TO PETER (previously known as TO KAM FAI PETERMILK) AND OTHERS v. WONG KAN TAK

HCMP 1442/2023

[2024] HKCFI 2600

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1442 OF 2023

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REASONS FOR DECISION

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A. INTRODUCTION

1.  The Plaintiffs sought a declaration that an undated mortgage (“the Mortgage”) recorded in the Schedule of the Block Government Lease of Demarcation District No.1 Mui Wo commenced on 1st July 1898 in favour of Wong Kan Tak over Lot No.1182 in Demarcation District No.1, Mui Wo, Lantau Island, New Territories, Hong Kong (“the Lot”), subsequently divided as described in the Amended Originating Summons of 25th August 2023 be declared to be no longer subsisting or capable of taking effect by virtue of s.19 Limitation Ordinance (Cap.347); alternatively, for leave to make a payment of $4,000 into court and a declaration that upon such payment into court, the Mortgage be discharged and the Land be freed from such encumbrance, pursuant to s.12A Conveyancing and Property Ordinance (Cap.219).

2.  At the hearing, I granted a declaration in terms of the primary relief sought by the Plaintiffs.  I now set out my reasons for so doing.

3.  The Block Government Lease relating to the Lot commenced on 1st July 1898.  The Lot was at one time registered in the name of To Yung Fu, the grandfather of the 1st Plaintiff. The schedule attached to the Block Government Lease refers to an undated mortgage subsisting and registered against the Lot, with To Yung Fu as the mortgagor and Wong Kan Tak as the mortgagee (“the Mortgagee”).  Details of the Mortgage are unknown, and the Plaintiffs have not been able to ascertain them.

4.  To Yung Fu passed away in about 1948.  The Lot then passed to four individuals by way of succession, one of whom was the 1st Plaintiff’s father.  On 18th April 1978, the other three individuals assigned their interests in the Lot to the 1st Plaintiff’s father by way of a Deed of Gift.

5.  Part of the Lot was resumed by the Government in 1995.  The 1st Plaintiff’s Father retained the remainder of the Lot (references to the Lot after 1995 are to this remainder).

6.  The 1st Plaintiff’s father died intestate on 3rd October 1997. Letters of Administration were granted to the 1st Plaintiff and his sister. By a Deed of Family Arrangement and Assignment dated 29th July 1999, the administrators of the 1st Plaintiff’s father’s estate assigned the Lot to the 1st Plaintiff.

7.  On 14th September 2016, the 1st Plaintiff subdivided the Lot by way of Deed Poll into four pieces of land.  On 7th July 2021, the 1st Plaintiff further subdivided Section E of the Lot and the Remaining Portion of the Lot into four pieces of land.  The Lot at that point consisted of eight pieces of land: Section A, Section B, Section C, Section D, Section E subsection 1, Section E Remaining Portion, Section F, and Remaining Portion of the Lot.

8.  By an assignment of 7th July 2021, the 1st Plaintiff assigned Section C of the Lot to the 2nd Plaintiff.  By another assignment of the same date, the 1st Plaintiff assigned Sub-section 1 of Section E of the Lot and Section F of the Lot to the 3rd Plaintiff.

9.  The three Plaintiffs are therefore the registered owners of all the subdivided portions of the Lot.

10.  The land searches for all the subdivided portions of the Lot continue to refer to the fact that the Block Government Lease relating to the Lot states that the portions are subject to the Mortgage.

11.  The 1st Plaintiff’s evidence is that when he was young, his father told him that To Yung Fu used the Lot for agricultural purposes, that after To Yung Fu passed away, the four subsequent owners (including the 1st Plaintiff’s father) also used the Lot of agricultural purposes since 1949, and that he (the 1st Plaintiff) himself used to help his father in this use.  The Lot has been in the continuous possession of To Yung Fu, the 1st Plaintiff’s father and the 1st Plaintiff since 1898, until the assignments in July 2021. The 1st Plaintiff says that this possession has been free from any disturbance, interference, claims or demands by the Defendants or his descendants.  He says he has been living in Pak Ngan Heung, Mui Wo since his birth and he has never heard of the Mortgagee or any of his descendants. The 2nd and 3rd Plaintiffs also say that they have not heard of the Mortgagee or any of his descendants.  All of the Plaintiffs say that they have not made any written acknowledgment under the Mortgage, and that they have not received demands from the Mortgagee or his descendants for repayment of the loan secured by the Mortgage.

12.  Efforts have been made to locate the Mortgagee and to find out what became of him, including inquiries with the Probate Registry and the Births and Deaths Registry, but these were unsuccessful.  Efforts have also been made to obtain details of the Mortgage from the District Lands Office and the Land Registry but these have not borne fruit.

13.  There are authorities to the effect that in such situations, the court may make a declaration to the effect that the mortgage in question is no longer subsisting or capable of taking effect: Fung Kam Cheung v Kwok Yiu Wing [1991] 1 HKC 321 (Godfrey J, as he then was).

14.  In Alpha Star Enterprises Ltd v Personal Representative of Tang Mei Shin (Deceased) [2002] 4 HKC 218 (Chung J), a similar declaration was refused.  Given that there were at least 3 possible ways in which a mortgage document could provide for repayment of the mortgage debt (by prescribing a time for repayment, by providing for repayment upon demand, or by not providing for the time of repayment, in which case it is arguable that the debt is repayable after a lapse of a reasonable period of time), and that there was a complete lack of evidence as to which of the three situations was applicable, the plaintiff had failed to discharge its burden of proving that the mortgagee had been time-barred from claiming against the mortgagor and/or the subject property.

15.  Alpha Star Enterprises Ltd was distinguished in Wong Mo Yuen & anor v Choi Chin Man & anor, unreported, HCMP 988/2013, 20th March 2015. In an obiter dictum, DHCJ Ramanathan SC said that he was satisfied that the mortgage, created more than a century prior to the application, had been discharged: common sense dictated that the repayment date would in all probability have been within the lifetime of the mortgagee; alternatively, given the antiquity of the mortgage and the lengthy inaction on the mortgagee’s part, the mortgage should no longer be in subsistence.

16.  I accept that in the circumstances of the present case, where the Mortgage was created over one hundred and twenty years ago in favour of an individual (such that it was likely that the repayment date would have been within his lifetime), the Lot has been used continuously by the 1st Plaintiff’s grandfather, his father (together with others), and himself (together with others since 2021) free from any disturbance or demands from the Mortgagee or his descendants, and the Mortgagee or his descendants cannot be found, it is possible to infer that by now, the Mortgagee or those claiming through him have been time-barred from claiming under the Mortgage.

17.  I therefore granted a declaration in terms of counsel’s draft as amended.