LEE HUNG CHEONG, THE ADMINSTRATOR OF THE ESTATE OF LEE MING TIM, DECEASED v. WILLIAM TSOKSON

HCMP 386/2022

[2023] HKCFI 872

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 386 OF 2022

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REASONS FOR JUDGMENT

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INTRODUCTION

1.  This is the hearing of the Originating Summons taken out by the plaintiff on 14 April 2022 for inter alia:

(1)  A Declaration that the Second Mortgage dated 14 October 1961 that was registered in the Land Registry on 25 October 1961 by Memorial No. UB352999 (the “Mortgage”)  against the property known as 1^st Floor, No.263 Tai Nan Street, Kowloon, Hong Kong (the “Property”)  is incapable of subsistence and is unenforceable by the operation of the Limitation Ordinance (Cap. 347)  (the “Ordinance”);

(2)  An Order that the Mortgage registered in the Land Registry on 25 October 1961 by Memorial No. UB352999 against the Property be vacated.

BACKGROUND

2.  The background of the matter has been helpfully summarized in the plaintiff’s skeleton submissions, which is set out below.

3.  The Property was assigned to Lee Ming Tim (the “Deceased”)  on 31 December 1960.

4.  On 14 October 1961, the Mortgage was executed by the Deceased as the mortgagor and the defendant as the mortgagee. Shortly thereafter, the Mortgage was registered in the Land Registry on 25 October 1961.

5.  On 18 March 2000, the Deceased passed away. By a grant of Letters of Administration dated 2 March 2001, the plaintiff, being the son of the Deceased, was appointed as the administrator of the estate of the Deceased.

6.  According to the land search conducted on 29 December 2021, no documents were registered in the Land Registry to discharge the Mortgage.

7.  The defendant was represented by Hastings & Co in the Mortgage, but the defendant’s whereabouts, contact details and whether Hastings & Co had any instructions to act for the defending in discharging the Mortgage remain unknown.  Further, general search of death records and probate search under the name of the defendant were to no avail.

8.  Moreover, the two solicitors who witnessed the execution of the Mortgage and certified the Mortgage respectively, and the two confirmors of the Assignment, can no longer be located.

9.  Against these circumstances, the plaintiff took out the Originating Summons in these proceedings.

10.  Pursuant to the Order of Master Kent Yee dated 28 December 2022, the Originating Summons (accompanied by a form of Acknowledgment of Service)  and the said Order were to be served on the defendant by substituted service by way of advertisement for 2 consecutive days in designated local newspapers.  I am satisfied that substituted service was duly effected, and that the plaintiff’s solicitors have not been contacted by the defendant and no Acknowledgment of service had been filed to date.

RELEVANT LAW AND APPLICATION

11.  According to section 19 of the Ordinance, no action shall be brought to recover any principal sum of money secured by a mortgage or other charge on property, or to recover proceeds of the sale of land, after the expiration of 12 years from the date when the right to receive the money accrued.  Such period was stipulated in place of the original limitation period of 20 years by section 8 of the Limitation (Amendment)  Ordinance 1991, with effect from 1 July 1991.

12.  As the Mortgage in the present case was executed prior to 1 July 1991, the applicable limitation period should be 20 years instead of 12 years: Broada Ltd & Anor v Chow Cheuk Yin, HCMP 1049/1997, 6 June 1997, per Le Pichon J (as she then was)  at para 5.  The same would have applied to any foreclosure action: section 19(2)  of the Ordinance.  As regards the recovery of arrears of interest (if there were any), the limitation period should be 6 years: section 19(5)  of the Ordinance; Yau Pak Hin & Anor v Ho Lung Thomas Ignatius, HCMP 628/2012, 31 July 2013, per Deputy High Court Judge Sakhrani at para 17.

13.  According to the terms of the Mortgage, the Deceased as mortgagor had requested the defendant as mortgagee to lend and advance to the Deceased the sum of HK$5,000, and the Deceased had covenanted with the defendant to pay to the defendant the said sum of HK$5,000 on 13 April 1962 (defined as “the day for repayment” under the Mortgage)  and to pay to the defendant interest thereon in the meantime.

14.  In the absence of any evidence to the contrary, it would appear that the right to receive the money accrued at the latest by 13 April 1962.  As such, the limitation period for the defendant to recover any principal sum of money started running on 13 April 1962 and expired on 13 April 1982, i.e. over 40 years ago.  The same would apply to any foreclosure action, whilst the recovery of arrears of interest (if any)  would have been time-barred even earlier.

15.  In any case, in view of the long lapse of time and the fact that neither the Deceased nor his estate was being pursued by the defendant for repayment of principal or recovery of arrears of interest over several decades, a reasonable assumption is that the Mortgage had long since been discharged: see similarly Fung Kam Cheung v Kwok Yiu Wing [1991] 1 HKC 321, per Godfrey J (as he then was)  at para 3; Yau Pak Hin & Anor v Ho Lung Thomas Ignatius, HCMP 628/2012, 31 July 2013, per Deputy High Court Judge Sakhrani at para 18.

16.  Accordingly, I am satisfied that the Mortgage is no longer subsisting and is unenforceable by the operation of the Ordinance and I agree to make a declaration to the same effect.  I am also prepared to make an Order that the registration of the Mortgage be vacated.

17.  In the premises, I make an order in terms of paragraphs 1 and 2 of the Originating Summons, as set out in paragraph 1 of this judgment above.

COSTS

18.  In the Originating Summons, the plaintiff also seeks costs of these proceedings.

19.  In my view, the present proceedings are necessitated by the long lapse of time and the inaction of the parties, with the result that the defendant can no longer be located and hence the plaintiff has little alternative but to apply for the orders mentioned above.  This is, however, through no apparent fault on the part of the defendant.  As such, I am hesitant to award costs of these proceedings against the defendant (even putting aside the question whether the plaintiff could enforce such costs order against the defendant in reality, given that the plaintiff could not locate the defendant).  It may be otherwise if the defendant could be located but unreasonably refuses to cooperate, so as to necessitate the institution of court proceedings.  In contrast, in the present case, it would appear inevitable for the plaintiff to apply to the court for the orders sought in any event, given the long lapse of time and the plaintiff’s inability to locate the defendant and secure the latter’s cooperation.

20.  Having discussed my above concern with Mr Shum for the plaintiff and, upon taking instructions, Mr Shum informed the court that the plaintiff is agreeable to the court making no order as to costs, and I so order.

21.  It remains for this Court to thank Mr Shum for the plaintiff for his submissions and assistance rendered to the court.