LUCKY POWER LTD v. LAM, PHILIP YUNG TAK and/or other occupiers

HCA 481/2012
and HCA 1785/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 481 OF 2012

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AND

ACTION NO 1785 OF 2012

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(Consolidated by Order of Master Leong dated 13 May 2013)

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JUDGMENT

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INTRODUCTION

1.  This is the trial of two actions, HCA 481/2012 (“the First Action”) and HCA 1785/2012 (“the Second Action”), which were consolidated pursuant to an order of Master Leong dated 13 May 2013.

2.  The plaintiff (“Lucky Power”) in the two actions is the registered owner of the lands known and registered in the Land Registry as the Remaining Portion of Lot No 48 in DD 212 (“RP48”) and the Remaining Portion of Lot No 49 in DD 212 (“RP49”) (collectively “the Lots”), pursuant to an assignment executed by the previous owner, Antonio Casadei (“Mr Casadei”), dated 28 September 2011.

3.  The 1^st defendant (“Mr Lam”) and the 2^nd defendant (“Educational”) in the First Action are the occupiers of a portion of RP49 coloured “green” on a plan annexed to the statement of claim in the First Action (“the Green Area”).

4.  According to Lucky Power, Mr Lam is a mortgagee of the Lots pursuant to a written memorandum dated 8 June 1984 (“the Memorandum”), and it wishes to exercise the equitable right of redemption to free the Lots from the mortgage.

5.  On the other hand, Mr Lam denies Lucky Power’s title or ownership of the Lots.  He further denies that the Memorandum creates a mortgage over the Lots.  Mr Lam’s case is that that he is the purchaser of the Lots and has fully paid the purchase price to Mr Casadei.  Mr Lam also says that Educational is a lawful tenant of the Green Area pursuant to a written tenancy agreement (“the Tenancy Agreement”) dated 10 May 2007 for a term of 10 years commencing on 1 June 2007.

6.  In the First Action, commenced by a writ of summons on 23 March 2012, Lucky Power claims against Mr Lam and Educational for vacant possession of the RP49, including Green Area.

7.  In the Second Action, commenced by a writ of summons on 26 September 2012 against Mr Lam only, Lucky Power seeks to exercise the equitable right of redemption in respect of the Lots.

8.  In each action, Mr Lam and/or Educational have raised a counterclaim against Lucky Power seeking, inter alia, a “discharge” of the instruments under which Lucky Power obtained title to the Lots, damages and other relief.

Background facts

9.  Mr Casadei used to be the registered owner of the Lots pursuant to an assignment dated 4 December 1975.

10.  On 8 June 1984, Mr Casadei and Mr Lam entered into the Memorandum.  The Memorandum provided as follows:-

“ 1. In consideration of

(a) the sum of $100,000.00 now advanced by [Mr Lam] (hereinafter called ‘the Lender’) to [Mr Casadei] (hereinafter called ‘the Borrower’) (the receipt whereof the Borrower do hereby acknowledge); and

(b) the Lender agreeing to further advance a sum of $200,000.00 to the Borrower in the following manner:-

(i) $100,000.00 to be paid on or before 8^th September 1984;

(ii) $100,000.00 to be paid on or before 8 December 1984

the Borrower hereby declare that he has deposited with the Lender the title deeds and documents relating to [the Lots] to the intent that [the Lots] may be equitably charged with repayment to the Lender of the said sum of $300,000.00 or such other sum as may be outstanding upon demand.

2. The Borrower hereby covenants with the Lender that he shall not redeem [the Lots] on or before the 1^st day of July 1997 otherwise he shall pay interest to the Lender on the amount outstanding at the rate of 15% per annum from the date hereof to the date of payment.

3. The Lender hereby covenants with the Borrower that he shall not call in or demand the loan herein or any part thereof on or before the 1^st day of July 1997.

4. The Lender hereby covenants with the Borrower that if the further advance of $200,000.00 or any part thereof is not made to the Borrower on the due dates as set out in clause 1(b)(i) and (ii) hereof, the Borrower shall be entitled to redeem [the Lots] by repaying the amount then outstanding to the Lender.

5. The Borrower hereby covenants with the Lender that so long as there is any amount outstanding herein, the Lender shall be entitled to the exclusive use occupation and enjoyment of [the Lots].

