judgment creditor cannot by his charging order get any more than the debtor could honestly give him" per Bramwell B. in Gill v. Continental Gas Co. (1872) LR 7 Ex 332, 338. In Hong Kong this principle was accepted by the Court of Appeal in Ho King-yim v. Lau King-mo (1980) H.K.L.R. 42: see also Chung Khiaw Bank Limited v. United Overseas Bank Limited (1970) A.C. 767, 774.

7. On 3rd March the company only had its equity of redemption under the Wayfoong mortgage, and it is accordingly common ground that the Order nisi could initially attach only to this.

8. The issue arises out of the events of 13th and 17th March, and the apparent discharge of the Wayfoong mortgage by the reassignment of 13th March. This document was in common form, and includes words to the effect that the property was reassigned "Freed and absolutely discharged of and from the said indenture" i.e. the Wayfoong mortgage. The issue can be put thus. Can the plaintiffs, as they contend, claim priority from 23rd February as equitable assignees of the Wayfoong mortgage, the discharge of which they funded, they say, for their benefit and not for that of the defendants? Or does the execution and registration of the Deed of reassignment operate to elevate the defendants from second to first mortgagees, and leave the plaintiffs tied, with regard to priority, to 13th March the date of registration of their mortgage, and thus postponed to the defendants?

9. I propose to consider the problem at two stages namely:-

 

(1)	In law and in equity apart from the Land Registration Ordinance; and
(2)	Under the Land Registration Ordinance.

Law and Equity

10. Mr. Yam's first contention for the defendants here was that the solicitors could readily and safely have met the plaintiffs' intention if they had followed the usual practice. They should, it was said, have proceeded as follows:-

11. The vital step is No. 4. This was said to be justified because the document was received undated, (as it was) and in escrow. This it was said entitled the solicitors to insert this date, which, coupled with registration within one month, would have completely protected the plaintiffs.

12. This alleged entitlement to date is directly challenged by Mr.Wei for the plaintiffs. The only true delivery in escrow here, he says, was that of the mortgage. This was indeed conditional upon the execution by Wayfoong of the reassignment. It is not necessary to determine whether that Deed could have dated 23rd February, following the majority in Alan Estates Limited v. W.G. Stalls Limited (1981) 3 W.L.R. 892; or 13th March following Terrapin International Limited v. I.R.C. (1976) 1 W.L.R. 665. But the reassignment was not delivered conditionally or in escrow at all. It was simply undated. What took place on 13th March was delivery as a Deed. "A Deed takes effect from the date of its execution being completed by delivery" per Emmet on Title, 18th edition, page 269 and the authorities there cited. So it would not have been proper for the solicitors to back-date this document prior to its actual delivery.

13. Nor submits Mr. Wei would it have been safe. Extrinsic evidence of JSM's letter of 13th March enclosing the document would have been admissible to prove the true date, and the Deed could only take effect from such date: 12 Halsbury's Law 4th edition paragraph 1486. The registration of the document could then only had been maintained from 13th March not 23rd February, and of itself would have given no protection against the defendants' charging order.

14. The usual practice as described by Mr. Yam is convenient, and I would like to be able to approve it. But I can see no flaw in Mr. Wei's argument. I am forced to the conclusion that this practice is both wrong and unsafe, and that the only safe and proper way of taking advantage of the time interval given by L.P.O.S.5A is to have the documents ready and available for delivery on the day of payment. I recognise that this view, if right, will be very unpopular. .It will be inconvenient to bankers and force them to risk money on the preparation of documents, in advance, and without the security of a cheque. But I can see no escape.

15. Secondly Mr. Yam submits that the plaintiffs are bound by the conveyancing documents. The plaintiffs' intention all along, he submits, was to discharge the Wayfoong mortgage and take a direct mortgage themselves. They had no intention of taking any assignment of the Wayfoong mortgage legal or equitable. The Deed of reassignment and the new mortgage to the plaintiffs achieved this intent and the defendants can take advantage of the documents as executed.

