GLORY QUEEN LTD. v. LUI CHI HUNG PETER AND OTHERS

HCMP 2571/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2571 OF 1998

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J U D G M E N T

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1. This is an application by way of Originating Summons for various declaratory relief. Although the three Defendants have all signed consent summonses in terms of the declaratory relief sought, it is nevertheless important for the Court to consider all the evidence before granting a declaratory judgment.

2. In the present case, the facts disclosed are that on 14 March 1967 the 3rd Defendant bank gave a mortgage to Lui Kwai Fan, now deceased, though for some reason this mortgage was wrongly registered in the Land Office as having been executed on 23 March 1967. The borrower under the mortgage was the 2nd Defendant Lau Tze Yuen, now deceased, trading as a sole proprietorship.

3. Soon after the mortgage, namely on 23 March 1967, Lui Kwai Fan sold the property to Stewart Lau, subject to the mortgage.

4. On 12 April 1973, there was a reassignment made by the 3rd Defendant bank in favour of Lui Kwai Fan even though at that time Lui Kwai Fan had already sold the property to Stewart Lau. It is not shown in the reassignment who had paid off the mortgage.

5. In October 1982, Stewart Lau sold the property to a company called Nam Huat which apparently was controlled by himself and the borrower Lau Tze Yuen. The property was sold by Stewart Lau to Nam Huat free from encumbrances.

6. On the same day as the sale there was a statutory declaration made by Stewart Lau to the effect that he had obtained the title deeds from the bank in 1973 but had then lost them. The year 1973 corresponds to the year when the bank had reassigned the property to Lui Kwai Fan although the months appear not to correspond. As I have said, the mortgage was reassigned in April 1973 but according to the statutory declaration of Stewart Lau, he only collected the title deeds and documents from the solicitors of the bank in November 1973. However, I do not regard that as a substantial consideration because it is well-known that banks and solicitors do take some time after the execution of documents to deliver relevant documents to their clients.

7. However, what is important in the statutory declaration of Stewart Lau is that he did not indicate who had paid off the mortgage.

8. Subsequently, Nam Huat sold the property to the present owners being the Plaintiff in this application.

9. The only persons who were likely to have paid off the mortgage would be either Lui Kwai Fan or Lau Tze Yuen or Stewart Lau. However, there does not need to be any concern about Stewart Lau because he is the Plaintiff's predecessor in title.

10. So the only other persons who might have paid off the mortgage would be Lui Kwai Fan or Lau Tze Yuen. However, from the evidence it would appear that it is more likely that it was Stewart Lau who had paid off the mortgage. This is due to the statutory declaration of Stewart Lau that it was he who had obtained the title deeds in 1973.

11. I consider also the fact that the 1st, 2nd and 3rd Defendants have not indicated any opposition to the present application.

12. I am prepared to make a declaration that the mortgage in question dated 14 March 1967 and made between Lui Kwai Fan as mortgagor, Lau Tze Yuen as borrower and the 3rd Defendant as mortgagee was discharged by the reassignment dated 12 April 1973 executed by the 3rd Defendant in favour of Lui Kwai Fan.

13. I am prepared to declare that alternatively in so far as the mortgage was not so discharged, the estate, right, title or interest which the 1st and/or 2nd Defendants might have had in the property by virtue of the mortgage had been extinguished by virtue of Limitation Ordinance.

14. Thirdly, I am prepared to declare that the Plaintiff holds the estate, right, title and interest in the property free from the mortgage; and fourthly, that in so far as may be necessary, the property and the estate, right or title or interest therein of Lui Kwai Fan do vest in the Plaintiff.

15. No order as to costs of the 1st and 2nd Defendants as agreed and as agreed, costs to the 3rd Defendant in the sum of $5,000.00.