CHOW CHIU TAI v. CHAN TAK MING

1992, No.A3825

_______________

H E A D N O T E

_______________

Leakage and escape of lubricant or oil from defendant's premises- action based on nuisance, negligence, rule in Rylands v. Fletcher and breach of DMC - claims for injunction, mandatory order and damages - nuisance already abated after interlocutory injunctions - plaintiff registered action as lis pendens at Land Office - application by defendant to vacate registration - definition of lis pendens in s.1 A of Land Registration Ordinance - test to be applied - Whittingham v. Whittingham [1978]2 WLR 936 and Greenhi Builders Ltd. v. Allen [1979] 1 WLR 156 considered.

S.C.224

1992, No.A3825

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

___________

_______________

D E C I S I O N

_______________

1. This is the defendant's application under s.19 of the Land Registration Ordinance, Cap. 128 to vacate the registration by the plaintiff of the writ of summons in this action as a lis pendens at the Land Office against the defendant's property.

2. The defendant is the owner of certain factory premises on the 11th floor of an industrial building in Kwun Tong. The plaintiff is the owner of the factory premises immediately below the defendant's. In this action, it is alleged that the defendant had caused a nuisance by allowing lubricant or oil to be discharged or leaked from his premises to the plaintiff's premises thereby causing loss and damage. Negligence and the rule in Rylands v. Fletcher are also pleaded. The plaintiff further relies upon the Deed of Mutual Covenant (DMC) in respect of the whole industrial building and alleges that the defendant was in breach of certain provisions of the DMC. In the prayer, the plaintiff claims against the defendant for certain injunctions restraining the defendant from continuing the nuisance and the breaches of the DMC and for damages. He also claims for an order that the defendant should ensure the due performance of the provisions of the DMC. Interlocutory applications had been taken out and dealt with. As a result of these, the defendant had given some undertakings to the court and the alleged nuisance and breaches had stopped. I was told that the defendant had in fact moved out of the premises which was later let out to a tenant. The action has however continued. Meanwhile in September 1992, the plaintiff registered the writ at the Land Office as a lis pendens against the defendant's premises. Recently the defendant wants to sell the premises and has entered into a sale and purchase agreement with the existing tenant. He now seeks to vacate the registration of the lis pendens.

3. Counsel for the defendant referred to s.l A of the Land Registration Ordinance for the definition of lis pendens. It was submitted that the writ in the present case did not fall within that definition and was therefore not registrable. The action was simply on nuisance and this had already ceased. The writ should not have been registered and therefore should be vacated. Counsel relied on a number of cases touching on the registration of lis pendens, including Thian's Plastics Industrial Company Limited (No.2) v. Tin's Chemical Industrial Company Limited, [1971] HKLR 249, In re an Application by Lo Ling Leung- chai [1980] HKLR 910, Regan and Blackburn Limited v. Rogers [1985] 1 WLR 870, Heywood v. B.D.C. Properties Limited (No.2). [1964] 1 WLR 267 and Calgary and Edmonton Land Company Limited v. Dobinson, [1974]1 Ch.102. It was submitted that the nuisance or leakage had stopped; that any subsequent purchaser would also be subject to the provisions of the DMC and that the only thing left was the damage claim.

4. Counsel for the plaintiff agreed that the action was based on nuisance, negligence and breach of the DMC. It was however argued that the writ also related to the defendant's land within the meaning of s.1 A of the Ordinance in that it sought a court order to restrict the defendant's way of using or enjoying his own property. Counsel relied on a comment by Megarry J. in Calgary and Edmonton Land Company Limited v. Dobinson in which the learned judge left open the question of whether an action based on nuisance would fall within the definition of "pending land action". He also referred to Greenhi Builders v. Allen, [1979]1 WLR 156, and Regan and Blackburn Limited v. Rogers. It was submitted that in the absence of a registration of the action against the premises, a purchaser would not be bound by any order or judgment which the court might give in the present action and that this was something which the court should also take into consideration.

5. The definition of lis pendens in s.1A of the Land Registration Ordinance was only added in 1992. Prior to that, there was no statutory definition and a lis pendens would be registrable in the same manner as a judgment by which land in Hong Kong might be affected (see s.14 of the Ordinance). This was dealt with by the Full Court in 1971 in the Thian's case. Briggs J. (as he then was) adopted the dictum of Cairns L.J. In In re Barned's Banking Company ex parte Thormon, [1867]2 Ch.App.C. 171, at 178 which said that a lis pendens "always implied a claim of right. or a claim to charge some specific property. That was always a necessary ingredient in a lis pendens."

