TONG WAI TAK AND ANOTHER v. FOK SHEUNG LING

HCMP 2898/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2898 OF 1999

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BETWEEN

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DECISION

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THE APPEAL AND GROUNDS THEREOF

1.  The 1^st Plaintiff Mr Tong applies for discharge of the Charging Order Absolute dated 15.8.2001 (“the COA”).  This was dismissed by Master Pang on 27.7.2011.  Mr Tong now appeals on 2 grounds:

(i)  Lack of full and frank disclosure in the COA; and

(ii)  Over security.

2.  As pointed out by Mr Chang for the Defendant, the grounds now relied on are very different from those advanced before the Master.  The hearing bundle contains all the documents that the parties wish to rely on in this appeal and it is not necessary to refer to the affirmations filed by Mr Tong in support of the application below and in this appeal.  I therefore proceed to consider this appeal accordingly.

THE FACTS

3.  The Plaintiffs withdrew the present claim against the Defendant and on 30.5.2000 was ordered by Master CB Chan to pay costs, including costs previously ordered in favour of the Defendant on 2 occasions by Master Barnes and Master S. Kwan respectively.  All costs had been taxed and an allocator for $50,399.33 (“the judgment debt”) was issued on 5.2.2001.

4.  On 15.8.2001, the Defendant obtained the COA against 2 properties of Mr Tong in Battery Street and Ma Tau Wai Road respectively.  This COA has been re-registered twice at the Land Registry once every 5 years on 21.8.2006 and 18.8.2011 respectively.

5.  On 2^nd November 2011, Mr Tong entered into a provisional agreement for the sale and purchase of the Battery Street Property.  As the COA was an encumbrance on it, Mr Tong took out a summons to discharge it (取消2001 年8月15日 釘契令).

ANALYSES

6.  There is no doubt that the Court has power to make an order discharging or varying the COA on such terms as it thinks just under section 20(B)(4) of the High Court Ordinance and Order 50, rule 9 of the Rules of the High Court.

1^st Ground: Lack of Full and Frank Disclosure

7.  Mr Wang acting for Mr Tong submits that the charging order nisi on which the COA was based did not make full and frank disclosure in stating that the judgment debt was made against both Plaintiffs and not just Mr Tong alone.

8.  With respect to Mr Wang, this ground is untenable for the following reasons:

(i)  It was never his client’s case on affirmation. 

(ii)  The affirmation of Mr Chang Chun Pong filed by the Defendant on 21 February 2001 in support of the charging order nisi stated expressly in paragraph 2 thereof that it was both Plaintiffs and not just Mr Tong alone who had to pay the judgment debt. 

(iii)  The charging order nisi was made ex parte but the COA which resulted therefrom was made at an inter parte hearing.  Mr Tong did attend in person. Any allegation of lack of full and frank disclosure should have been made then and not now.

(iv)  In any event, the liability of the Plaintiffs under the judgment debt was joint and several and the Defendant was entitled to enforce the whole amount against Mr Tong alone under the COA.

Therefore, any alleged lack of full and frank disclosure was immaterial and should be disregarded.  The first ground of appeal fails.

2^nd Ground: Over-Security

9.  Mr Wang submits that the acquisition price of the Battery Street Property was $1,168,000 in 1997 and that of the Ma Tau Wai Property was $175,000 in 1978.  Both properties were then mortgage free and at the time of registration of the COA and now.  He submits that it was not a proper exercise of discretion to make a charging order on an asset of substantial value compared to the small judgment debt of $50,399.33:  Chan Miu Cheung, personal representative of John Gilbert, deceased v. Prague Enterprises Ltd & 2 others, unrep., HCA2200/1985, 25.3.1999,Madam Justice Yuen (as she then was).  He proposes that (a) both properties be discharged upon full payment; or (b) that one of the properties be released from the COA. 

10.  There is no dispute that Mr Tong has not paid any part of the judgment debt. The judgment debt was in any case not a small sum.  By now, it has snowballed to over $101,000 by July 2011.  Judgment interest will continue to accrue until payment.  Accordingly, there is no reason to adopt proposal (a) to discharge the COA.

11.  In respect of proposal (b) to vary the COA, this was not sought in the summons or before the learned Master.  This line of submission should have been made before the Court made the charging order absolute.  However, in my view, it may also be advanced when there are subsequent changes in circumstances which justify varying or even discharging a charging order that has been made absolute.

