WONG HO YAN v. REGISTRAR OF COMPANIES

HCMP 2538/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO2538 OF 2015

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J U D G M E N T

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1.  The plaintiff seeks a declaration that his property is free from the incumbrance of a mortgage.

2.  The plaintiff purchased the property at Flat 6, 8^th Floor, Block C, Hoi Tao Building, Nos 7-11 Belcher’s Street, Hong Kong (“the Property”) on 18 March 2013 from the executor of the former registered owner (“the Deceased”).

3.  The Deceased had in March 1967 entered into a mortgage of the Property with the Bank of East Asia Ltd for a loan of $13,573 (“the Mortgage”).  The Mortgage, with an outstanding balance of $13,508.02 was transferred to the Sun Hung Kai Enterprises Co Ltd (“SHK”) in November 1967.

4.  SHK was wound up voluntarily in March 1975 and was eventually dissolved in March 1991. 

5.  The return of final meeting lodged with the Companies Registry prior to dissolution showed the outstanding asset of SHK to be nil.

6.  The statements of accounts for 1975-1991 and the memoranda of satisfaction between 1967 and 1974 rendered by the liquidators did not show the Mortgage to have been discharged.

7.  There was a possibility that the Mortgage was not redeemed and had become bona vacantia upon dissolution of SHK: section 752(1) of the Companies Ordinance, Cap 622 (or section 292(1) of Cap 32, its predecessor).

8.  The Registrar of Companies has the authority to act as agent on behalf of the government in bona vacantia cases: Liu Yiu Keung Stephen & anor v Registrar of Companies, HCMP 1098/2004, 11 June 2004, per Kwan J (as she then was) at §1.

9.  The Registrar of Companies has acknowledged service but has indicated that she does not intend to contest the application.

10.  The Mortgage was granted by deed.  It was a specialty debt: Halsbury’s Laws of England, Vol 68, §§975-976.  The Deceased covenanted to repay by 60 monthly instalments from 18 November 1966.  Accordingly, any instalment thereunder would have been due by 18 November 1971, at the latest.

11.  In the case of a covenant, the limitation period runs not from the date of the instrument, but from the breach of the covenant.  SHK’s enforcement of rights under the Mortgage by action would have been time barred after the expiration of 12 years, ie by 1983 at the latest: s 4(3) of the Limitation Ordinance, Cap 347.

12.  Though the Mortgage may have become bona vacantia in March 1991, the government is likewise barred from taking action to enforce it after 12 years: s 37 of the Limitation Ordinance. 

13.  I am of the view that it is appropriate to grant the plaintiff’s application.  I therefore make an order that:

(1)  There be a declaration that by operation of sections 4 and 37 of the Limitation Ordinance (Cap 347), the right of actions under Mortgage (Memorial No UB573911) (“the Mortgage”) transferred under a Transfer of Mortgage (Memorial No UB603202) (“the Transfer”) had extinguished;

(2)  There be a declaration that Block C Flat 6 on the Eight Floor of Hoi Tao Building, Nos 7-11 Belcher’s Street, Hong Kong is free from incumbrances due under the Mortgage and the Transfer; and

(3)  There be no order as to costs.

14.  I thank Mr Tsui for his assistance.