6. Lis pendens is now defined in s.1A of the Ordinance as "any action or proceeding pending in a court or tribunal that relates to land or any interest in or charge on land". It is in more or less the same terms as "pending action" as defined in s.2 of the Land Charges Act 1929 and the more modern term of "pending land action" as defined in s.17(1) of the Land Charges Act 1972. The English cases on these terms are therefore relevant in the interpretation of lis pendens under the Hong Kong Ordinance. The keywords are "relating to land". In Heywood v. B.C.D. Properties Limited (No.2), Plowman J. was of the opinion that:

"The words relating to land in s.2(1) of the Land Charges Act are confined to or referred to an action in which a claim to land or an interest in land is asserted"

7. That was a case where the plaintiffs issued a writ for the vacation from the Land Charges Register of two land charges which were registered by the defendants who alleged that there had been a contract of sale of the land, the subject matter of the charges. The defendants however registered the plaintiff's action itself as a lis pendens. It was held that the writ (which sought to vacate the land charges) was not an action in which a claim to land was asserted and was therefore not a registrable pending action within s.2(1) of the 1925 Act. This decision was approved by Megarry J. in Calgary and Edmonton Land Company Limited v. Dobinson, which was a case on s.17(1) of the 1972 Act. The learned judge went into greater length with regard to the interpretation of the term "pending land action". He said at p. 107 E-G:

"The rights made registrable under the Land Charges Act 1972, as under the Land Charges Act 1925, are in general substantive rights in the land. Those with specified rights or claims to the land or any interest in it must register those rights or claims (and so give warning to purchasers) or else suffer the consequences of failure to register. What is protected is some substantive right adverse to the owner, rather than a mere fetter on the owner's right of disposition. That being so, it is not surprising that an expression as wide and general in its literal meaning as 'any action or proceeding pending in court relating to land or any interest in or charge on land' should be given a narrower meaning more in conformity with the generality of rights registrable under the Act. what is registrable as a pending land action is an action or proceeding which claims some proprietary right in the land and not an action merely claiming that the owner should be restrained from exercising his powers of disposition" (my emphasis)

8. This passage was cited with approval by Mr Commissioner Litton (as he then was) in In re Lo Ling Leung-chai and cited in various subsequent decisions. Megarry J.'s formulation of the term "pending land action" was discussed by the Court of Appeal in Whittingham v. Whittingham, [1978] 2 WLR 936. It was considered that such interpretation was perhaps too restrictive. Stamp L.J. in that case said at p. 948:-

"That Megarry J's decision in that case was correct I do not for one moment doubt .... I have no doubt that the judge was perfectly right in coming to the conclusion that that was not a pending land action. But a judge's words are to be read in the light of the question which he is determining, and although the dichotomies which the judge drew, first between a substantive right and a mere fetter on the owner's right of disposal and, secondly, between an action claiming a proprietary interest in the land and one merely restraining the owner from exercising his power of disposition, were convenient in the context of what Megarry J. had to decide, there are cases (and this is one of them) which fall within neither of those dichotomies; and I do not think Megarry J intended to lay down any general rule to determine what action does and what action does not fall within the definition. 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. Here the action or proceeding did claim the land and it appears to me that it clearly falls within the definition. If Megarry J intended to lay down the principle that in order to be registrable there must be a claim to an existing interest in the land, then I venture to think he came to a wrong conclusion in that regard." (my emphasis)

9. Orr L.J. agreed with Stamp L.J. and Eveleigh L.J. further commented at p.949 G:

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

10. I think it is important to note the facts in the Calgary decision in order to understand fully what Megarry, J. was saying. In that case a company contributory applied to the court to restrain the liquidator of the company from disposing of some of the company's assets including land. Based on that application, entries were registered at the Land Registry as pending land actions against the land in question. The court held that the application which claimed no interest in the land and merely sought injunctions to restrain any disposition of it was not a pending land action under the 1972 Act and therefore had to be vacated.

11. In Greenhi Builders Limited v. Allen, Browne-Wilkinson J. (as he then was) went further to explain on this. In that case, the owners of some houses situated at the top of a slope alleged that the owners of the houses at the bottom of the slope had withdrawn the support to the houses at the top and brought an action claiming inter alia an easement of support, damages, injunctions, and an order that the loss of support be made good. The action was registered under the provisions of the 1972 Act. The court held that the claim for an easement over land was an action relating to an interest in that land within the definition of a "pending land action" under the 1972 Act. The learned judge said at p.159:-

"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 It 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" (my emphasis)

12. I would respectfully agree with the observations made in these 2 cases. Megarry J. did not purport to lay down an exhaustive definition of the term "pending land action". He was there to give an interpretation of the term by way of contrast with the claim which was before him.