16. Mr. Wei seeks to meet the plain prima facie meaning of the reassignment by a line of cases in equity. These show his submits that what governs is the true intent of the party funding the discharge of the first mortgage, not the form of the documentation, provided that the payer's intent in funding the discharge was to secure for himself his position as first mortgagee. His act in providing payment raises a very strong presumption in his favour against the discharge of the mortgage and against the merger of the equity of redemption with the legal interest. The authorities afford him a continuing remedy as equitable mortgagee, if by reason of ignorance of the true position, or mistake, the documentation ultimately produced does not provide such intended security. He referred me to 32 Halsbury's Laws, 4th edition, paragraphs 658, 965, 970-975: to Fisher & Lightwood Law of Mortgage, 9th edition, page 256: and to Shell Principles of Equity 28th edition pps. 418, 419. The authorities rely upon by him and these authors include Chetwynd v. Allen (1899) 1 Ch. 353: Butler v. Rice (1910) 2 Ch. 277: Irby v. Irby (No. 3) 25 Beav. 632: and Lord Gifford v. Lord Fitzhardinge (1899) 2 Ch. 32. More especially he relies upon two cases of the highest authority, Whiteley v. Delaney (1914) A.C. 132, in the House of Lords: and Ghana Commercial Bank v. D.T. Chandiram (1960) A.C. 732 in the Privy Council. It is sufficient I think to notice only these two decisions.

17. In Whiteley v. Delaney the parties employed the same conveyancing procedures as were followed here. F (in the present plaintiffs role) agreed to put up ￡300 on the security of a first mortgage of a farm owned by O to enable the farm to be purchased by O's daughter M. F put up ￡300, which was used towards the discharge of the existing first mortgage of A (in the Wayfoong role), and in return F's solicitor received the Title Deeds. This was but the first step in a series of transactions executed some three weeks later, which comprised a reconveyance of the farm by A to O: a conveyance by O to L and a mortgage by L to F. This procedure was chosen in ignorance of the existence of a second mortgage to M, although both it and the first mortgage to A had been duly registered under the Yorkshire Registries Acts.

18. In the suit the original second mortgagee, M, claimed a declaration that his mortgage ranked prior to that of F, because upon the discharge of A's mortgage he had been elevated to the status of first mortgagee. In the words of his counsel at page 138: "This is the ordinary case of a second incumbrancer becoming first, by the deliberate discharge of the first mortgage - an event which frequently occurs against the intention of the parties. The respondents are merely asking the court to give effect to the title as it appears on the Register".

19. The claim was rejected. Viscount Haldane L. C. accepted that prima facie the conveyance of the farm by A to O merged O's equity of redemption under the A mortgage in a "new unencumbered fee simple" p.146. But this conclusion he held to be displaced in equity by the plain intention of the parties which was to grant to F a first mortgage of the property. Although F's payment of £300 was a first step in the conveyancing scheme above described, it operated in itself to produce an equitable first mortgage in F's favour. F, he said, "having thus become entitled in equity to the priority of A's mortgage, this priority could not be taken from him without his consent" p.143. This was not given and M who could only claim in equity under O was in no better position than O. M's registration was no advantage because under the terms of s.14 of the Yorkshire Act of 1884 a person claiming under another, could claim no further priority than that other, without additional consideration.

20. Lord Dunedin having emphasised that "no new rights to third parties had arisen on the faith of what had been done" summarised his opinion by adopting the approach of Fletcher Moulton L. J. in the court below, p.150. This was that F's equitable interest in A's mortgage remained alive, whether O intended it or not, because it was never conveyed to O, or by him to his daughter.

21. This decision is clear authority for the view that given the necessary intention, an act of repayment alone will give rise to an equity in the payer's favour, even though he never intended to take an assignment of that mortgage, and that his intent was to create priority not by that method but by quite another.

22. In Ghana Commercial Bank v. D. T. Chandiram the owner of the material property created an equitable mortgage in favour of B Bank simply by a deposit of Deeds. On 4th September 1954 these Deeds were sent to the plaintiff's bank on its undertaking to B Bank. On 24th September a judgment creditor obtained an attachment order as against the owner the effect of which was to prohibit further dispositions of property. On 27th October the owner executed a legal mortgage in favour of the appellant bank who on the same day funded the discharge of B's mortgage and retained custody of the Deeds.