6. The Lender hereby covenants with the Borrower that so long as he is entitled to exclusive use occupation and enjoyment of [the Lots], the Lender shall pay perform and observe all moneys obligations terms and conditions to be paid observed and performed by the Borrower in respect of [the Lots].”

11.  The Memorandum was, it is not in dispute, prepared by Mr Lam’s solicitors, Messrs Poon, Yeung & Li.  In the relevant bill rendered by Messrs Poon, Yeung & Li to Mr Lam dated 8 June 1984, the document was described as a “Memorandum of deposit of title deeds”.

12.  According to Mr Lam, the total sum of HK$320,000 (comprising the sum of HK$300,000 mentioned in the Memorandum plus a further sum of HK$20,000 requested by Mr Casadei) was paid to Mr Casadei by instalments between 5 June 1984 and 27 December 1986.

13.  On 4 November 2005, Mr Lam caused the Memorandum to be registered in the Land Registry against the Lots.  The relevant memorial, which Mr Lam admits was prepared by him, described the Memorandum as a “Memorandum of Mortgage”, Mr Casadei as the “Lender” and himself as the “Borrower”.

14.  On 10 May 2007, Mr Lam entered into the Tenancy Agreement with Educational and one other company known as Shiu Hang Enterprises Co Ltd (“Shiu Hang”) as tenants in respect of the Green Area for a term of 10 years commencing on 1 June 2007 at the monthly rent of HK$10,000.  The Tenancy Agreement was signed by Mr Lam on behalf of the landlord which was stated to be, or described as, “Antonio Casadei, and/or Philip Yung Tak Lam”, and also by or on behalf of Educational and Shiu Hang.  The Tenancy Agreement was stamped, but it has never been registered in the Land Registry.

15.  It is Lucky Power’s case that in around 2010, Wang Guan (“Mr Wang”) was interested in purchasing RP49.  Mr Lam held out to Mr Wang that notwithstanding the paper owner of the Lots was Mr Casadei, he was the beneficial owner and would be in a position to transfer title in RP49 to Mr Wang.

16.  Accordingly, on 15 October 2010, Mr Lam (as vendor) and Mr Wang (as purchaser) entered into a written provisional agreement for sale and purchase (“the Provisional Agreement”) of a portion of RP49 as marked on a plan annexed to the Provisional Agreement (being the entirety of RP49 less the Green Area, hereinafter referred to as “the Pink Area”) at the price of H$15,000,000.  The agreed completion date was on or before 18 February 2011.

17.  Clause 18.1 of the Provisional Agreement provided as follows:-

“ [Mr Lam] is an un-registered owner of ‘the said premises’ of Lot No.49 RP in DD 212. And will proceed to complete the registration procedure in legal title, and further proceed to sub-division of the said lot into 2 portions. One portion is appox. 2,000’ shown in the annexed lot index plan Coloured Pink ‘the said premises’ and the other portion shown in the lot index plan Coloured Yellow which is not for sale. The Vendor shall proceed to complete the procedures of the Deed Title Document to register with The Land Registry.”

18.  It is not in dispute that Mr Lam received from Mr Wang the total sum of HK$6,000,000 under or pursuant to the Provisional Agreement as follows:-

(1) an initial deposit of HK$2,250,000 upon the signing of the Provisional Agreement;

(2) a further deposit of HK$3,750,000 on or about 3 March 2011.

19.  It is also common ground that the Provisional Agreement was not completed, apparently because Mr Lam was unable to transfer title in the Pink Area to Mr Wang.

20.  In the meantime, on 21 October 2010, Mr Casadei sent a letter to Mr Lam stating that he had appointed Messrs K B Chau & Co as his solicitors to redeem the Lots, and requested Mr Lam to send all title deeds and documents relating to the Lots to his solicitors as well as to inform them of the outstanding principal and interest on 31 November 2010 for the purpose of redemption.  The same request was made in Messrs K B Chau & Co’s letter to Mr Lam dated 30 October 2010.

21.  Mr Lam replied by a letter dated 5 November 2010 to Messrs K B Chau & Co refusing to comply with the aforesaid request and alleging that Mr Casadei had sold the Lots to him a long time ago and received full payment for the Lots.

