NG KAM HA v. VINCENT SINA TRADERS (H.K.) LTD.

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JUDGMENT

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1. The Plaintiff bought a flat from a Mr. CHENG Cho-pui. The Sale and Purchase Agreement was dated the 8th of November 1985 and the assignment was dated the 10th of December 1985. The assignment was not registered until the 7th of February 1986.

2. A judgment was entered against Mr. Cheng's firm on the 4th of October 1985. The Plaintiff in thoseproceedings is the Defendant in the present proceedings. They obtained a Charging Order Nisi charged against the property on the 3rd of February 1986 and this was registered on the 6th of February 1986.

3. The Plaintiff is seeking a Declaration that the Charging Order Nisi and the subsequent order absolute are void and of no effect.

4. Mrs. Clough for the Plaintiffs advanced an able submission along the lines that after Mr. Cheng disposed of his interest in the flat by the said assignment no interest remained in the land. It was accordingly impossible for the Dependents to obtain a Charging Order Nisi against the flat as there was no interest to charge. In support of this, she referred to section 20 of The Supreme Court Ordinance, Cap. 4.

5. She went on to argue that the Land Registration Ordinance Cap. 128 must be considered in some detail. Section 3(1) of the Ordinance deals with priorities which arise when there are successive transactions in Land. Registration of transactions is not mandatory. Obviously if a transaction is not registered untoward consequences may ensue. That however is a different matter.

6. Section 3(2) is a even greater assistance. It deals with the consequences which flow from a failure to register transactions. Section 3(2) reads as follows:

7. It will be noted that it is only in limited circumstances that an unregistered transaction is rendered null and void.

8. There can be no doubt on the facts before me that the Defendants cannot derive a benefit under Section 3(2) as they are not purchasers for value and their interest is not by way of purchase or mortgage.

9. Miss Lam for the Defendants argues that the charging order was validly obtained. She then goes on to deal with the effect of registration under the Land Registration Ordinance. She submitted the case was virtually on all fours with Consolidated Sales v. Turner Lynn⁽¹⁾ where Briggs J. as he then was had in effect held that the purpose of Cap. 128 was to make priority of registration according to the Ordinance the test of ownership. Mantell J. in Kai Sum Investments v. Dah Sing Bank⁽²⁾ followed Briggs J. although he did not give any detailed reasons for doing so.

10. Both of these cases were referred to by Mr. Justice Hunter in Financial & Investment Services v. Baik Wah International⁽³⁾. Mr. Justice Hunter did deal in some detail with the underlying principals of Cap. 128 and at page 109 onwards in his judgment he postulated the four questions which have to be asked in order to ascertain the rationale of the land registration legislation.

11. In doing so, he considered in some detail the exact meaning of Section 3(1) and Section 3(2). He came to a conclusion that the Land Registration System in Hong Kong was registration of title deeds rather than registration of title. There was no duty or obligation imposed on a party to register a transaction. Registration affected the priority of the transaction not its validity subject to the provision of Section 3(2). There could be no question of Section 3(2) being successfully invoked as there was no question of there being a bona fide purchaser for value along the lines I have already indicated.

12. I have no doubt that Mr. Justice Hunter was correct in his assessment of the position. When Mr. Cheng disposed of the land by the assignment, it was no longer possible for the Defendants to charge any interest against the land.

13. I would also make a few passing observations concerning with the Defendants' contention that the doctrine of estoppal by representation was applicable.

14. As pointed out by Mrs. Clough, this would have to be by inference as no representations were in fact made.

15. There are two reasons why this argument cannot succeed. The first is that the Plaintiffs were under no duty to make any representation. See Mercantile Bank of India Ltd. v. Central Bank of India Ltd.⁽⁴⁾. The second is that the Defendants have not acted to their detriment as a result of the failure of the Plaintiffs to make any representation. The Defendants have simply been endeavouring to enforce the judgment they obtained against Mr. Chang.

16. That I think disposes of all the substantive issues which have been raised in this matter. I am prepared for the reasons I have given to make the Declarations sought by the Plaintiffs and I will hear the parties on costs.

(1)    [1970] HKLR 222

(2)    [1986] HKLR 850

(3)    [1935] HKLR 103