XCHRX In re Chong Ching Yue, deceased

1994, No.A12439

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H E A D N O T E

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Order granting mandatory injunction to remove trespass - whether a "lis" for the purposes of section 2(1) of the Land Registration Ordinance, Cap.128 - whether direct or express claim to proprietary interest in land a pre-requisite - whether sufficient if judgment or order "affects" land in question - Chow Chiu Tai v. Chan Tak Ming [1994] 1 HKLR 274 considered and followed

Order for removal of external staircase - staircase exclusive access to the 2nd floor of 3-storied building - lis registered against the entire building - ground and first floors owned by applicants and 2nd floor owned by respondent - applicants and respondent being the "3rd defendants" to action for trespass by adjacent owner - applicants and respondent parties to consent order undertaking jointly and severally to remove offending staircase

Held,

(1) The writ and/or order is properly registrable as a "lis" pursuant to section 2(1) of Cap.128.

(2) It is properly registrable even as against the properties owned by the applicants who were parties to the consent order, Active Keen Industries Ltd. v. Fok Chi Keong distinguished.

1994, No.A12439

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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D E C I S I O N

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1. This is an application by the 1st named 3rd Defendants, Cheung Chi-shing and Tsang Shui-kum (the Applicants) who are the registered owners of the properties known as Ground Floor and 1st Floor of the building erected on Lot No.1886 RP in DD 7 (respectively "the Building" and "the Lot") and of two equal undivided third shares of and in the Lot ("the Properties"). The 2nd named 3rd Defendant Chan So-mui ("Madam Chan") is the registered owner of the 2nd Floor of the Building and of the remaining one equal undivided third share of and in the Lot.

2. On 8 December 1994, the Plaintiff, the registered owner of adjacent land known as Lot No.1891 or DD 7, brought an action against the 3rd Defendants and others in trespass, seeking orders that illegal structures particularized in the Statement of Claim be dismantled and removed. The Writ was registered against, inter alia, the Properties. On 20 April 1995, the Applicants, Madam Chan, the Plaintiff and others entered into a consent order ("the Order") which was also registered against, inter alia, the Properties. The Applicants seek to vacate those registrations.

3. Under the terms of the Order, it was incumbent on the 3rd Defendants to do a number of things on land occupied by them. All but one has been done. The outstanding item is the removal of an external staircase (in the Order referred to as "Staircase 4" and hereafter referred to as the "Staircase") which was and remains the only means of access to and from the 2nd floor of the Building.

4. The Applicants submit that the registrations are improper because

(1) the action brought by the Plaintiff which was for trespass did not assert any proprietary right against the Building or the Lot, consequential relief sought being "personal";

(2) the relief contained in the Order was also personal against the Applicants and the Order was not against the Properties or the owners for the time being thereof;

(3) the action is no longer a "lis" because of the Order and which has been complied with so far as the Applicants are concerned;

(4) the registration ought to be vacated because the action is no longer being prosecuted bona fide; and

(5) there is good cause for vacating the registrations.

5. The issue before me is whether removal of the Staircase is an encumbrance against the Building and the Lot so as to render the registrations of the Writ and the Order proper. This is not a question that can be answered in the abstract. Rather, it has to be answered in the context of the relevant facts and what compliance with the Order entails for the 3rd Defendants including the Applicants.

