WANFU FINANCE COMPANY LTD v. NG CHI FAI AND ANOTHER

HCMP 558/2024

[2025] HKCFI 3065

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 558 OF 2024

____________________

____________________

____________________

_________________________________

REASONS FOR DECISION

_________________________________

1.  In this case, the Plaintiff (“P”) is enforcing the Mortgage dated 1 November 2022 and the Second Legal Charge dated 30 January 2023 against the 1^st Defendant (“D1”). The Mortgage and the Second Legal Charge were registered in the Land Registry on 3 November 2022 and 1 February 2023 respectively. By executing the Mortgage and the Second Legal Charge, D1 has mortgaged his 50% interest in the Mortgaged Property to P as security for the loan and interest owed by D1 to P. The other 50% interest of the Mortgaged Property is vested in the 2^nd Defendant (“D2”).

2.  The parties are able to reach an agreement on many matters, but there are still some differences between them. Those differences are as follows:

(1)  Apart from D1, whether D2 should be liable to bear the costs and expenses incurred in the sale of the Mortgaged Property in the enforcement action taken by P;

(2)  Whether it is necessary to vacate the following documents recorded in the Land Registry to facilitate the sale of the Mortgaged Property by P in the enforcement action:

(a)  a sealed copy of the Order made by the Family Court dated 16 December 2002 in the matrimonial case between D1 and D2 and registered in the Land Registry on 10 March 2003 (“the 2002 Order”); and

(b)  a sealed copy of a Writ of Summons in DCCJ 1787/2023 issued by HK Professional Credit Limited (“HKPC”) against Ng Chi Fai (ie D1 in the present case) on 8 May 2023, claiming for repayment of a loan of HK$500,000 plus interest and costs (“the 2023 Writ of Summons”), delivered to the Land Registry on 11 May 2023 and recorded as a document pending registration in the Land Registry.

3.  In the hearing on 14 July 2025, I made a ruling on the aforesaid matters and approved the draft order prepared by P with the necessary amendments. These are my reasons for the decision.

4.  As to issue 1, I ruled that D2 should not be liable to pay anything in the sale of the Mortgaged Property by P.

(1)  D1 and D2 were husband and wife. By the 2002 Order, D1 was required to transfer his interest in the Mortgaged Property to D2. At the time of the 2002 Order, the Mortgaged Property was held by D1 and D2 as joint tenants.

(2)  On 1 November 2022, the following documents were executed:

(a)  an agreement between D1 and D2 (“the 2022 Agreement”), in which D1 and D2 agreed that they would execute a Deed of Severance in relation to the Mortgaged Property, and D2 gave her consent to the execution by D1 of the mortgage of D1’s ½ interest in the Mortgaged Property in favour of P;

(b)  the Deed of Severance mentioned in the 2022 Agreement; and

(c)  the Mortgage.

(3)  Clause 5 of the 2022 Agreement is as follows:

“[D1] shall bear the legal costs and disbursements and incidental to the preparation and completion of this Agreement and executing [the Mortgage], mortgage loan and credit facilities with [P] and selling of the Mortgaged Property in case of default.”

(4)  D2 submits that by reason of Clause 5 of the 2022 Agreement, D2 should not be liable to bear the costs and disbursements incurred in the sale of the Mortgaged Property. According to D2, the 2022 Agreement, the Deed of Severance, and the Mortgage were all prepared by Messrs. Lo & Fung, P’s then solicitors. These documents are the document in the entire mortgage arrangement designed and engineered by P. The 2022 Agreement is indeed part and parcel of the whole mortgage arrangement. In the circumstances, although the 2022 Agreement has not been signed by P, P should also be treated as being bound by Clause 5 of the 2022 Agreement. It would be unjust if P is not bound by Clause 5 of the 2022 Agreement.