22.  According to Mr Wang, in or about June 2011 Mr Casadei (through his solicitors) got in touch with Mr Wang’s solicitors, and discussion followed regarding a proposed sale of the Lots by Mr Casadei to Mr Wang.  Mr Wang decided to appoint Lucky Power as his trustee or nominee to purchase the Lots in order to avoid any legal problem which might arise from his entering into two agreements to purchase the same property.

23.  On 31 August 2011, Mr Casadei as vendor and Lucky Power as purchaser entered into a written agreement for sale and purchase (“the Agreement”) of the Lots at the price of HK$6,500,000.

24.  The following provisions of the Agreement are of note:-

(1) Clause 8A –

“ [Mr Casadei] shall, out of his own fund, bear and pay to the Solicitors of [Lucky Power] the charges to obtain certified copy of title deeds and documents of [the Lots] to [Lucky Power] within 7 working days from Completion and [Mr Casadei] shall confirm in writing that there is no documents other than those deposited under [the Memorandum].”

(2) Clause 8B(ii) –

“ [Lucky Power] agrees that he shall take [the Lots] subject to the principal sum under [the Memorandum].”

(3) Clause 8C –

“ [The Lots are] sold subject to and with the benefit of the existing lettings and occupiers, if any, affecting [the Lots]. For the avoidance of doubt, [Mr Casadei] has no obligation to hand over possession to [Lucky Power].”

25.  By a power of attorney dated 11 September 2011, Mr Casadei appointed Lucky Power as his attorney with wide powers to deal with the Lots.  The powers granted to Lucky Power included, in particular, the power to “redeem release and discharge any charge, mortgage or pledge affecting [the Lots] or any part thereof or any interest therein” (clause 2).

26.  On 28 September 2011, the Agreement was completed by an assignment (“the Assignment”) of the Lots by Mr Casadei in favour of Lucky Power.  Both the Agreement and the Assignment were duly registered in the Land Registry against the Lots.

27.  By a letter dated 25 June 2012, Lucky Power’s solicitors, Angela Lau Law Office, wrote to Mr Lam seeking to discharge the mortgage under the Memorandum and asked Mr Lam to provide the updated amount, if any, payable on redemption of the mortgage.

28.  By a letter dated 28 June 2012 from Mr Lam to Angela Lau Law Office, Mr Lam asserted that he and other parties had fully paid Mr Casadei the purchase price for the Lots, and objected to any discharge of the Memorandum by Lucky Power.  In that letter, Mr Lam also stated that there was a tenancy agreement relating to a portion of the Lots, but no particulars of the tenancy agreement were given.

29.  I have been told by Mr Lam that the Green Area is currently occupied by Mr Lam and/or Educational, and used as a workshop as well as for storage purposes.

Mr Lam is an equitable mortgagee, and not a purchaser, of the Lots

30.  It is clear, on the face of the Memorandum, that it effected or evidenced an equitable mortgage of the Lots by deposit of title deeds.  The terms and conditions of the Memorandum plainly support this view.  In particular:-

(1) clause 1 expressly refers to a deposit of title deeds and documents to the intent that the Lots may be equitably charged with the repayment to “the Lender” (ie Mr Lam) of the sum of $300,000 or such sum as may be outstanding upon demand;

(2) clause 2 provides that the “Borrower” (ie Mr Casadei) shall not “redeem” that Lots prior to 1 July 1997; otherwise he shall pay interest on the outstanding amount at the rate of 15% per annum;

(3) clause 3 provides that Mr Lam shall not call in or demand the “loan” or any part thereof prior to 1 July 1997;

(4) clause 4 provides that Mr Casadei shall be entitled to “redeem” the Lots by repaying the outstanding amount if Mr Lam fails to make the further advance of $200,000 on the due dates as set out in clause 1(b)(i) and (ii) thereof; and

(5) clause 5 makes provisions for further rights and obligations of Mr Lam during the period of time when (a) there was any outstanding amount due or (b) he was entitled to the exclusive use occupation and enjoyment of the Lots.

