XCHRX GUANGDONG INTERNATIONAL TRUST & INVESTMENT CORPORATION HONG KONG (HOLDINGS) LTD. v. FULL COUNTRY DEVELOPMENT LTD.

1995 No.A10485

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The matters before me, are appeals against the order of Masters, the first one against an order made pursuant to Order 88, the Rules of the Supreme Court for payments of money due under cover of a debenture and delivery of vacant possession of a property to the plaintiff. And in the second action, pursuant to Order 14 of the same Rules for judgment against the guarantor, of the loan referred to in the first action.

2. The issue before me is the same in each of these appeals and is relatively simple. The loan between the parties, or the original parties before the transfer of the learn, was a simple one in standard form albeit from a great deal of money. They sole matter upon which the appellant relies on each case is whether the mortgagee was justified in refusing to lend the title deeds to the mortgage property to the solicitors for the mortgagor for inspection by potential lenders to satisfy the outstanding mortgage in circumstances where those lenders required delivery of the title deeds to their solicitors so as to properly inspect them.

3. I am referred to the s.44(6) of the Conveyancing and Property Ordinance which reads : "Unless the contrary intention is expressed, the mortgagee under the first mortgage of a legal estate. Shall be entitled to possession of deeds of the title relating to the mortgaged lend". It is quite clearly from that section that the mortgagee, who in this case held the title deeds which were of considerable volume in the hands of its solicitor, were entitled to possession of those deeds as against any other person.

4. Section 47(1) of the same Ordinance reads : "A mortgagor and a mortgagee not having possession of the deeds of title relating to the mortgaged lend for so long as they have an interest in the land shall be entitled at any reasonable times to inspect and make copies of those deeds in the possession of the mortgagee."

5. Mr Robert Tang Q.C. for the appellants argues that in s.47(1) firstly I should import the words "at any reasonable place" after the words "at any reasonable times", and should hold that if the deeds are given up to the mortgagor's solicitors against an irrevocable undertaking to return upon demand, that still amount, to possession in the hands of the mortgagee.

6. Without deciding either of those the points, Mr Tang faces a larger hurdle. Even were possession to remain in the hands of the mortgagee's solicitors, thereby the mortgagee, when delivered up to the mortgagor's solicitors against such an undertaking and were s.47(1) to be read as requiring inspection at any reasonable place, it would still be for the appellants to show that a good defence was made out where the mortgagee required any inspection of the documents to take place in the premises of the mortgagee's solicitors.

7. Notwithstanding the evidence by way of affirmation of Cheng Kwok Fai, and the letter from the solicitors acting for a potential lender asking that those solicitors be given possession of the title deeds, I cannot find, in all circumstances it was in any way unreasonable for a mortgagee and its solicitors who are obliged to protect their own interests and the interest of their clients respectively, by retention of mortgage documents, that should require inspection to be at the offices of the solicitors. I take note that solicitor's offices are normally places that the public has little difficulty in finding and attending. I cannot find that it was an unreasonable place for an inspection to be made. On that simple point, as a matter of common sense, both these appeals must be dismissed.

(T.M. Gall)

Judge of the High Court