23. Lord Jenkins, delivering the advice of the Privy Council, concluded that although the legal mortgage "was intended to constitute a4 new and distinct security", and was rendered void by the attachment, it did not follow that the appellant bank had no security. The attachment took effect subject to B Bank's equitable charge but this Lord Jenkins said: '

 

".........continued after September 25, 1954, to be capable of assignment or devolution, whether by express disposition or by operation of law or by the application of equitable principles, just as it would have been if the attachment had never taken place.

 

        The case thus turns upon the question whether the payment by the Ghana Bank to Barclays on October 27, 1954, of the amount then owing on the security of Barclays' equitable mortgage had the effect of entitling the Ghana Bank to the benefit of the equitable mortgage with the like priority over the purchaser's interest as it had possessed in the hands of Barclays at the date of such payment off.

 

        It is not open to doubt that where a third party pays off a mortgage he is presumed, unless the contrary appears, to intend that the mortgage shall be kept alive for his own benefit: see Butler v. Rice.

 

        In the present case it has been contended that the execution of the abortive legal mortgage sufficed to negative any such intention. Their Lordships cannot agree. While not disputing that the Ghana Bank's intention was to substitute the legal mortgage for the equitable charge, they find it impossible to accept the view that the Ghana Bank intended the equitable charge to be extinguished in the event of the legal mortgage proving for any reason to be invalid or ineffective. In other words, their Lordships take the intention of the Ghana Bank to have been to replace the equitable charge by a valid and effective legal mortgage, but to keep it alive for their own benefit save in so far as it was so replaced: see Butler v. Rice and Chetwynd v. Allen. .....

 

        Their Lordships accordingly hold that by paying the amount due to Barclays the Ghana Bank became entitled to the benefit of the equitable charge with the same priority for the amount thereby secured as had theretofore been enjoyed by Barclays."

24. Unless the failure of the legal mortgage is an essential distinguishing feature, this case is directly applicable. Having regard to Lord Jenkins' deliberate phrase "invalid or ineffective" I cannot so regard it. I think the result would have been the same had the legal mortgage been valid, as in Whilteley, but ineffective to give the appellant bank priority.

25. In my judgment therefore the plaintiffs' position is identical to that of the Ghana Bank. They intended throughout to take a first legal mortgage. By funding the discharge on 23rd February, they became entitled in equity to claim the same priority for the amount paid as was enjoyed by Wayfoong, who admittedly rank before the defendants.

The Position under the Land Registration Ordinance

26. The next and most controversial question is whether this prima facie conclusion in equity is displaced, as Mr. Yam contends, by the impact of the Land Registration Ordinance. I propose here separately to deal with the four questions which I think arise.

                (1)    What is registrable under the Land Registration Ordinance?

27. The answer in s.2(1) is "Deeds conveyances and other instruments in writing, and wills and judgments" which may affect land. This includes any equitable mortgage created by "Deed or other instrument in writing". It necessarily excludes, submits Mr. Wei, any unwritten equity, e.g. a deposit of Deeds unaccompanied by any memorandum or an equitable lien. He adopts Mr. Thomson's comments to this effect in the Article at page 264. He points out that Mr. Thomson's suggested remedy at page 266 directly reflects the Singaporean statute of 18866 considered in the Chung Khiaw Bank case (1970) A.C. 767, and which in turn appears to have been based on the Yorkshire Registries Act 1884. But he goes further than Mr. Thomson in submitting that the decision of the full court in Ho See-shing v. Wan Ying-him (1959) H.K.L.R. 483 is binding authority in his favour.

28. Upon my reading of the judgment of Sir Michael Hogan C. J. in that case, the court concluded that the appellants held "an equitable charge or lien upon the interests acquired by the 1st and 2nd respondents under the assignment of 1957", p.511. This assignment had been registered, and was acquired bona fide and for value but with express notice of the appellants' claim p.504. These respondents accordingly argued that by the combined effect of sections 3 and 4 of the Land Registration Ordinance they took free of this charge. The argument was "decisively" rejected. This equitable interest was simply held not to be registrable. It was not within section 3 and its priority was not effected by section 4.

