MAN CHI KAN v. MAN TSAK LUN

HCMP 4945/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4945 OF 2002

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REASONS FOF DECISION

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1. This is yet another case where the registered owner of the piece of property in the New Territories is concerned with the discharge of a stale mortgage in order to perfect her title. The Plaintiff is the registered owner of a piece of land in Yuen Long known as Lot No. 343 in Demarcation District No. 96 ["the Property"]. The root of title is a Block Government Lease executed on 27 March 1905. In the schedule thereto, there was a remark that the land was "mortgaged to Man Tsak Lun for $3.00, mortgagee in possession". Man Tsak Lun is named as the Defendant in these proceedings.

2. In the land search record obtained from the Land Registry on 24 October 2002, there was no entry under the section for incumbrances. However, under the heading of property particulars, there was a remark as follows,

"As stated in the Block Government Lease the lot is subject to mortgage in favour of Man Tsak Lun, the consideration is $3.00."

3. I was told that the Plaintiff intended to sell the Property and she has entered into a conditional agreement for that purpose. The purchaser required this incumbrance to be cleared off before going ahead with the purchase.

4. Despite diligent efforts on the part of the Plaintiff, she could not locate Man Tsak Lun and she has no information whatsoever pertaining to this person. Her evidence is that her late husband had assisted a person called Man Pak Shing in attending to the Property since a couple of years before 1934. By succession, her late husband became the registered owner of the Property in October 1934. From 1934, her late husband had exclusive use and possession of the Property until 1950. After her late husband left Hong Kong in 1950, his nephew as his agent took care of the Property in his absence. Her late husband passed away in 1974 and probate in respect of his estate was granted to her in 1988. Throughout these years, Man Tsak Lun did not take any steps in respect of the mortgage or the Property.

5. Originally the Plaintiff primarily sought declaratory relief in the originating summons regarding the extinguishment of the mortgage by reason of the Limitation Ordinance. However, due to the lack of information as to the whereabout of Man Tsak Lun, it was impossible for the Plaintiff to effect service. Given the lapse of time, there is a high probability that Man Tsak Lun had already passed away. In view of that, the Plaintiff chose to proceed under the alternative relief prayed for under section 12A of the Conveyancing and Property Ordinance Cap. 219.

6. Having heard submissions from the solicitor for the Plaintiff, I granted leave to the Plaintiff to pay into court the sum of $65.00 on account of the principal and interest due in respect of the mortgage with liberty to apply for a declaration freeing the Property from the mortgage upon payment. Since the matter may be of general interest to the profession, I said I would hand down my reasons for decision in open court, which I now do.

7. I have analysed at some length the jurisdiction of the court under section 12A in my judgment in Re an application by Cheung Chi Wang [2002] 1 HKLRD 409. As I said in that judgment, section 12A envisaged three stages and I am only dealing with the first stage at the hearing on 8 January 2003. In Paragraph 9 of that judgment, I identified the matters which give rise to the court's power under section 12A.

8. On the evidence before me, Man Tsak Lun cannot be found. If he has died, there is no information as to who is his successor and whether they could be located. Hence, I accept this is a case where the encumbrancer cannot be found or, in the scenario that Mr Man has died, the encumbrancer is unknown or uncertain.

9. For the reasons I have set out in Paragraph 16 in my judgment in Cheung Chi Wang, I have some doubts as to whether the mortgage is still subsisting. However, on reflection, I think I should adopt a liberal approach in construing the requirement of the land being subject to the encumbrance under section 12A, see Paragraphs 9 and 20 of my previous judgment. In view of the fact that the record at the Land Registry contained the remark set out in Paragraph 2 above, I think it would be against the spirit of the legislation if I were to hold that section 12A is not applicable in these circumstances.

10. The figure of $65.00 was arrived at by the Plaintiff adopting a notional interest rate of 20% per annum with some additional margin. I am satisfied that such amount should be adequate to satisfy whatever interest the mortgagee might have in the mortgage. I therefore granted relief accordingly.

11. Lastly, I would say something about the mode of the application. Although the Plaintiff commenced by an originating summons naming the mortgagee as Defendant, the Plaintiff has not been successful in effecting service on the Defendant. By reason of the likelihood of the demise of the Defendant, the Plaintiff also had difficulties in satisfying the court that the proceedings would come to the notice of the Defendant by way of substituted service. Hence, no order for substituted service has been granted. In essence, the matter was proceeded with on an ex parte basis. As explained in Cheung Chi Wang, I think section 12A implicitly authorized this mode of application. This does not mean that a plaintiff will be allow to proceed further on ex parte basis as of right. There is evidence placed before me to satisfy the court that the Plaintiff has exercised due diligence in trying to locate the Defendant or his successors. In the circumstances of the present case, I would allow the proceedings, at least up to the second stage, to be continued on an ex parte basis.