Background facts

6. In or about 1964, three traditional Chinese village-type houses were erected on Lot No.1886 which was subdivided into sections A, B and RP. Each house as originally constructed was a two-storied building with an internal staircase. In 1975, the District Officer Taipo issued Letters of Modification in respect of each of the three subsections. Upon payment of an additional premium, each registered owner was granted permission to erect another storey (the 2nd floor). So far as the Building on the Lot is concerned, there is evidence that when this was done, access to the 2nd floor was internal i.e. via the Ground and 1st floors : she was given a key by the then owner so that she could show the Building to prospective tenants/purchasers. See the affirmation of Tam King Ding ("Madam Tam") who lived on the 1st floor of Lot 1886A from 1978 to 1986. According to Madam Tam, the Building was divided into and used as more than one dwelling and the external staircase built only after it was acquired by a Mr Wen. Entries in the Land Search record for the Lot show that the Building was acquired by Wen Tai Hoi ("Mr Wen") in June 1980, that it remained in his sole ownership until September 1982 when he sold off the Ground and 1st floors to Lau Yuet Ngor ("Madam Lau") retaining only the 2nd floor, that a Deed of Mutual Covenant was entered into on the same date by Mr Wen and Madam Lau. Prior to Mr Wen's ownership, the registered owner of the entire Lot and Building since April 1971 was one Wong Sau King Eli. The need for a separate access to the 2nd floor therefore did not arise until the sale of the Ground and 1st floors in 1982.

7. The evidence of Leung "Kay who has lived at Lot 1886 since May 1979 was to the effect that the staircases to all the three subsections were erected by 1979 and were the only means of access to the 2nd floor of each of the three buildings. In view of Madam Tam's evidence, Leung Kay's recollection as regards the Building may not be as reliable as his recollection of the situation pertaining to the building in which he actually lived in 1979 i.e. that erected on section B. He did not depose to any personal knowledge of the internal layout of the Building. Whilst his evidence and that of Madam Tam are not necessarily mutually exclusive or inconsistent, insofar as there is any conflict, that of Madam Tam is to be preferred since she did have personal knowledge of the internal layout of the Building prior to its acquisition by Mr Wen. I therefore conclude that for a period of time after the addition of the 2nd storey to the Building, access to it was via an internal staircase and the Staircase was erected subsequently, probably shortly before part of the Building was sold off in 1982.

Is the Writ and/or Order a lis pendens?

8. Both the Writ and the Order have been registered under the Land Registration Ordinance, Cap.128. The principal issue is whether they are properly registrable as a "lis". Under the provisions of section 2(1),

"All deeds, conveyances and other instruments in writing, and all judgments, by which deeds, conveyances, and other instruments in writing, and judgments, any parcels of ground, tenements, or premises in Hong Kong may be affected, may be entered and registered in the said office in the prescribed manner."

Section 14 extended the provisions of the Ordinance relating to judgments to lites pendentes. In section 1A, the definition section, "lis pendens" is defined to mean, inter alia,

"(a) Any action or proceeding pending in a court or tribunal that relates to land or any interest in or charge on land."

9. The meaning and scope of "lis pendens" was considered by P. Chan J (as he then was) in Chow Chiu-tai v. Chan Tak-ming [1994] 1 HKLR 274. There is a helpful review of the history and purpose of the parallel English statutory provision, namely section 17(1) of the Land Charges Act 1972 as well as of the leading authorities in that judgment. In Calgary and Edmonton Land Co. Ltd. v. Dobinson [1974] 1 Ch 102, Megarry J said at p.107 F :

"What is protected is some substantive right adverse to the owner, rather than a mere fetter on the owner's right of disposition."

The English Court of Appeal in Whittingham v. Whittingham [1978] 2 WLR 936 found Megarry J's interpretation a little too restrictive. Stamp LJ stated at 948 D-E -

"One must in each case, as I see it, look at the terms of the definition and say whether the action or proceeding with which one is concerned is one which falls fairly within it. Some assistance in answering the question will no doubt be obtained by considering whether in the absence of registration a purchaser or mortgagee might obtain a title to the land as a bona fide purchaser without notice of, and so defeat, the plaintiff's claim."

Eveleigh LJ commented at p.949 G-H -

"I would add that I do not read the judgment of Megarry, J. in Calgary and Edmonton Land Company Limited v. Dobinson [1974] Ch 102 as saying that there must be a claim to a specific vested proprietary interest; ..."

