BOND STAR DEVELOPMENT v. CHOY YEE CHUN

1996, No. M.P. 2446

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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REASONS FOR JUDGMENT

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1. In 1964 the defendant Mr Chan lived in a structure atop a lower roof of a building at Ming Yuen Western Street, North Point. It was a ramshackle home - made little hut and I suppose probably illegal; photographs however show the interior to be comfortably appointed with running water, electricity, air-conditioning and a refrigerator.

2. In July 1993 the plaintiff Bond Star Development Ltd, bought the entire building including Mr Chan's hut. It incidentally bought the adjoining buildings as well. Its intention was to demolish and rebuild the entire site into a new development.

3. Over the next year or so the company gave notice to, or negotiated with, the many occupants about compensation. Eventually all the occupants left, save for Mr Chan who would not budge.

4. I would mention that at about this time the plaintiff claimed it had evidence Mr Chan was not the impoverished squatter he pretended to be, that he did not then live there at all but visited only occasionally, that he lived elsewhere in a substantial flat. All that was relevant to certain Lands Tribunal proceedings for other purposes but nothing turns on its truth or otherwise here.

5. On 31 August 1995 Mr Chan registered an affirmation with the Land Registry alleging he had an interest in the premises. This gave rise to the lis pendens registered against the title which is the subject of this originating summons.

6. In December 1995 the plaintiff company took proceedings in the Lands Tribunal claiming possession. Mr Chan defended claiming he had ownership by adverse possession. Eventually, on 6 June 1996, Judge Muttrie presiding at the Lands Tribunal found in favour of the plaintiff. The defendant was ordered to vacate the hut.

7. More proceedings followed. The defendant filed in the High Court Notice of Appeal against, and an application to stay execution of, the Lands Tribunal order for possession.

8. The application to stay was dismissed on 23 July 1996, the Notice of Appeal was struck out on 12 September 1996 (save only for some residual matter of costs which is not relevant here).

9. In the meantime, on 5 August 1996, the defendant's solicitors wrote to the Land Registrar a long letter enclosing copies of -

1. The Lands Tribunal judgment with full accompanying Reasons of the Tribunal

2. Their Notice of Appeal against that (this had not then been determined, and was still pending)

3. The judgment in High Court case MP2068/96 whereby their application for stay of execution was dismissed on 23 July 1996.

10. The solicitors' letter to the Land Registrar with all these several dozen accompanying pages concluded with a request to vacate registration of the lis pendens but

"... stressed ... that such request for vacation of registration is made without prejudice to his appeal ... and ..."

11. As I have said that appeal against the Lands Tribunal judgment had not then been determined, it was formally struck out more than a month later on 12 September.

12. Not surprisingly when faced with all these documents the Land Registrar declined to vacate the lis. His brief response did not say why he declined. I assume he quite properly took the attitude that he is not a legal adviser to the parties and it was not for him to interpret the effect of these documents. There could be no conditional, or partial, vacation of a lis. Unless and until he received an unequivocal request to vacate, or an order of the court to vacate, the lis would have to remain.

13. Now, in these proceedings, by originating summons in the High Court the plaintiff seeks orders for -

1) Vacation of the lis pendens

2) Damages for its registration

3) Costs.

14. After some discussion on the first day of the hearing the defendant did not resist the first application, the vacation of the lis. I therefore made an order vacating it on that date, 31 October 1996.

The hearing proceeded on subsequent days purely upon damages and costs.

The plaintiff's claim to damages

15. The plaintiff's argument is that the lis was wrongfully registered at the outset, that it was void ab initio, that that is demonstrated by the Lands Tribunal's subsequent finding in favour of the plaintiff.

16. That argument appears to me to misconceive the nature of both a lis pendens and the Lands Tribunal judgment. A lis is merely notice to anyone checking the title that the holder of the lis is alleging a claim adverse to the proprietor, that he intends to litigate that claim if necessary.

17. It is no more than that. The holder does not warrant his claim will succeed. He merely gives notice that he intends to make a claim which may affect the land. In the meantime anyone who deals with the proprietor without reference to the claimant (the lis holder) does so at his peril.

18. A lis is a form of security to the claimant, it prevents, for example, an unscrupulous proprietor selling the land to an innocent buyer over the head of the claimant (unlikely perhaps in the case of a responsible large company like the plaintiff, but theoretically possible). The Lands Tribunal judgment on the other hand is a finding upon the merits as between the parties. It is not directed at the lis and does not purport to deal with it. I have no idea whether Judge Muttrie was even aware of the lis, quite probably he was not, but it does not matter.

