RE YEUNG KI FAI AND OTHERS

DCMP 4189/2019

[2020] HKDC 306

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4189 OF 2019

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D E C I S I O N

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1.  This is an ex parte application by the applicants, who are siblings, under Section 12A of the Conveyancing and Property Ordinance, Cap 219 (“Section 12A”) for an order that the property known as all those pieces or parcels of ground registered in the Land Registry as Section A of Lot No 1579 in DD 117, Yuen Long, New Territories (“the Land”) be free from a mortgage upon the applicants’ payment into court of a sum of $3,600.

2.  The applicants submit to the jurisdiction of this court under Section 12A(4) and the annual rateable value of the Land is less than HK$320,000.  This court therefor has jurisdiction to hear the matter.  Upon the applicants’ request made during this General Adjournment Period (“GAP”) to have this matter disposed of on paper without an oral hearing, I think it appropriate and so proceed.

Section 12A and the legal principles

3.  Section 12A provides:-

“(1)  Where land is subject to any encumbrance, whether immediately realizable or payable or not, and the encumbrancer is out of the jurisdiction, cannot be found or is unknown, or if it is uncertain who the encumbrancer is, the court may, if it thinks fit, on the application of the party for the time being entitled to redeem the encumbrance, direct or allow payment into court of a sum of money sufficient to redeem the encumbrance and any interest thereon.

(2)  Upon payment into court of the sum referred to in subsection (1), the court may, if it thinks fit, and either after or without any notice to the encumbrancer, as the court thinks fit, declare the land to be free from the encumbrance, and make any order for conveyance or vesting order as appropriate, and give directions for the retention and investment of the sum of money paid into court and for the payment or application of the income thereof, and for the payment of an amount certified by the court to be the reasonable costs of the applicant in making the application, such amount to be deducted from the sum of money paid into court.

(3)  On application by the encumbrancer or any person entitled to the money or fund in court, the court may direct payment or transfer thereof to the persons entitled to receive or give a discharge for the same, and generally may give directions respecting the application or distribution of the capital or income thereof.

(4)  In this section, “court” (法院) means the Court of First Instance unless the party to the application submits to the jurisdiction of the District Court.”

4.  In Re Cheung Chi Wang & Another [2002] 1 HKLRD 409, one of the earliest applications, if not the first, made after Section 12A came into operation on 9 June 2000, DHCJ Lam (as he then was) has given some clear guidelines which have since been consistently followed.  They have been helpfully summarized by HHJ MK Liu in Re Fung Chi Hon DCMP 1631 of 2018 [2018] HKDC 1080, which I quote:-

“(1)  The purpose of s 12A is to give the court the power to declare land to be free from an encumbrance on payment of sufficient money into court. It is not predicated upon a sale of land.

(2)  Section 12A is only applicable when the land in question is subject to an encumbrance. Yet, if there is a doubt as to whether the encumbrance exists, section 12A still applies.

(3)  The first stage of an application under section 12A is to obtain the direction or approval of the court regarding payment into court under s 12A. Before an applicant can ask the court to exercise its discretion under section 12A, he has to establish that the encumbrancer could not be found, or is unknown. The applicant must take reasonable steps to find out the encumbrancer and place the evidence of his efforts before the court.

(4)  After money is paid into court, the second stage is for the court to consider whether to exercise its discretion under section 12A to declare the land free from an encumbrance. The court has discretion as to whether notice should be given to the encumbrancer. In practice, such notice would often have to be given by advertisement in a newspaper.

(5)  In determining the amount to be paid into court, the court may take into account an additional amount on account of the contingency of further costs, expenses and interests.

(6)  The matter would come back to the court at the third stage, when the encumbrancer, or any person entitled to the money, apply to the court for payment under section 12A(3). If there are other parties who might have an interest in the money, the court would require notice to be given to such parties before deciding on how to exercise its discretion.

5.  Furthermore, an application pursuant to Section 12A may be made on ex parte basis (Re Cheung Chi Wang & Another, ibid §20), and the court cannot adopt a one-stage approach, that is to direct payment into court under Section 12(1) and at the same time declare that upon payment being made the land shall be free from the encumbrance (Fu Sum v Fu San Fat [2008] 5 HKLRD 271 at §§11-17, Re Light Time Investment Ltd HCMP 326, 328, 330-347/2010).

The facts and discussion

6.  In support of this application, the applicants proffered an affirmation by Yeung Chun Fai, one of the applicants, filed on 30 December 2019 and another affirmation from their father Yeung Wing Kwong (“the Father”) dated 17 April 2020, which deposed to the following matters, among others.

