CHEUNG KAM LIN (in his personal capacity and as the executor of the estate of Chong Shun Wo also known as Cheung San Wo, deceased) AND OTHERS v. LEUNG KUNG WANG

HCMP 630/2022

[2022] HKCFI 2081

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 630 OF 2022

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DECISION

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THE APPLICATION

1.  By an Ex Parte Originating Summons filed on 23 May 2022, the plaintiffs applied for an order pursuant to section 12A of the Conveyancing and Property Ordinance (Cap 219, Laws of Hong Kong)  (“the CPO”)  that the 1^st Property, the 2^nd Property, the 3^rd Property and the 4^th Property be free from the Mortgage upon their payment into Court of a sum of money.

2.  At the beginning of the hearing today, this Court has granted leave to the plaintiffs to amend the said Ex Parte Originating Summons (so as to revise the capacity of the 1^st plaintiff)  and file an Amended Ex Parte Originating Summons on or before 14 July 2022. 

THE LAW

3.  As aforesaid, this application is made pursuant to section 12A of the CPO.  This section provides that:

“(1)  Where land is subject to any encumbrance, whether immediately realizable or payable or not, and the encumbrancer is out of the jurisdiction, cannot be found or is unknown, or if it is uncertain who the encumbrancer is, the court may, if it thinks fit, on the application of the party for the time being entitled to redeem the encumbrance, direct or allow payment into court of a sum of money sufficient to redeem the encumbrance and any interest thereon.

(2)  Upon payment into court of the sum referred to in subsection (1), the court may, if it thinks fit, and either after or without any notice to the encumbrancer, as the court thinks fit, declare the land to be free from the encumbrance, and make any order for conveyance or vesting order as appropriate, and give directions for the retention and investment of the sum of money paid into court and for the payment or application of the income thereof, and for the payment of an amount certified by the court to be the reasonable costs of the applicant in making the application, such amount to be deducted from the sum of money paid into court.

(3)  On application by the encumbrancer or any person entitled to the money or fund in court, the court may direct payment or transfer thereof to the persons entitled to receive or give a discharge for the same, and generally may give directions respecting the application or distribution of the capital or income thereof.

(4)    In this section, court (法院)  means the Court of First Instance unless the party to the application submits to the jurisdiction of the District Court.”

4.  Guidance on the procedure to be adopted in relation to an application made under section 12A of the CPO has been given by Deputy High Court Judge Lam (as Lam PJ then was)  in Re Cheung Chi Wang & Another [2002] 1 HKLRD 409. There are three stages in this application:

(1)  The first stage is for the party for the time being entitled to redeem the encumbrance to obtain a direction or approval of the court regarding payment into court provided it is shown that the encumbrancer is out of the jurisdiction, cannot be found or is unknown, or if it is uncertain who the encumbrancer is.

(2)  In the second stage, on the basis that payment into Court is made pursuant to the Court’s approval, the Court will consider the exercise of its discretion and declare the land to be free from the encumbrance.  At this stage, the Court has the discretion to decide whether notice should be given to the encumbrancer.

(3)  The matter would come to its third stage when the encumbrancer or any person entitled to the money paid into Court applies to the Court for payment.

DISCUSSION

5.  Having considered the affirmations filed in support of this application, I am satisfied that:

(1)  The plaintiffs are the registered owners of the 1^st Property, the 2^nd Property, the 3^rd Property and the 4^th Property (“the Properties”)  respectively.

(2)  The Properties are still subject to the Mortgage.

(3)  The plaintiffs are entitled to redeem the Mortgage.

6.  I am also satisfied that reasonable steps have been undertaken to locate the defendant but in vain.  Since the defendant cannot be found, section 12A(1)  of the CPO is engaged.

7.  In respect of the payment to be paid into Court, Mr Koon for the plaintiffs proposed that the sum be fixed at $2,160 for the following reasons:

(1)  The principal of the Mortgage was $100.

(2)  The notional annual interest rate of 20% be adopted.

8.  I agree that the proposed approach is reasonable.

ORDER

9.  By reasons of the aforesaid, I make the following orders as proposed by the plaintiffs:

(1)  Leave be granted to the plaintiffs to pay into Court a sum of $2,160 being a sum sufficient to redeem the Mortgage and any interest thereon.

(2)  Within 7 days after the payment into Court is made, the plaintiffs do advertise in a widely circulated local Chinese newspaper a notice making known this Order and the fact of payment having been made into Court pursuant to this Order and stating that any person interested in the Mortgage and/or the payment aforesaid may apply within 14 days to be joined as a defendant to these proceedings.

(3)  The plaintiffs may after the lapse of no less than 21 days from the publication of the advertisement make a paper application pursuant to section 12A(2)  of the CPO for a declaration that the Properties be free from the Mortgage; and

(4)  There be no order as to costs.