P. Chan J went on to consider the decision in Greenhi Builders Ltd. v. Allen [1979] Ch 156 which concerned a claim to an easement of support by owners of houses situated at the top of a slope who alleged that those at the bottom of the slope had withdrawn support. The following passage in Browne-Wilkinson J's judgment at p.159 is quoted with approval by P. Chan J at 278 line 24 - 279 line 3 -

"It is consistent with the scheme of the Act that an action which makes a claim to a right over the land, which affects the title to that land and which will operate as an incumbrance (in a loose sense) on the land against which it is registered is a pending land action.

Stamp, L.J.'s judgment says that it is material to take into account whether, in the absence of the registration of the pending action, a third party acquiring the land before judgment in the action without notice will take free of the plaintiff's claim. In this case, a purchaser from the company would not take free of the easement which is claimed if the cautioners succeeded in establishing such an easement for the easement claimed is a legal easement and it would take effect under the Land Registration Act without registration as an overriding interest. But it is on this aspect of the matter that, in my judgment, the claim for a mandatory injunction in the pleadings in the action becomes material. If the company retained the land until judgment, there can be no reason why, if other considerations are satisfied, the court should not specifically order the company to restore the support which has been allegedly wrongly removed. If, on the other hand, the land has in the interim ceased to belong to the company and has come into the hands of third parties who have no notice of the claim and no notice of the claim to the easement, there may be very substantial difficulties in getting mandatory relief against the persons who are the owners at the date of judgment. It is, in my view, exactly for this type of purpose that the registration of pending land actions was introduced so as to ensure that anybody taking the land during the pendency of a land action should know that the action was going on and should be on notice as to the relief claimed in it. Having taken with notice of the relief being claimed, it would present very formidable difficulties in a purchaser to resist an order under which the cautioners' rights were enforced specifically by a mandatory injunction."

The learned judge agreed with the observations made in Whittingham v. Whittingham and Greenhi Builders and turning to the Ordinance stated at p.279 line 26 et seq :

"A lis pendens, to be registrable, must be one which affects an interest in land so that if it is not registered or registered in time, the interest affected by it may lose priority to some other interest in the same land if the document relating to that other interest is registered. In other words, the question to be answered is : will the interest which is to be affected by the action or proceeding be adversely affected by or deferred to some other interest in the land if the action or proceeding is not registered or registered in time? An action which claims some proprietary right in land, as referred to by Megarry, J., would be registrable as such a lis pendens because in the absence of registration, a subsequent purchaser or mortgagee bona fide and without notice of the action will certainly take free from the proprietary right under claim even if at the end of the day such a claim is upheld by the court. Similarly an action for the reinstatement of an easement support of land or the maintenance thereof, as in Browne-Wilkinson, J.'s case, will also be registrable under the Ordinance, because if the action is not registered or registered in time, any subsequent purchaser in title of this land will not be affected by any judgment which may be given in the action.

Little or no difficulty will arise in an action which makes a claim for a proprietary interest or an easement in land. However, there may be actions in which there are no direct or expressed claims for an interest in land and yet the judgment or order to be given may affect the land in question. This type of actions should also be registrable because if they are not registered, they are not binding on any purchaser or mortgagee of the land intended to be affected. And if the purchaser or mortgagee is to be bound, it is only fair that he can have notice of the pending action (i.e. the lis pendens) if the same is registered. On the other hand, there are cases which although they can be said to be in one way or another relating to land, are not registrable because whatever their outcome, the subsequent purchaser or mortgagee of the land in question will not be affected by the registration, or lack of it, of the action at the Land Office. The material consideration is therefore that set out by Stamp, L.J. and Browne-Wilkinson, J., i.e. whether any subsequent purchaser or mortgagee will take a free title in the land or lose priority if the action is not registered." (emphasis added)