31.  Mr Lam maintained, nevertheless, that the transaction that he had agreed with Mr Casadei was a sale and purchase of the Lots.  As to how it was that the transaction took the form of the Memorandum, Mr Lam said in his evidence that he had originally prepared a draft written agreement for sale and purchase (a copy of which is before the court) but he eventually decided not to sign it.  Instead, he entered into the Memorandum with Mr Casadei on 8 June 1984 because, at that time, he had not fully paid the purchase price to Mr Casadei and furthermore he did not know what would happen after 1997.  He said that he had been advised by his solicitor (Mr Poon) that it was not possible at that time to execute any assignment of land in Hong Kong which would be effective after 1997, and also there were some (unspecified) liabilities arising out of the buildings or building structures on the Lots, and thus there were uncertainties and risks associated with a purchase of the Lots.  Whether such advice was sound is neither here nor there.  What is significant is that Mr Lam’s evidence clearly indicates that he did not want to proceed with a sale and purchase transaction at that time, and wished to adopt a wait and see attitude.

32.  I accept, on the evidence before me, that at the time of the making of the Memorandum Mr Casadei was willing to sell and Mr Lam was willing to purchase the Lots at the price of HK$300,000, and they would have entered into an immediate binding agreement for the sale and purchase of the Lots at that price but for the uncertainties and risks perceived by Mr Lam as aforesaid.  I consider that they entered into the Memorandum as a sort of compromise or interim solution which would permit Mr Lam to have immediate possession of the Lots for the period up to 1 July 1997.  Both Mr Casadei and Mr Lam probably considered the arrangement under the Memorandum to achieve practically the same result as an outright sale and purchase agreement of the Lots, and thought that it was as good as such agreement.  It is also likely that Mr Lam and Mr Casadei both contemplated that they might enter into a further agreement for sale and purchase of the Lots after the aforesaid uncertainties and risks had been resolved.  This background would explain why, in some of the subsequent letters written by Mr Casadei or Mr Lam, they wrote in terms as if they had already entered into a contract for the sale and purchase of the Lots or Mr Lam had already purchased the Lots: see for example Mr Lam’s letter to Mr Casadei dated 7 April 2003, and an undated letter written by Mr Casadei to Mr Lam which was posted on 22 October 2008.  I shall further comment on these letters later in this judgment.

33.  The evidence of Mr Lam as a whole clearly indicates that he was, at the time of the signing of the Memorandum, not willing to accept or take the uncertainties and risks arising from an outright purchase of the Lots.  Although Mr Lam refused to acknowledge that the Memorandum created an equitable mortgage of the Lots, Mr Lam admitted in his evidence that he understood English and the meaning of the provisions of the Memorandum at the time of its execution.  Moreover, the Memorandum was prepared by his solicitors.  In the absence of evidence to the contrary, I consider it reasonable to proceed on the basis that the Memorandum properly reflected the instructions that he had given to his solicitors regarding the nature and substance of the transaction that he wished to enter into with Mr Casadei.

34.  I also place weight on the fact that in the relevant memorial under which the Memorandum was registered in the Land Registry on 4 November 2005, Mr Lam himself described the instrument as a “Memorandum of Mortgage”, and Mr Casadei and himself as the “Lender” and “Borrower” respectively. The description “100% owner” also appeared next to the word “Lender” in that memorial.  For the sake of completeness, I should mention that Mr Lam said in his evidence that the description of “Memorandum of Mortgage” was a mistake.  I do not accept such evidence.  I consider the description to accurately reflect Mr Lam’s understanding of the true nature of the Memorandum.

35.  In the course of the trial, Mr Lam referred me to quite a number of documents which might have a bearing on the true nature of the transaction which he had entered into with Mr Casadei.  I do not propose to examine each of those documents individually in this judgment, but shall express my views on some of the more important documents below.

36.  First, in a telex which apparently was sent by Mr Lam to Mr Casadei prior to the making of the Memorandum, two other options were mentioned, one involving the transfer of the Lots to a new company to be formed, and the other involving a management contract, a power of attorney and a nominee arrangement.  However, neither option was eventually pursued.  I do not see how the telex can support Mr Lam’s case.