12.  The burden is, of course, on Mr Tong to show that charging only one of the properties was sufficient for the protection of the Defendant’s interest.

13.  As shown from the land search record, the Battery Street property was sold under a provisional sale and purchase agreement dated 2/11/2010 for $1,338,000.  This shows prima facie that the judgment debt can be covered by the value of this property.

14.  The land search record, however, shows that the Battery Street property is subject to the incumbrance of a Memorandum of Charge and a charging order absolute by the Incorporated Owners, which had been registered in 1998 and 2000 respectively, i.e. prior in time to the COA.  Mr Wang draws my attention to the Land Registration Ordinance Cap. 128 which he says will cause a prior incumbrance to lose its effect 5 years after its registration. 

15.  Presumably Mr Wang is referring to sections 17 and 18 of the Land Registration Ordinance, Cap.128, which provide as follows:

“17 The registration of a judgment, order or lis pendens shall cease to have effect at the end of 5 years from the date of registration, but the judgment, order or lis pendens may be re-registered from time to time and, if so re-registered, shall have effect for 5 years from the date of re-registration.

18  Every lis pendens registered or re-registered, and also every judgment or order re-registered under this Ordinance, shall have the same force and effect as a judgment registered and not further or otherwise.”

16.  With respect to Mr Wang, these sections may apply to the charging order absolute imposed by the Incorporated Owners.  However, I doubt if they apply to the Memorandum of Charge, which does not fall within the description of “a judgment, order or lis pendens”.  As the Memorandum of Charge is not in the evidence and there is regrettably no proof of the amount due under it, I am unable to comment further.

17.  Mr Wang informs me during the submission that all monies owed to the Incorporated Owners have been paid and it was only a question of discharge of the relevant incumbrances.  However, I am not prepared to accept such submission without evidence.

18.  In the premises, Mr Tong has failed to adduce satisfactory proof that the value of the Battery Street property is sufficient to cover the Memorandum of Charge and judgment debt to justify the release of the charge against the Ma Tau Wai property.

19.  In respect of the Ma Tau Wai property, there is a charging order absolute imposed by the Incorporated Owners registered as an incumbrance but presumably it will have ceased to be of effect under section 17 of the Land Registration Ordinance.  There is, however, no proof on its value. 

20.  There is insufficient evidence to enable me to come to the view that any one of the properties will be sufficient to cover the judgment debt.  The second ground of appeal fails.

PROPOSED ORDER SOUGHT BY THE PLAINTIFF

21.  It is strictly not necessary to deal with this but I just make a few comments.  Mr Wang seeks an order that if Mr Tong were to pay a certain sum by a certain date, the COA will be discharged.  In my view, that is wholly unnecessary.  It is a question of construction of the COA to see under what circumstances it will be discharged.  The COA spelt out clearly that it was to cover the judgment debt of $50,399.33 and judgment interest until payment in full, together with costs to be taxed for that COA.  Mr Tong has agreed to pay the amount of $101,383.85 (including judgment interest calculated up to about July 2011).  The Defendant asked for a sum in the region of $137,688.92 which covered also the taxed costs for the COA.  As the costs were not taxed when the COA was obtained, Mr Chang for the Defendant conceded that those costs should fall within the terms of another charging order nisi granted on 25.10.2002 with which the Court is not concerned in this appeal; and the Defendant was prepared to accept the judgment sum plus accrued judgment interest under the COA. Accordingly it is only a question of adding accrued interest since July 2011 up to the date of Mr Tong’s payment.  Upon payment of the full amount (e.g. by applying the proceeds of sale of the Battery Street property), the COA will be discharged without further ado.  It is not necessary for me to make an order now as sought by Mr Wang.

RULING

22.  Mr Tong has never paid the judgment debt.  There is no ground for discharge of the COA.  The ground of appeal for lack of full and frank disclosure is not sustainable.  The other ground of over-security has not been established by the Defendant for lack of sufficient evidence.  The appeal is thus dismissed.

23.  I make an order nisi that Mr Tong should bear the costs of this appeal.  The appeal is a simple one although new grounds have been advanced. It does not justify engagement of a solicitor charging $4,000 per hour. Accordingly I assessed summarily the costs in the amount of 14,500.

24.  I thank Mr Wang and Mr Chang for their assistance.