10. In Chow Chiu-tai, the action was brought in nuisance with alternative claims based upon Rylands v. Fletcher, negligence and breach of the deed of mutual covenant. All the complaints related to activities alleged to have been conducted by the defendant in his own premises. All the plaintiff wanted was to put a stop to those activities as once those activities were stopped, the nuisance would be averted. In that case, the defendant had in fact ceased the activities complained of. The learned judge went on to state at p.280, line 43 to p.281, line 4 as follows -

" I do not wish to generalise on all actions based on nuisance. There can be different types of nuisance and each nuisance has to be looked at separately. While most actions based on nuisance, similar to the one in the present case, are not properly regarded as actions relating to land for the purpose of the Ordinance, I can see that there may be cases where the nuisances complained of may require certain improvement to be carried out on to the land to abate such nuisances. In such cases, it would be in the interest of the subsequent purchaser or mortgagee to have notice of the relevant court action, otherwise his interest in the land after the purchase or mortgage may be affected and he may not be able to take a free title." (emphasis added)

11. It is clear from the judgment in Chow Chiu-tai that an action may nevertheless qualify as a lis pendens without there being any direct or express claim to a proprietary interest in land. The critical issue is whether the judgment or order to be given affects the land in question. What the learned judge appeared to have in mind were situations where the complaint can only be properly addressed through something being done to the land against which the action is registered particularly where a mandatory injunction is sought. It is implicit from the judgment that registration in those circumstances would be proper. On the facts of that case, the nuisance had already been addressed and so the registration could no longer be sustained. In the present, the cause of action is trespass. But if the trespass can only be removed by work being carried out to the land in question, it falls squarely within the parameters set out in Chow Chiu-tai. Here the complaint has not been satisfactorily addressed inasmuch as the Staircase has yet to be removed. Applying the principles set out in Chow Chiu-tai (with which I agree), both the Writ and the Order are registrable and I so hold.

Whether registrable against the Properties

12. What the Order requires to be done is the removal of the Staircase which leads to and from the 2nd floor. The unusual feature in this case which does not emerge from the Order itself but from the evidence filed is that Staircase is and was at the date of the Order the exclusive access to the 2nd floor. The Applicants submit that whether the Writ and/or Order is registrable depends on the pleadings and is not a question of evidence. I doubt whether such a blinkered view is appropriate but as will become apparent, it is unnecessary to decide the point.

13. The Applicants submit that from the pleadings, it is clear that the Staircase accesses the 2nd floor only and that it is in Madam Chan's exclusive possession. In those circumstances, they submit that although they are tenants in common together with Madam Chan, and that interest would give rise to certain obligations inter se, the relief sought and in any event, the Order made, does not affect the Applicants' undivided shares, exclusive possession being the test.

14. The Applicants rely on Active Keen Industries Limited v. Fok Chi-keong [1994] 1 HKLR 396 where the Court of Appeal had to consider the position of tenants in common in buildings in multiple ownership. That case concerned the sale of Flat C on the 9th floor of a building. Under the terms of the occupation permit, each of the relevant floors contained seven tenements or self-contained flats. There were two additional tenements on the 9th floor. Litton JA rejected the submission that where the Building Authority might in the exercise of its power under section 24(4) of the Buildings Ordinance, seek to recover part of the costs of demolishing unauthorised building works from a co-owner, this constitutes an "encumbrance" upon the property. A distinction was drawn between situations where the Building Authority is seeking to exercise powers with regard to unauthorised works in common ownership, i.e. those affecting only the common areas of a building and situations in which the Building Authority seeks to exercise those powers with regard to unauthorised works belonging to individual owners. In the former case, an order served under section 24 could result in the apportionment of costs of removal being charged against the title of the individual owners which would then constitute an encumbrance. But in the latter case, the exercise of section 24 powers could not affect the owners of individual flats in the building apart from the owner of the unauthorised works. Reliance was placed on the observations of Litton JA at p.410, lines 15-19 that -

"A possibility that, sometime in the future, the owner of Flat C 9/F might have to share with the other co-owners the cost arising out of something done to the building does not affect the title to the flat: no more than if, for instance, the lifts should fail and the co-owners had to share the cost of repair or replacement."