37.  Second, Mr Casadei executed two powers of attorney conferring on Mr Lam wide powers to deal with the Lots.  The first power of attorney was dated 28 December 1986 (“the December 86 PA”), under which Mr Lam was given the powers to, inter alia, let, sell and dispose of the Lots, and to sign, seal and deliver any deed or instrument in writing for the sale of the Lots.  The second power of attorney was dated 25 April 1988 (“the April 88 PA”).  The main difference between the December 86 PA and the April 88 PA is that the latter expressly empowered Mr Lam to negotiate, discuss, and agree with the Government in respect of a short term tenancy relating to (it would appear) a neighbouring site and a short term waiver relating to RP48 and RP49.

38.  Leaving aside for the moment the doubts raised by Ms Queenie Ng (for the plaintiff) on whether the December 86 PA and the April 88 PA were properly executed by Mr Casadei, it seems to me relevant that by June 1986 (ie prior to the date of the December 86 PA) Mr Casadei had already left Hong Kong and moved to Spain (see Mr Lam’s letter to Mr Casadei dated 2 June 1986).  It was therefore not surprising that Mr Casadei might need someone to deal with the Lots on his behalf while he was absent from Hong Kong. Also, under the Memorandum, it was contemplated that Mr Lam would be in occupation of the Lots for a long period of time up to at least 1 July 1997 and was responsible to perform and observe all moneys obligations, terms and conditions to be paid, observed and performed by Mr Casadei in respect of the Lots.  All these might explain why Mr Casadei executed the two powers of attorney in favour of Mr Lam.

39.  In any event, by a deed of revocation dated 12 June 2007 (“the Deed of Revocation”), Mr Casadei revoked all powers of attorney and authorizations previously executed by him affecting the Lots with immediate effect.  Prima facie, the December 86 PA and the April 88 PA were discharged or terminated immediately upon the execution of the Deed of Revocation.

40.  Third, on 23 February 1987, Mr Lam (in his capacity as Mr Casadei’s attorney pursuant to the December 86 PA) entered into a written agreement to sell certain interests in or under the Memorandum, namely, 44% and 11% shares respectively, to two companies known as Goods Exchange Co (HK) Limited and Rokaphila Lanton Company Limited for the prices of HK$133,019.40 and HK$32,000.00.  It is important to note that the subject matters of the sale and purchase were not undivided parts or shares of or in the Lots themselves, but interests in or under the Memorandum.  It is not clear why the seller of such interests should be Mr Casadei instead of Mr Lam, but what seems to me to be significant is Mr Lam’s apparent recognition of the validity and effect of the Memorandum.

41.  Fourth, in a letter written by Mr Lam to Mr Casadei dated 7 April 2003 (referred to in paragraph 32 above), Mr Lam stated that at the time of the making of the Memorandum he had not approached his solicitor to complete the “procedure of transaction and [registration]” of the property which he had purchased from Mr Casadei, and requested that the transaction be now completed. It is, however, significant, to note that in that letter, Mr Lam also explained the background to the making of the Memorandum as follows:-

“ In 1984, when I appointed the solicitor Mr Poon of Poon, Yeung & Li for the purchasing transaction of the above property it is at such time we have discussed the due to the unknown after the year of 1997 about the Land Policy and matters of Hong Kong therefore we have agreed the transaction by Memorandum dated 8^th June, 1984 …”

42.  Moreover, just a few days prior to 7 April 2003, Mr Casadei had written a letter dated 2 April 2007 to the Small Claims Tribunal in Hong Kong relating to a claim in respect of certain charges on the Lots. There, Mr Casadei pointed out that Mr Lam was the occupier of the land and he relied on clause 6 the Memorandum to argue that it was Mr Lam who should be responsible for the charges in question.  Mr Casadei did not suggest, as he might have, that Mr Lam was the owner of the Lots and therefore was responsible to pay the relevant charges.

43.  Fifth, in an undated letter written by Mr Casadei to Mr Lam which was posted on 22 October 2008 (referred to in paragraph 32 above), Mr Casadei stated as follows;-

“ First in 1984 we had a contract to sell my property to you. In that contract you are responsible to pay all regular fees to the government of HK and any other expenses related to the property. To my big surprise and bitterness that after more than 20 years I find out that you have failed to make regular payment to the government and accumulated enormous debts to my name because property title was not transferred. Due to your negligence the HK government have summoned me on several occasions as a debtor.