(5)  Ms Sylvia Ng, counsel for P, accepted that notwithstanding that P is not a party to the 2022 Agreement, P is also bound by the 2022 Agreement. In my view, this must be correct. In the Affirmation of Chen Jinmei (“Chen”, a director of P) filed in support of P’s application herein, in §§31 to 34, Chen addressed D2’s position on the Mortgaged Property. At §32, Chen mentioned the 2002 Order. At §33, Chen mentioned that P inquired for D2’s position on D1’s application for mortgage loan with P, and then Chen mentioned the confirmation and consent given by D2 in the 2022 Agreement. At §34, Chen said “[s]ubject to [D2]’s confirmation and consent, P entered the 1^st Loan Agreement and lent a sum of HK$3,500,000 to [D1] accordingly.” Clearly, P decided to enter into a loan agreement with D1 (secured by the Mortgage) because of D2’s confirmation and consent given in the 2022 Agreement. P must know that the confirmation and consent given by D2 in the 2022 Agreement are subject to the terms of the agreement. Accordingly, P should also observe the terms of the agreement, including Clause 5.

(6)  Ms Ng took a minor point and tried to argue that the plain meaning of the word “disbursements” would not include any commission payable by D1 and D2 directly to the estate agent in the sale of the Mortgaged Property, if D1 and D2 procure the sale of the Mortgaged Property. With respect, I am unable to accept this point. First, as per the draft order prepared by P, the conduct of the sale of the Mortgaged Property would be committed to P’s solicitors (to which both D1 and D2 have no objection). Hence, the sale of the Mortgaged Property would not be procured by D1 and D2, and no commission would be directly paid by D1 and D2 to any estate agent. Second, Ms Ng conceded that adopting a purposive approach, the true meaning of Clause 5 of the 2022 Agreement is that D2 would not be required to pay anything in the sale of the Mortgaged Property by P. For these reasons, the point taken by Ms Ng cannot be accepted.

5.  I did not order removal of the documents in issue (2) from the Land Registry.

6.  As to issue 2(a), I am of the view that the registration of the 2002 Order has ceased to have effect on 10 March 2008 and would not affect the interests of P and P’s successors-in-title derived from the Mortgage and the Second Legal Charge. It is not necessary to vacate the registration of the 2002 Order in the Land Registry to facilitate the intended mortgagee’s sale of the Mortgaged Property by P.

(1)  Section 17 of the Land Registration Ordinance (“LRO”) provides:

“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.”

(2)  The 2002 Order was registered in the Land Registry on 10 March 2003, and it has not been registered at any time thereafter. Pursuant to s.17 of the LRO, the registration of the 2002 Order ceased to have effect on 10 March 2008. Clearly, that registration would not have any impact on the interests of P and P’s successors-in-title derived from the Mortgage and the Second Legal Charge.

(3)  P asked me to vacate the registration of the 2002 Order from the Land Registry. I declined to do so. The 2002 Order was properly registered in the Land Registry in the first place, for the contents of the order indeed related to the interest in the Mortgaged Property. By now, it is plain and obvious that the interests of P and P’s successors-in-title derived from the Mortgage and the Second Legal Charge would not be affected by the registration of the 2002 Order at all. I see no reason why the Court should exercise the power to vacate a document from the Land Registry which was properly registered in the first place, and would not affect the interests of any current owner, mortgagee, or their successors-in-title.

7.  As to issue 2(b), I accept that this Court has inherent jurisdiction to order removal of a document recorded as “pending registration” from the Land Registry. See Shineland Corporation Limited v Gladford Ltd (HCMP 1972/2017, 30 November 2017), per Recorder Stewart Wong SC at §44. Ms Ng submitted that HKPC’s claim as per the 2023 Writ of Summons is a monetary claim only, and the 2023 Writ of Summons is not a document registrable in the Land Registry. I am inclined to agree. However, since HKPC is not a party in this case and has no opportunity to make submissions on whether the 2023 Writ of Summons is a registrable document in the Land Registry, I am of the view that it would not be appropriate for me to make an order removing of the 2023 Writ of Summons from the Land Registry. In my view, it is plain that even assuming that the 2023 Writ of Summons is a registrable document, the interests of P and P’s successors-in-title derived from the Mortgage and the Second Legal Charge would not be prejudiced by the presence of the 2023 Writ of Summons in the Land Registry. By virtue of s.3(1) of the LRO, the Mortgage and the Second Legal Charge must have priority over the 2023 Writ of Summons. That being the case, even assuming that the 2023 Writ of Summons is a registrable document, it would not be necessary to remove the 2023 Writ of Summons from the Land Registry to facilitate the intended mortgagee’s sale of the Mortgaged Property by P.

8.  I thank the parties for the assistance rendered to the Court.