15. Counsel for the Applicants referred to the "unauthorised or protruding balcony" situation. Any order served on the owner of such unauthorised works would not affect or constitute an encumbrance on the title of co-owners who do not have unauthorised works. That is a proposition with which I agree. In fact, I have recently so held. See To Kam Kwong v. Tseung Yuk Chu 1997 No.MP 505.

16. But the applicability of that proposition to the facts in the present case is questionable. Factually there are significant and critical differences. The work required to be done in Active Keen involved the tearing down of walls and partitions which could not have been effected without trespass upon his neighbour. Here, it is not apparent that the Staircase could not have been removed without trespassing upon the premises of Madam Chan. At any rate, there is no evidence that that would be the necessary consequence. The Building though held in undivided shares, has no more than two owners : the analogy with the kind of building in multiple ownership that was involved in Active Keen is not necessarily apposite. Active Keen was concerned with the implications of an enforcement order served pursuant to the Buildings Ordinance on the owners of the undivided shares other than the owners of the unauthorised works. Here, the Plaintiff and Madam Chan had voluntarily consented to the Order under which they undertook jointly and severally (by virtue of together being "the 3rd Defendants") to remove the offending Staircase. Put differently, the co-owners in Active Keen were not parties to any consent order.

17. The Applicants' submissions might have carried more weight had they not themselves submitted to the Order. For in that event, it is conceivable that they might have been in a better position to identify themselves with the "innocent" or "hapless" co-owners in Active Keen. But the obligation was upon the Applicants as well as Madam Chan, the 2nd named 3rd Defendant and not on Madam Chan alone. It is therefore not a case where the Applicants can truly say removal of the staircase has nothing to do with them or their Properties. Whilst the Applicants may not use the Staircase (they have no need to), it is attached to and forms part of the Building. Its removal must inevitably entail some structural work to the Building itself of which the Applicants are two of the three tenants in common which work the Applicants had undertaken to do.

18. Although the Applicants contend that Madam Chan has exclusive possession of the offending Staircase, that does not accurately reflect the situation : Madam Chan has exclusive possession of the 2nd floor and the Staircase leads to and from the 2nd floor. But it does not follow that she has exclusive possession of the Staircase which is an adjunct to the Building. She may perhaps be the only one to make use of it but that does not mean she has exclusive possession of the Staircase as if it were part of the 2nd floor within her exclusive control. If the Applicants so desire, they may go on to and use the Staircase : I do not see that Madam Chan has the power to stop them.

19. Moreover, if the Applicants are right that the Writ and/or the Order is not registrable against the Properties, it would equally not be registrable against the 2nd floor. That proposition is plainly unsustainable. The cause of action is the same against Madam Chan as against the Applicants and the terms of the Order to which the Applicants and Madam Chan are parties do not differentiate between their positions. In fact, the Applicants pray in aid the fact that the Writ and the Order have been registered against Madam Chan's property which they assert is adequate protection for the Plaintiff.

20. The Applicants further submit that it would be wrong to read into the Order a provision that it is not to be effective until an alternative access is available for Madam Chan : restoration of a quasi-easement for Madam Chan was simply not part of the Order and there is no basis for reading such a precondition into the Order. The relevance of an internal access for Madam Chan is not, as the Applicants appear to suggest, the reason why the Order relates to land or that it is necessarily a pre-condition. It is relevant in a different context, namely, whether the Applicants have done all that is in their power as they claim to be the case. What renders the Order registrable is the fact that the owners for the time being of the Building and Lot are, and remain, under an obligation to do something to their Building and Lot so as to eliminate the continuing trespass.