13. I now turn to the Land Registration Ordinance. Lis pendens is defined in s.1A in the same terms as "pending land action" in the Land Charges Act 1972. It is somehow not expressly included in s.2 as one of the various documents (which include judgments) that are registrable under the Ordinance. Section 14, however, provides that "the provisions of this Ordinance relating to judgments (subject to the provisions hereinafter contained) shall extend to lites pendentes". So an action or proceeding which falls within the definition of lis pendens is registrable in the same manner as a judgment. But not every judgment is registrable under the Ordinance; only those by which "any parcels of ground, tenements, or premises in Hong Kong may be affected may be registered at the Land Office" (see s.2). It follows that not every lis pendens falling within s.1A is registrable; only those by which land may be affected are. In other words, not every action or proceeding pending in a court that relates to land or any interest in or charge on land is registrable unless it affects the land or any interest therein.

14. One of the main purposes of the Ordinance is to confer priority on an interest in land over another interest in the same piece of land by means of a system of registration at the Land Office of the documents affecting these respective interests. Under s.16, a registrable lis pendens which is not registered "shall not bind any purchaser or mortgagee of the estate intended to be thereby affected". In my view, the consideration formulated by Stamp L.J. in the Whittingham's case and followed by Browne-Wilkinson J. in the Greenhi's case is equally appropriate in the Hong Kong context. 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.

15. 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.

16. In the present case, the main complaint is nuisance, although negligence and the rule in Rylands v. Fletcher have also been pleaded. In essence, the plaintiff complains that the defendant had used his own premises as a manufacturer of metal products and that during the process, the defendant had caused or permitted lubricant or oil to be discharged and leaked into the plaintiff's premises. Paragraph 5 of the Statement of Claim complains that the defendant had improperly stored lubricant or oil in the premises, failed to provide proper containers for such lubricant or oil, failed to provide proper channel for its discharge and/or failed to provide an effective drainage system for such substance. It is alleged that the leakage, discharge or escape of such substance had caused damage to the plaintiff's premises and goods. In paragraph 10 of the Statement of Claim there is also an allegation that the defendant had failed to comply with the terms and covenants of the Deed of Mutual Covenant. Although this is a separate cause of action, the complaint is the same. Reference is made to a covenant not to make any structural alteration to the premises and the defendant is alleged to have breached that covenant as well. However, there is nothing in the Statement of Claim alleging that the defendant had made any structural alteration to his own premises and no particulars have been pleaded. In the prayer, the plaintiff seeks inter alia an order that the defendant do forthwith ensure the due performance of the terms and conditions of the DMC.

Counsel argued that this amounted to a mandatory order that the defendant was to do something positive to his own premises.

17. In my view, all the complaints are related to the activities alleged to have been conducted by the defendant in his own premises. All that the plaintiff wants is to put a stop to such activities. Once these activities are stopped, the nuisance will be averted. And I do not think the plaintiff is interested in any way or claims any interest in the defendant's premises. It is true that the DMC runs with the premises and is binding on any subsequent purchaser or mortgagee. But the alleged breaches of the deed only relate to the activities conducted by the defendant inside the premises. And the defendant had ceased these activities. Counsel argued that Megarry J. had deliberately left open the question of whether an action based on nuisance would be an action relating to land. Indeed the learned judge did. He said on p.105 of his judgment:

"Thus an action to restrain a nuisance alleged to emanate from X's land is in some senses an action 'relating to' X's land, However, no contention that such an action would be within the statutory definition has been put before me, and I do not think that I need say any more about it."

18. 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. In the present case, I do not think that the action falls within that category. Similarly I do not think Browne-Wilkinson J. had laid down any rule that an action which claims for a mandatory injunction in relation to land must be a registrable lis pendens. In the Greenhi's case, the mandatory order sought was for the provision and maintenance of an easement support. This was clearly a claim for an interest in land by which a subsequent purchaser or mortgagee would be affected. Each mandatory relief is to be looked at separately and not all of them would result in an alteration or improvement of the land which will affect the title of the subsequent purchaser or mortgagee. The present action is certainly not such a case.

19. In the circumstances, I do not think the present action is registrable as a lis pendens. Its registration at the Land Office was improper and must be vacated. I would therefore order that the plaintiff do cause the registration of the lis pendens to be vacated from the register. The defendant shall have the costs of the present application.