19. The lis merely protected Mr Chan until the resolution of the litigation. Mr Chan lost that litigation. He must accept that, he must now withdraw the lis. He must, subject to any right of appeal, respect the ruling of the Lands Tribunal and give possession of the hut.

20. I regret I cannot agree with the submission that the Lands Tribunal judgment somehow operates in retrospect to render the lis void from the moment of the registration. The Lands Tribunal judgment deals with the rights of the parties at the time of its delivery.

21. The lis itself was valid at its registration. At that time Mr Chan had a dispute in the course of litigation or which was about to be litigated and he was entitled to register notice to all the world that such a dispute was pending. It is not a guarantee he would win that dispute.

22. The plaintiff points to some passages in the Lands Tribunal judgment which it describes as "stinging criticisms" of the defendant. Those passages are adverse to him certainly on the question of creditability but that is a long way short of a finding that his claim was bogus, or malicious.

23. Now that he has lost Mr Chan must now withdraw the lis or the court will order its withdrawal. And that he did do, a little tardily perhaps, on 31 October, at the first day of hearing of this application.

24. The plaintiff's claim for damages up to 12 September 1996 for wrongful registration fails.

25. The defendant should have withdrawn his lis strictly speaking promptly after 12 September when his appeal was determined. He did not withdraw until 31 October, some six weeks later and at the first day of this hearing.

26. Instead the parties seem to have set to an acrimonious exchange of affidavits and letters accusing each other of wrongfully conduct and even harassment. Both seem to have made the erroneous assumption the Lands Tribunal judgment demonstrated that the lis was wrongfully registered earlier in 1995. In my view it was validly registered, but should have been withdrawn promptly after 12 September.

27. The defendant's advisers seem to have thought that they had to get the approval of the Land Registrar, or an order of the court, vacating the lis. In fact, they should have simply and unequivocally by letter directed the Land Registrar to vacate. No more was required.

28. The long letter of 5 August to the Land Registrar was misconceived because, apart from its sheer complexity, at that stage the Lands Tribunal appeal was still outstanding. On that ground alone the Land Registrar could not possibly vacate the lis.

29. On 5 September the defendant's solicitors did write offering to vacate the lis. I accept the argument that this letter was intended as an open offer. The difficulty was that it was not unequivocal, there were two further conditions about abandoning the damages and costs, and the plaintiff did not accept that proposal.

30. The result is that the plaintiff may have had a claim for damages for the comparatively short period 13 September - 31 October 1996. That claim would not lie for wrongful registration, it would be for wrongful failure to withdraw registration. The period is minimal in all the circumstances but I will examine the damages claim as a whole.

31. On the question of damages the plaintiff exhibits by affidavit a bundle of documents displaying its demolition and rebuilding contracts, and a receipt from a bank for $218,000.00 for a loan "arrangement fee". It exhibits a letter from that bank dated 12 July 1996 stating inter alia -

"... affirmation ... has been registered ... against ... (the title) ... it is one of the conditions ... that good title ... shown to our satisfaction ... the drawdown of the loan facilities will have to be postponed until title ... satisfactorily clarified ..."

32. The arrangement fee paid to the bank appears to be valid and subsisting. The loan has not been refused, merely deferred.

33. These few documents are short of proof the plaintiff's entire redevelopment has been delayed solely because of the defendant's lis registration. There could have been other reasons for the delay other than the deferment of the loan. The bank's letter of 12 July was not a refusal but merely a query. It could possibly have been answered satisfactorily there and then by directing attention to the Lands Tribunal judgment. I have no evidence of any attempt to do this.

34. The plaintiff simply has not shown to my satisfaction any necessary causal link between the lis and any damages.

35. To summarize, on the matters raised by the originating summons -

1) The lis pendens I ordered vacated on 31 October 1996 and I confirm that order.

2) The lis was validly registered and the plaintiff has no claim for damages prior to 12 September 1996. It may have had a claim for damages for the period 13 September - 31st October 1996 only, but has failed to demonstrate any damage to my satisfaction.

36. The damages claim therefore must be dismissed.

3) Costs.

37. The plaintiff has succeeded in the sense that it had somehow to get the lis vacated and the defendant vacillated about withdrawing it right up to the hearing. The defendant has succeeded in the sense that the damages claimed was misconceived.

38. There will be orders nisi for costs of the issue of the originating summons to the plaintiff, for costs of the two hearings on 31 October 1996 and 23 July 1997 to the defendant.