Whether lis still subsisting

21. The Applicants' next submission is that the action even if registrable, has ceased to be a lis by reason of the Order. The Achilles' heel of this submission is that the Order is by no means "spent". There remains one critical outstanding item and until that obligation has been met, it cannot be said that there is nothing left of the action which was settled by the Order. Wong Kwok Chiang v. Longo Construction Ltd. [1987] 3 HKC 34 relied on by the Applicants is distinguishable and of little assistance. That case involved a defunct deed of grant which in view of the Court of Appeal's decision in that case would not be reinstated nor enforced. Insofar as the action in that case was founded on that defunct deed, it ceased to be registrable.

22. As regards the further submission that the Applicants have done all in their power to comply with the Order, it is misconceived. Indeed, they say they went so far as to apply for an order against Madam Chan under O.45, r.7 to compel compliance with the Order. It is Madam Chan's intransigence in refusing to dismantle the staircase rather than anything the Applicants are themselves required to do that accounts for the continuing non-compliance with the Order. But Madam Chan's intransigence is readily understandable : without alternative access her property which is her home would be uninhabitable.

23. As the Applicants themselves acknowledge, compliance with the Order is possible in a variety of ways. The permutations are : reinstating the internal staircase, by either Madam Chan or the Applicants buying each other out, or (assuming it were feasible as to which there is no evidence before me), by erecting a staircase at a wholly different position. There is no evidence before the Court that the Applicants have explored, much less exhausted, these possibilities. They are therefore not in a position to demonstrate that they have done all in their power to comply with the terms of the Order.

24. It is disingenuous to suggest that the solution is within the Plaintiff's power, viz. by granting access to Madam Chan for consideration. The Plaintiff has succeeded in his action in as much as he has obtained the Order. Why should the tables now be turned and the onus put on the Plaintiff and the Applicants allowed to renege on an obligation they have assumed?

Bona fides

25. Delay by a party in prosecuting proceedings which have been registered as a lis against property, if not explained, could amount to lack of bona fides and the Court under section 19 of the Ordinance could order the vacation of a lis on the grounds of dilatoriness in the prosecution of the action. See Tahir v. Cheung Wai Bun Charles [1980] HKC 370. In the present case, the action has been prosecuted and it has resulted in the Order. Presumably the submission that is being made relates to the delay in enforcing the Order. The Plaintiff explained that the reasons why it has not taken more active steps to enforce the Order were the costs of the proceedings and the likely difficulties as was fully borne out by the Applicants' attempt to compel Madam Chan to comply with the Order by their application under O.45, r.7. Moreover, under the Order, many items of work had to be done and many of them have been done. The present case is thus distinguishable on the facts from Tahir : in any event, it is not concerned with the prosecution of an action but the enforcement of an order obtained as a result of those proceedings. Assuming that the Tahir principle applies to the enforcement of an order (which question I leave open) the facts are not such as to warrant a conclusion that there is a lack of bona fides on the part of the Plaintiff so as to justify the exercise of the Court's discretion in ordering the vacation of the registration.

Good cause

26. The Applicants' final submission is that the Court should exercise its inherent jurisdiction to vacate the registration for good cause. The Applicants submit that on the facts of the present case, the Court ought to exercise its jurisdiction under s.19 of Cap.128 which empowers the Court if satisfied that "for other good cause shown", make an order vacating the registration of the lis pendens.

27. No evidence has been adduced by the Applicants to state what efforts have been made by them to enable the outstanding item under the Order to be implemented. On the facts, it is not at all evident that the blame should fall upon the Plaintiff who was successful in prosecuting the action by obtaining the Order. I can derive no assistance from the passages in Tiverton Estate Ltd. v. Wearwell Ltd. [1975] 1 Ch 146 at 161H and 172B referred to by counsel for the Applicants. They relate to issues which do not arise in the present case. Accordingly, I do not agree that there is good cause shown to warrant the vacation of the lis under section 19.

Dismissal of application

28. The application is dismissed for the reasons set out above. I make an order nisi for costs in favour of the Plaintiff.

(Doreen Le Pichon)

Judge of the Court of First Instance
High Court