7.  The land search records show that the applicants are the current registered co-owners of the Land, having been assigned the same by a Deed of Gift dated 28 February 2012 executed by the Father who acquired the Lot, as to half share, by an Assignment by way of gift dated 9 December 1986 and as to the other half share, by another Assignment by way of sale dated 9 February 1987, both assignments being executed by his cousin Yang Yung Yen, who in turn inherited the Land from his father Yeung Chuk Nam.

8.  The applicants are therefore persons for the time being entitled to redeem the below mentioned mortgage.

9.  In the land search record of the Land was registered a Mortgage by Memorial No YL98807 (“the Memorial”) which recorded that a mortgage was created on 10 March 1937 by a former owner Li Kam Fat as the trustee of Li Leung Shi in favour of Lam Tim Wan (“the Mortgagee”) to secure payment of HK$200 without any provision as to interest (“the Mortgage”).

10.  There was no record of the redemption of the Mortgage in the land search record, the Memorial Index record or the title deeds of the Land.  In the affirmation of the Father, who is now 83 years old, he deposed that he had no knowledge that there was such a record of redemption.

11.  In the circumstance, there lurks a doubt as to whether the Mortgage still exists.

12.  By reason of the matters set out below, I am satisfied that the Mortgagee or his successor cannot be found.

13.  The full address of the Mortgagee was not stated in the Memorial, but only his locality or village “Shan Pui” was recorded.

14.  In the affirmation of Yeung Chun Fai, he deposed to the following efforts all made in January 2018 to attempt to identify and locate the Mortgagee or his successor:-

(a)   Letters to enquire about the correspondence address and contact details of the Mortgagee were written by the applicants’ solicitors to respectively Yuen Long District Lands Office, Yuen Long District Office, Tai Po District Office, the Heung Yee Kuk and Pat Heung Rural Committee.  All of the above replied that they did not have any record or information pertaining to the enquiry.

(b)  The applicants’ solicitors conducted a search in the Probate Registry for any grant concerning any deceased person in the English or Chinese name of the Mortgagee with no result.

(c)   A search of the records in the Births and Deaths Registry revealed that a person with identical English and Chinese name as that of the Mortgagee died in 1953 at age 71, but whose address was “No. 6, Main Road, Y.L., G.F.” which has no resemblance to the locality or village of the Mortgagee as stated in the Memorial.

15.  I think reasonable steps have been taken by the applicants to try to locate the Mortgagee or his successors, whom nevertheless cannot be found.

Conclusion and disposal

16.  I am satisfied that the requirements of Section 12A have been met and the application ought to be acceded to.

17.  As to the amount of money to be paid into court, the applicants propose HK$3,600 being the round-up total of the principal of HK$200 plus simple interest for 83 years at the notional rate of 20% per annum, which is the rate usually adopted in Section 12A applications (see for instance Man Chi Kan v Man Tsak Lun [2003] 2 HKLRD 489 and Re Fung Chi Hon above).  I think the sum proposed is an appropriate amount.

18.  The applicants seek an order along the line of an approach and form now consistently adopted by judges in applications under this section (for instance, Re Light Time Investments Limited HCMP 326, 328, 330-347/2010, DHCJ L Chan (as he then was); Wu Cho Yeung and others v 楊木勝 HCMP 1461/2011, Suffiad J; and very recently in Re Cheung Fuk Cheong and Others HCMP 1294/2019, Au-yeung J).

19.  I think it appropriate and order:-

(1)  Within 14 days hereof, the applicants do pay HK$3,600 into court to redeem the mortgage registered by Memorial No YL98807 against Section A of Lot No  1579 in DD 117, Yuen Long and any interest thereon;

(2)  Within 7 days after the said payment into court, the applicants do advertise in a widely circulated local Chinese newspaper a notice making known this order and the fact that payment has been made into court pursuant to the order with full particulars of the lot, the mortgage and the names of the mortgagee and mortgagor and further stating that any person who has any interest or entitlement in or derived from the mortgage and in the payment into court aforesaid may apply within 14 days to be joined as a respondent to these proceedings; and

(3)  The applicants may, after a lapse of no less than 21 days from the publication of the advertisement, make a paper application pursuant to section 12A(2) of the Conveyancing and Property Ordinance for a declaration that the said lot be free from the mortgage or encumbrance.

20.  As the said affirmation of the Father has not been filed due to the closure of the District Court Registry in GAP, I further direct that the said affirmation be filed within 14 days, and this order shall not be sealed until after the said filing.

21.  There be no order as to costs.

22.  I thank the applicants’ solicitors for their helpful submissions.