CHEUNG KA WAI v. LEE YU KWAN JEANETTE

HCMP 1459/2025

[2026] HKCFI 1157

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1459 OF 2025

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J U D G M E N T

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1.  This originating summons (“OS”) is a vendor and purchaser summons taken out by Cheung Ka Wai (the “Plaintiff”) against Lee Yu Kwan Jeanette (the “Defendant”) arising out of an agreement dated 27 June 2025 (the “Agreement”) whereby the Plaintiff agreed to sell a flat in Whampoa Garden, Kowloon (the “Property”) to the Defendant at the price of $8,380,000. Completion scheduled for 29 August 2025 did not take place because the parties are in dispute as to whether the Plaintiff has shown and could give a good title to the Property. At the conclusion of the hearing, judgment was reserved which I now give.

Factual background

2.  The Plaintiff and her late husband, Yip Chi Ming Tony (“Mr Yip”) became the registered owners of the Property through an assignment made to them in 1998, holding the same as joint tenants (the “Joint Tenancy”).

3.  In 2011, Mr Yip borrowed from a money lender Credit Gain Finance Co Ltd (“Credit Gain”) under a loan agreement and to secure his borrowing, executed an Irrevocable Power of Attorney on 19 December 2011 (the “2011 IPA”) as security for the due payment of all moneys payable.

4.  The 2011 IPA granted Credit Gain various powers including

(i)  the power to let and receive rents and profits of and manage the Property (clause 1);

(ii)  the power to claim, receive and accept any refund of taxes (clause 2);

(iii)  the power to dispose of or deal with the Property (whether by way of sale, mortgage, lease or otherwise) including the power to apply moneys received and proceeds of sale of the Property to repay Credit Gain all sums of money due.

5.  The 2011 IPA was executed pursuant to section 4 (1) of the Powers of Attorney Ordinance, Cap 31. The final clause of the IPA provided that so long as the indebtedness remained undischarged, the 2011 IPA is irrevocable without the consent of Credit Gain. Further, so long as the IPA remained in force, without Credit Gain’s consent, Mr Yip could not exercise any of the powers granted to Credit Gain (the “final clause[1]”).

6.  On 12 January 2013, Mr Yip executed the following documents:

(i)  a Deed of Revocation revoking the 2011 IPA with the consent of Credit Gain given under its Notice of Satisfaction; and

(ii)  an Irrevocable Power of Attorney in favour of Credit Gain (the “2013 IPA”) to secure the repayment of money due to Credit Gain, the terms which were identical to those in the 2011 IPA.

7.  On 30 June 2014, Mr Yip executed a Deed of Revocation of the 2013 IPA with the consent of Credit Gain given under its Notice of Satisfaction.

8.  Mr Yip died on 14 May 2015.

9.  The Plaintiff who is Mr Yip’s widow entered into the Agreement with the Defendant.

10.  In issue is whether the 2011 and/or 2013 IPA effected a severance of the joint tenancy. Good title to the Property depends on the Plaintiff having acquired Mr Yip’s share by survivorship. If severance did take place, the Plaintiff would not be able to show good title.

11.  Mr Lee Yee Hung (“Mr Lee”) and Mr Eric Chim were counsel for the Plaintiff. The Plaintiff’s primary position is that severance could not take place earlier than Credit Gain starting to exercise any of its powers under the IPA, and his fallback position is that severance would not take place earlier than an event of default having occurred on the part of Mr Yip.

12.  Mr Lee proceeded to address the 2 issues he considered arose from the Purchaser’s submissions, namely, on (1) whether the IPA created an equitable charge; and (2) the decision on severance in Ho Wai Kwan v Chan Hon Kuen [2015] 1 HKLRD 901.