29. The clear words of sections 2 and 3, and this authority, support Mr. Wei's submission, which I accept. It follows that if the plaintiffs' equity is "unwritten" it was not registrable.'

30. Mr. Yam submits not. The solicitors letter of 23rd February, alternatively the whole correspondence between them and JSM, constituted he submits an instrument in writing and was registrable. The position he says is similar to that in Fullerton v. Provincial Bank of Ireland (1903) A. C. 309, where correspondence was held to be registrable under the Irish statute because it constituted a binding agreement to create an equitable charge.

31. The phrase "other instruments in writing" has to be construed in its context. It is easy to give it what I regard as its primary meaning of instrument underhand namely (and I quote from 12 Halsburys Laws paragraph 1436) "a document in writing which either creates or affects legal or equitable rights or liabilities, and which is authenticated by the signature of the author but is not sealed by him". This is supported by the cases collected in Stroud Judicial Dictionary pps. 1387/8 and would cover the type of charge in Fullerton.

32. It is more difficult to determine whether a more extended meaning can properly be given that was appropriate to cover documents in writing, which did not themselves create or affect rights, but evidenced rights: for example a note or memorandum of an agreement sufficient to satisfy what is now section 3(1) of the Conveyancing and Property Ordinance. I am prepared to assume, without deciding, that such extended meaning is permissible.

33. Upon my reading of the authorities above considered, the plaintiffs' equity arises solely from the "application of equitable principles" to the fact of payment. It is not only not dependent upon any actual agreement or documentation: it survives inconsistent agreement and documentation. Thus registration of the letter of 23rd February would have done nothing to reveal this equity because it did not disclose the plaintiffs' identity. If this letter can be said to constitute a note or memorandum of any agreement, it was of an agreement between Wayfoong and the company, not Wayfoong and the plaintiffs. No agreement to grant an equitable charge comparable to that in Fullerton was ever made.

34. In my judgment therefore the plaintiffs' equity was both unwritten and unregistrable.

                (3)    Are the defendants "subsequent bona fide mortgagees for valuable consideration" within section 3(2)?

35. Mr. Yam submits that they are. He founds upon section 20(3) of the Supreme Court Ordinance Cap. 4, and especially the words that a charging order "shall have the like effect and shall be enforceable in the same manner as an equitable charge created by the debtor by writing under his hand". He advances a different argument to that which failed in Kai Sun Investments Limited v. Dah Sing Bank Limited. Action No. 1999 of 1982... Because an equitable charge requires consideration in its creation, the words "like effect" necessarily import or presume consideration. He adopts the argument put by Mr. Michael Kerr Q.C. (as he then was) in the Chung Khiaw Bank case (1970) A.C. 767 at page 771: "the writ of execution is the assurance and the debt the valuable consideration".

36. I think there are two answers to this. Mr. Wei asked me to follow the construction put upon section 35 of the Administration of Justice Act 1956 (upon which section 20 is based) by the Court of Appeal in Re Overseas Aviation Engineering (GB) Limited (1963) 1 Ch, 24. The majority there held that a charging order was a form of execution, and that the phrase "like effect" said or implied nothing about the creation of the charge, only that it was valid as, and gave rise to the same remedies as an equitable charge, per Lord Denning at p.38 and Harman L.J. at p.45. I can see no reason for not following this reasoning

37. Secondly Mr. Kerr's argument fails on the different words of our Ordinance. The word "subsequent" is fatal to the defendants. They gave no consideration after 23rd February and before 1st March.

38. It follows from these conclusions that the position of the defendants under the Land Registration Ordinance is prima facie weaker than that of the applicant in Whiterly v. Delaney under the Yorkshire Acts. Following the criticism of Fry J. in Kettlewell v. Watson (1882) 21 Ch. 685, 702 unwritten equities were brought within the scope of registration by the Yorkshire Act of 1884. Section 7 permitted the registration of a memorandum of such an equity, and in default gave it no "effect or priority" against an assurance for valuable consideration. The proviso to section 14 relied upon in Whiteley v. Delaney reflected this requirement of consideration. So in contrast to the position as I see it under the Land Registration Ordinance, under the Yorkshire Acts F's unwritten equity was registrable, and M failed only for want of consideration.