For this reason I removed the power I gave you in the good days, and through consulate I officially gave legal power of attorney to my son Remo …

My position to close this case is clear, transparent and honest.  First show me that you have re-paid the debts to the government of HK and any other debts on the property owed in my name.  When I have such evidence, give me the details and date for the property title transfer.  If necessary, my son will go to HK to sign my name for the transfer of ownership.”

44.  Mr Casadei’s letter should be read in conjunction with two other letters written by Mr Casadei’s son (Remo Casadei) to Mr Lam.  One was dated 11 August 2008, in which Remo mentioned that Mr Lam had recently made significant repayments to the Ratings and Valuation Department and asked Mr Lam to contact his lawyer for information and conditions regarding the transfer of property title to Mr Lam.  The other letter was undated and was written in response to Mr Lam’s letter of 20 August 2008.  In Remo’s letter, he set out various conditions for the transfer of title of the Lots by his father to Mr Lam, stating expressly that the terms therein “were not binding until a formal agreement is signed between me or my father and you”.

45.  Mr Lam strongly relied upon these letters in support of his case that he had entered into a contract for the purchase of the Lots from Mr Casadei.  I accept that the contents of these letters might, at first sight, tend to support Mr Lam’s case that Mr Casadei and his son considered that Mr Casadei had entered into a contract to sell the Lots to Mr Lam.

46.  On further consideration, it seems to me that the reference to “a contract to sell my property to you” in Mr Casadei’s letter was probably a reference to the Memorandum because, in the same paragraph, Mr Casadei also stated that in that “contract” Mr Lam was responsible to pay “all regular fees to the government of HK and any other expenses related to the property”.  Such obligation or responsibility on the part of Mr Lam would be entirely consistent with, and seems to be a reference to, clause 6 of the Memorandum.

47.  As earlier mentioned, I consider that both Mr Casadei and Mr Lam probably considered the arrangement under the Memorandum to achieve practically the same result as an outright sale and purchase agreement of the Lots, and thought that it was as good as such agreement.  It is possible that both of them treated the Memorandum as equivalent to a sale and purchase agreement of the Lots.  However, I do not consider that there is any or any sufficient evidence to prove that, as a matter of fact, Mr Casadei and Mr Lam ever entered into any binding agreement for the sale and purchase of the Lots.

48.  Overall, notwithstanding the various documents mentioned above, I find that the only legally binding agreement which Mr Casadei and Mr Lam entered into was the one embodied in the Memorandum, the legal effect of which was undoubtedly that of an equitable mortgage by deposit of title deeds.

49.  For the sake of completeness, I should mention that although I have not expressly dealt with all the documents referred to by Mr Lam in the course of the trial, I have considered them but do not consider that they would alter my conclusion that Mr Lam is in truth and in fact a mortgagee, and not a purchaser, of the Lots.

Lucky Power is entitled to exercise the equitable right to redeem

50.  In view of the conclusion reached above that the relationship between Mr Casadei and Mr Lam is that of mortgagor and mortgagee, and not vendor and purchaser, it is clear that Lucky Power, being the purchaser of the Lots from Mr Casadei, is entitled to step into the shoes of Mr Casadei and exercise the equitable right of redemption to free the Lots from the equitable mortgage created by the Memorandum.

51.  The equitable right of redemption is inherent in every mortgage, and can be exercised by any mortgagor at any time upon payment of the outstanding amount together with interest (if any) secured by the mortgage, unless the equity of redemption has been extinguished by foreclosure, sale or lapse of time.  See Faricho Investment Limited v Good Time Finance Ltd, HCA 2496/2005 (25 July 2006), at paragraph 9 per Deputy High Court Judge Carlson; UTG Investment (Far East) Ltd v Petra Bank and Another, CACV 172/1994 (20 January 1995), at paragraph 13 per Godfrey JA.

52.  I see no reason why Lucky Power should not be entitled to exercise the equitable right of redemption on the facts of the present case.  I shall consider the precise form of relief that should be granted to Lucky Power later in this judgment.

The Tenancy Agreement is absolutely null and void as against Lucky Power

53.  The Tenancy Agreement has never been registered in the Land Registry, while the Agreement and Assignment were duly registered in the Land Registry against the Lots on 30 September 2011 and 27 October 2011 respectively.