Whether the IPA[2] created an equitable charge

13.  The Plaintiff submitted that no equitable charge was created for the following reasons:

(i)  the contra proferentem rule is applicable in construing the IPA;

(ii)  it never was the common intention of Mr Yip and Credit Gain to create any equitable charge; and

(iii)  the final clause is invalid and unenforceable: the clause reads:

“AND LASTLY it is declared that for the avoidance of doubt, [Mr Yip] shall not, without [Credit Gain’s] consent, do the acts, deeds, matters and things or any of them in relation to the Property which [Credit Gain] is appointed and authorized to do hereinabove for so long as these presents remain to be in force”

14.  I turn to consider the merits of the Plaintiff’s reasons:

(i)  It is common ground that the Fairbairn firm presented the IPA for registration at the Land Registry. Beyond that, there is no evidence to show which firms represented the parties or that the Fairbairn firm had drafted the IPA on the instructions of Credit Gain. Absent such evidence, any ‘conclusion’ can be nothing more than pure surmise. I do not consider that the contra proferentem rule arises on the facts.

(ii)  Because the expression “equitable charge” is nowhere to be found in the IPA, it is the Plaintiff’s stance that it was never the parties’ common intention that an equitable charge be created. But there is nothing to suggest that an equitable charge cannot be created without using the words ‘equitable charge’ in the relevant document. No authority was cited in support of the submission that the document must contain the expression “equitable charge”.

(iii)  (a) Mr Lee pointed out that the loan agreement considered by the Court of Final Appeal in Winland Finance Limited v Gain Hero Finance Limited [2022] HKCFA 3 contained a clause identical to the final clause. His purpose in citing Winland was “to knock down that clause”. However, the CFA neither discussed nor considered that clause and its validity.

(b) Mr Lee then submitted that if that clause were valid and enforceable, it would have far-reaching consequences, effectively ‘handcuffing’ Mr Yip by stifling and/or sabotaging his ability to repay Credit Gain. He submitted that it offends section 21 of the Money Lenders Ordinance (“MLO”)[3]. That submission is entirely misconceived. The final clause in the IPA in no way prevents the borrower (Mr Yip) from making repayment at any time and upon full repayment, section 4 (1) of the PAO does not prevent the revocation of the power of attorney.

(c) Mr Lee also referred to section 25 (1) which enables the court to reopen certain transactions (where rate of interest charged is extortionate, which is not the present case). However, Mr Lee does not rely on that provision. Obviously, that section has no relevance in the present context.

15.  Mr Lee’s submission that the IPA did not create an equitable charge is apparently premised on the ‘eradication[4]’ of the final clause. I do not accept that the final clause is invalid or unenforceable. It follows from the reasons set out above that I do not accept the Plaintiff’s submissions in that regard.

16.  The Plaintiff further submitted, in the alternative, that the powers conferred by the IPA are not exercisable unless and until default has occurred. Further, those powers only crystallise into an equitable charge once they are exercised.

17.  While it is the Plaintiff’s position that Credit Gain never exercised those powers, the Defendant’s position is that the fact that there is no evidence of any sale or letting is irrelevant when there is no evidence as to whether Credit Gain had exercised any other power granted to it under the IPA.

18.  Mr Edward Chan SC and Ms Sharon Ng, counsel for the Defendant submitted that (1) the IPA does operate as an equitable charge; and (2) the donee’s powers are exercisable at any time even before default.

19.  As regards (2) above, Mr Chan referred to the operative part of the IPA which in pertinent part reads as follows:

“NOW THIS DEED WITNESSETH THAT the Donor in consideration of the Loan Agreement and as security for the due payment of all moneys payable … DOTH hereby irrevocably and by way of security APPOINT the Money Lender to be the true and lawful attorney for the Donor and in the name of the Donor or in the name of the Money Lender or otherwise as occasion shall require from time to time and at any time or times during continuance of this Irrevocable Power of Attorney to act for the Donor to do execute transact perform and effectuate all of any of the following acts deeds matters and things relating to the Property that is to say:-

1. To receive the rents and profits …”

20.  It is clear that the IPA does not contain any provision that constrains the exercise of the powers conferred on the donee before any default occurs.