                (4)    What is the true construction and effect of section 3(1)?

39. The first and fundamental point here is whether I should follow and apply the reasoning of Briggs J. in Consolidated Sales Limited v. Turner C. Lynn (defendant) and Mak Yee-Ying (claimant) (1970) H. K. L. R. 222, as Mr. Yam contends or accept Mr. Wei's contention that this case was wrongly decided.

40. The chronology in that case was as follows:

41. On these facts it followed that on 24th February the debtor, Mary Lynn, had no interest in the flat at all. Prima facie there was nothing to which the charging order could attach. This was admittedly true inter partes. But Briggs J. held the position to be reversed, by the dates of registration, in favour of the plaintiffs, who were admittedly not subsequent mortgagees for value within s.3(2), and who had at no time inspected or relied upon the register. He explained his conclusion in these words:-

 

"The Ordinance clearly makes registration a determining factor of ownership.

 

        And the purpose of the Ordinance is to make priority of registration according to the Ordinance the test of ownership. This was clearly recognised in Kwok Siu-lau v. Kan Yang-che (1913) H.K.L.R. 52.

 

        The instrument first registered takes in priority to that which were registered later: the claimant takes the property subject to the registered charging order."

42. Mr. Yam founds upon those words. Read as "the test of ownership" the registration of the reassignment and the plaintiffs mortgage are conclusive in his favour. The Wayfoong mortgage has been "reassigned" without reservation in favour of the plaintiffs or anyone. The plaintiffs' only interest on the register is their subsequent mortgage. Mr. Yam did not seek to support the "recognition" claimed from the Kwok Siu-lau case. The full court there went no further than treating registration as the "test of priority" subject to actual fraud. But he submitted that the purpose of the Ordinance expressed in the preamble would not be fulfilled unless priority gave ownership, because priority could not be divorced from ownership. Registration creates not prima facie evidence of ownership but a presumption of ownership rebuttable only by actual fraud. Because she had failed to register her assignment timeously, Mary Lynn was properly deemed still to own what she had in fact sold.

43. This decision has not escaped comment and criticism. It is criticised by Mr. Thomson, the Article pps. 263, 4; and defended by Bramwell, Conveyancing in Hong Kong p.222. Both authors recognise that if the assignment had never been registered, the plaintiffs must have failed because they were unable to rely on section 3(2), and that it was this registration itself which had the decisive deeming effect. To Mr. Turner this is unacceptable: to Mr. Bramwell it is a proper encouragement to speedy registration. I find that difficult to follow because I would regard a threat of such disastrous consequences as no such encouragement at all. But the legislature has not intervened, and Mantell J. was recently persuaded to follow the decision, at least in part in the Kai Sun Investments Limited case.

44. I am unable to do the same. I can see no justification for the construction put by Briggs J. upon s.3(1), because I can see no answer to the argument put by counsel to Mantell J. (and adopted by Mr. Wei) in the following terms: "the section only deals with the question of priority as between two or more validly registered interests. So you look to the question of validity first and priority second".

45. As Mr. Thomson points out, "the system is one of Deeds registration not Title". The difference is fundamental. The purpose of the Ordinance is to facilitate the tracing of Title not to give title itself. But to treat the registration as more than prima facie evidence of ownership derived from the registered document is to treat such registration as creating title itself. This is a fortiori if the registration alone is held sufficient to create or preserve a title shown ab extra not to exist. Section 3(1) in my judgment may modify rights: it does not create them.

46. Validity and priority are different concepts. The second only arises between valid effective documents. But a rule expressed like section 3(1) simply as a rule of priority, creates no presumption of validity and can operate satisfactorily without it. I can see no reason to make registration a test of validity or for suggesting that the invalid should somehow be perfected by registration. The words of the section require no more than that prima facie validity should be accorded to a registered document. If a challenge to such validity is made then the underlying transaction has to be investigated and the matter ruled upon. I can see no mandate in the section for shutting out such challenge in limine.

