KINFORM LTD AND ANOTHER v. CHOW WING KUN

HCMP 1482/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1482 OF 2015

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JUDGMENT

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INTRODUCTION

1. On 21 October 2010, the defendant filed an Amended Notice of Intention to Proceed with an Application for Ancillary Relief (Form A) (“the Amended Form A”) in FCMC 11235 of 2010.  The application concerned four properties and, in respect of each of the properties, the defendant intended to proceed with applications for a settlement of property order, a transfer of property order, a variation of settlement order and an avoidance of disposition order.

2. On 28 October 2010, the defendant registered a certified copy of the Amended Form A against all four properties at the Land Registry.

3. By Originating Summons, dated 17 June 2015, the plaintiffs applied, pursuant to ss 19 and 20 of the Land Registration Ordinance, Cap 128, (“the Ordinance”) for an order vacating the registration of the certified copy of the Amended Form A. I heard the application on 5 July 2016  . 

4. Section 19 provides:

“ The court or judge before whom any property sought to be bound is in litigation, may … during the pendency thereof, … for other good cause shown, make an order for the vacating of theregistration in the Land Registry of such lis pendens without the consent of the party who registered it, and may direct the party on whose behalf the registration was made to pay all the costs and expenses occasioned by the registration or the vacating thereof,including the costs of the application to vacate, or may make suchother order as to such costs or any of them as to the said court or judge may seem just.”

5. Section 20 provides:

“ The application to vacate a lis pendens under section 19 may be in a summary way by petition or motion in court or by summons in chambers, and may be made by any person interested in the property against which the lis pendens has been registered, whether such person is a party to the lis pendens or not.”

6. Mr Lui appeared for the plaintiffs. The defendant wished to appear in person.

THE DEFENDANT’S STANDING

7. The defendant was declared bankrupt in July 2013.  He was granted legal aid on 14 August 2015 but the legal aid certificate was discharged on 8 March 2016.  The Official Receiver advised, by letter dated 24 June 2016, that she did not give her consent to the defendant pursuing his defence in this matter.  The Official Receiver took a neutral position regarding the application to vacate registration.

8. By application of s 58(1) of the Bankruptcy Ordinance, Cap 6, any right of action, which includes the right to contest this application, which would otherwise be exercisable by the defendant if not bankrupt, vests in the Official Receiver. In the absence of the Official Receiver’s consent to the defendant pursuing his defence of this application, the defendant had no locus standi before me.

THE PLAINTIFFS’ APPLICATION

9. The 1^st plaintiff is the sole registered owner of two of the properties, one in Tai Po, New Territories and the other in Kowloon. The 2^nd plaintiff is the sole registered owner of the other two properties, one in Tai Po and the other in Yuen Long, New Territories.

10. There is no dispute that the defendant has never been a shareholder or director of either plaintiff.

11. FCMC 11235 of 2010 are matrimonial proceedings between the defendant and a Miss Poon Tik Ka who has a 1% beneficial interest in the issued shares of each of the plaintiffs. Miss Poon’s mother and brother holdthe remaining 99% of the issued shares of each of the plaintiffs respectively.

12. As I noted above, the certified copy of the Amended Form A was registered on 28 October 2010.  By operation of s 17 of the Ordinance, registration ceased to have effect at the end of five years from the date of registration, ie on 28 October 2015.  The certified copy has not been re‑registered.  Accordingly, registration ceased to have effect before the date of this hearing.  Mr Lui told me that, when the plaintiffs’ issued the Originating Summons in June 2015, they did not anticipate that it would not be heard until after registration had ceased to have effect.

13. Given that the registration had ceased to have effect, when the application came before me, s 19 of the Ordinance was no longer applicable and an application should have been made under either s 17 or the court’s inherent jurisdiction. Madam Justice Chu considered a similar situation inRe Li Fat [2009] 5 HKLRD 259 and, notwithstanding that s 19 was no longer applicable to that application, her Ladyship vacated the subject registration by exercising the court’s inherent jurisdiction.

14. If the application had proceeded under s 19 of the Ordinance I would have found that the plaintiffs had shown good cause for vacating the registration for the reasons set out below.

15. The lis pendens, which had been registered against the four properties, is FCMC 11235 of 2010.  That lis pendens is pending.  The plaintiffs, as owners, are interested in the four properties against which the lis pendens had been registered. Although the plaintiffs are not parties to the lis pendens, they were entitled to bring this application pursuant to s 20   . 

16. The defendant has never claimed that he owned or owns any of the four properties. In his Statement of Affairs, dated 29 October 2013, filedin his bankruptcy proceedings, the defendant did not claim that he owned any of the four properties. He did not claim ownership in these proceedings and I am told he has not claimed ownership in FCMC 11235 of 2010.

17. Although the defendant claims that he is the beneficial owner of 99% of the issued shares of each of the plaintiffs, those claims are not before any court:

(1)  Such claims as were made in HCA 1465 of 2009, were struck out on 10 January 2014.

(2)  The Family Court dismissed the defendant’s application to join the plaintiffs’ respective shareholders for the purpose of determining his claims to beneficial ownership of the shares.

(3)  The Official Receiver has refused to adopt the defendant’s claims to beneficial ownership of the shares and has revoked an earlier consent given to the defendant to pursue such claims.  See: Official Receiver’s letter, dated 27 June 2014.

18. I shall respectfully adopt Madam Justice Chu’s approach in Re Li Fat for the resolution of the plaintiffs’ application in this matter.  Although the application should have been made under s 17 of the Ordinance, in the interests of costs and time saving and given that the plaintiffs have shown good cause for vacating the registration, I shall exercise the court’s inherent jurisdiction and order that the registration of the certified copy of theAmended Form A be vacated and I make orders in terms of the Originating Summons, dated 17 June 2015.