54.  By virtue of s3(2) of the Land Registration Ordinance, the Tenancy Agreement, being an unregistered instrument in writing, shall, as against any subsequent bona fide purchaser for valuable consideration of the Lots, be absolutely null and void to all intents and purposes.

55.  S4 of the Land Registration Ordinance further provides that no notice whatsoever, either actual or constructive, of any prior unregistered deed, conveyance, or other instrument in writing shall affect the priority of any such instrument as is duly registered.

56.  Lucky Power is a purchaser for valuable consideration of the Lots.  There is no basis to contend that it is not a “bona fide” purchaser for the purpose of s3(2) of the Land Registration Ordinance. It is not clear on the evidence as to whether Lucky Power had notice that Educational and Shiu Hang were tenants in possession of the Green Area pursuant to the Tenancy Agreement at the time of the execution of the Agreement or Assignment.  In any event, even if Lucky Power had notice of this matter, it is still entitled to rely on s3(2) of the Land Registration Ordinance having regard to s4 of that Ordinance: see Wellmake Investments Ltd v Chan Yiu Tong [1996] 2 HKLR 44 (CA).

57.  In all, I conclude that the Tenancy Agreement is null and void as against Lucky Power, and Educational cannot rely on it to resist Lucky Power’s claim for possession of the Green Area.

Miscellaneous matters

58.  There are two other matters which I ought to deal with briefly in this judgment.

59.  First, Mr Lam disputes, or does not accept, the authenticity of the Deed of Revocation and the Assignment.  Mr Lam has not produced any evidence to challenge the due execution by Mr Casadei of those documents. Each of these two documents was, on its face, executed by Mr Casadei in the presence of a Hong Kong solicitor, having first produced a Hong Kong identity card as proof of his identity.  I see no basis for treating them as anything other than authentic documents.

60.  Second, Mr Lam made a supplemental statement and also produced a statement from his employee (Rodolf Todio Datuin) to deal with an incident which allegedly occurred on 7 March 2015 at Mr Lam’s premises (ie the Green Area).  Ms Ng objected to the admission of the evidence contained in these statements on the ground that their contents were irrelevant to any issue in the two actions.  I informed the parties that I would admit the evidence provisionally and deal with the issue of admissibility in the main judgment to be delivered.  As a matter of fact, Ms Ng did not cross examine Mr Lam or his employee, who was called to give evidence, on the contents of the aforesaid statements.  Having further considered the contents of these statement, I agree with Ms Ng that they are not relevant and I would therefore not admit them as evidence in these actions.

Disposition

61.  In all, I find in favour of Lucky Power in the two actions.

62.  In relation to HCA481/2012, I make an order that, subject to payment by Lucky Power of any amount found to be due to Mr Lam under the Memorandum in HCA 1785/2012, Mr Lam and Educational shall deliver up vacant possession of the Green Area to Lucky Power.  I also dismiss Mr Lam and Educational’s counterclaim against Lucky Power.

63.  In relation to HCA 1785/2012, I make the following orders:-

(1) an account be taken of the outstanding indebtedness due to Mr Lam under the Memorandum, and payment of the amount found due by Lucky Power to Mr Lam;

(2) upon payment of the amount found due to Mr Lam under the Memorandum by Lucky Power as aforesaid, Mr Lam shall deliver up all title deeds relating to the Lots as well as vacant possession of the Lots (including the Green Area) to Lucky Power;

(3) an inquiry be made of the equitable compensation payable by Mr Lam to Lucky Power for being deprived of the use and enjoyment of the Green Area from 28 June 2012 to the date of delivery up of vacant possession of the Green Area to Lucky Power, and payment of the compensation found payable by Mr Lam to Lucky Power;

(4) Lucky Power be at liberty to apply for such further or other relief as it may be entitled to under this judgment; and

(5) Mr Lam’s counterclaim against Lucky Power be dismissed.

64.  Lastly, I make an order nisi that (i) Mr Lam and Educational shall pay the costs of Lucky Power in HCA 481/2012, and (ii) Mr Lam shall pay the costs of Lucky Power in HCA 1785/2012, to be taxed if not agreed.