47. This is admittedly true in the case of fraud. The Deed which is registered after being obtained by fraud has no doubt to be afforded prima facie validity and prima facie priority over a later registration. But when the fraud is revealed and proved it ceases to have any effect at all.

48. This result cannot I think be confined to fraud. The possibility of mistake cannot be excluded. Mistakes by the parties may lead to subsequent rectification of the Deed or instrument. Mistakes by their advisers or in the registry e.g. confusion over names, may lead to a completely mistaken registration. It is hard to see why anything more than temporary or apparent validity should be given to any such entry cp. Thomson page 261.

49. The point seems to be even clearer in relation to wills and judgments. A will may appear to be completely valid when registered, but fail thereafter for a variety of reasons. Likewise a judgment may be valid when registered but be set aside or reversed thereafter. No permanent effect can be given to any such document.

50. This is shown by the Consolidated Sales litigation itself. The charging order there was dependent upon the ruling of 16th February 1970. This was later set aside as having been made without jurisdiction, Mary L. Lynn v. Consolidated Sales Limited (1970) H.K.L.R. 373. The charging order collapsed with it. So in the result registration was not "the test of ownership", but only prima facie evidence of ownership, displaced subsequently but ab initio.

51. It further seems to me that the same observations could be made about the result in the Kai Sun Investments case, although the point does not seem to have been argued and so was not considered by the judge. The interest in that case which was still deemed to exist by reason of the late registration of the discharge agreement, was the apparent beneficial interest of a purchaser under an uncompleted agreement for sale. In order to see the effect of the charge this interest had to be quantified. For this purpose it was necessary to look beyond the register: to see what (if anything) the purchaser had paid: whether and to what extent the vendor remain unpaid: and whether he had any unpaid vendor's lien which per Ho See-shing v. Wan Ying-him would be an unregistrable equity. If this truth is relevant and admissible, it is hard to see why the whole truth such inquiry would have revealed, namely that nothing had been paid because the agreement had been cancelled, has to be ignored.

52. In my judgment section 3(1) does no more than provide for priority between valid documents of the defined classes which are registrable and registered. Such registration is only prima facie evidence of ownership. It does not exclude inquiry into the underlying transaction which is the subject matter of the registration. The validity and effectiveness of such transactions depend upon the results of such inquiry independently of the fact of registration.

53. I would emphasise however that these observations apply to the effect of registration itself. Subsequent conduct may materially affect the position. Thus if a third party thereafter searches the Register and acts in reliance upon it, the party affecting the registration may well be estopped as against him from denying the truth of any essential particular in the memorial, Tsang Chuen v. Li Po Kwai (1932) A.C. 715, 730. Like Whiteley v. Delaney, that is not this case.

54. Finally Mr. Yam pressed upon me the conveyancing uncertainties which would be created if the decisiveness of registration was in any way impaired and if equities of the type claimed were allowed to intrude. He drew my attention to the party's ability to create and register a memorial of their transaction, and virtually invited me to read into the ordinance some requirement similar to that suggested by Mr. Thomson, and in place in Yorkshire and Singapore. Similar regrets have been expressed in the past e.g. by Lord Davey about the Irish statute in Fullerton at p.314, and by' Fry J. in Kettlewell v. Watson (1882) 21 Ch. 685, 702 about the Yorkshire statute. The latter was then amended. I cannot amend our Ordinance or read into it any such provision.

55. Ho See-shino v. Wan Ying-him shows unwritten equities to be unregistrable. Ho King-yim v. Lau King-mo shows that one who acquires a registered title is not free from equity. As between the plaintiffs unwritten equity and the defendants' registered equity I think that the same rules of priority apply in Hong Kong as now apply in parts of Ireland, Wylie Irish Land Law paragraph 13.145 page 639. That is the old rule but where equities are equal the first in time prevails.

56. In my judgment therefore the plaintiffs are entitled to a declaration in the Ghana Bank case form that they are entitled to the same priority for the sum of $1,358,636.42 paid on 23rd February as had theretofore been enjoyed by Wayfoong Finance Limited.

57. I cannot leave this case without expressing to counsel my gratitude for the care and cogency of their submissions. If my decision causes despair to conveyancers the fault is entirely mine.