21.  On the question whether the IPA operates as a charge, the Defendant relies on Fisher & Lightwood’s Law of Mortgage, 15^th Edn (2019) which (at §6.1) defines a charge:

“6.1 … When real or personal property is appropriated for the discharge of a debt or other obligation, but without giving the creditor either an absolute or a special property in the subject of the security, nor any right to possession, the security created is an charge.”

22.  As regards its creation, §6.4 provides that:

“6.4 An ordinary charge may be created:

(a) by a charge or direction in a settlement, will, or other instrument, whereby real or personal property is expressly or constructively made liable or specifically appropriated to the discharge of a debt … or declared to be subjected to a charge for securing the debt; no debt is implied, but a right of realisation by judicial process is conferred …; or

(b) by the appropriation to the discharge of a debt of specific things in action or chattels, which either are, at the time of appropriation, or may or will thereafter be in the hands of a third person.”

23.  The Plaintiff does not take issue with the statements made in Fisher & Lightwood cited above. Rather, the dispute is over the term ‘appropriation’, it being the Plaintiff’s case that there can be no appropriation before an event of default has occurred.

24.  Mr Chan submitted that it is clear from the terms of the IPA itself that its purpose is to appropriate Mr Yip’s interest in the Property available as security for the discharge of his obligations to repay. It meets all the criteria for the charge as set out in Fisher & Lightwood. I respectfully agree.

25.  It will have become apparent that I do not consider any of the submissions made by the Plaintiff to be correct and of substance. I accept the Defendant’s submission that the IPA created an equitable charge over Mr Yip’s interest in the Property.

Severance

26.  The classic statement of the methods of severance is to be found in the judgment of Wood VC in Williams v Hensman (1861) 1 John & Hem 546 at 557:

“A joint-tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund—losing, of course, at the same time, his own right of survivorship. Secondly, a joint-tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. …”

27.  Applying that statement to the facts of the case before him, Wood VC held (at 558) that the joint tenancy amongst the 8 owners were severed. In that case, 8 children were entitled to a money fund as joint tenants subject to a prior life interest. Severance occurred

(1) when in 1828 the 8 legatees signed a document purporting to sanction the investment of the trust funds in a manner not authorised by the will, there was a dealing by the 5 adult legatees[5] as to their shares in a manner inconsistent with the continuance of a joint tenancy between the 5 and the 3[6]. It caused a severance of the 5 from the 3;

(2) by an assignment in 1929 by Rebecca to her trustee in the marriage settlement;

(2) by John and Frederick mortgaging their shares in 1855;

(3) by the effect of John and Frederick’s mortgage: as John and Frederick were 2 of the 3 minor legatees at the time they signed the 1828 document, the share of the 3^rd minor legatee (Harriette) must be treated as completely severed;

(4) by William taking the advance of £450 under the arrangement entered into with the trustee of the fund[7];

(5) by the remaining joint owners (Bethiah, Sarah and Caroline) entering into an arrangement in May 1835[8] with the trustees and the other legatees when £450 was advanced to William on account of his share.

28.  In Ho Wai Kwan, DHCJ Simon Leung accepted the submission of counsel for the vendor that:

“an act of severance must have a final or irrevocable character in precluding the joint tenant from claiming by survivorship any interest in the subject matter of the joint tenancy…”.

29.  The requirement that the act of severance must be such “as to preclude him from claiming by survivorship any interest in the subject-matter of the joint tenancy” and “have a final and irrevocable character” is a gloss on Williams v Hensman. The ‘preclusion’ part appears to stem from the decision of Stirling J In re Wilks [1891] 3 Ch 59 at 62 and the ‘final and irrevocable’ part from Gray’s Elements of Land Law 5^th ed (2009) at §7.4.73, extrapolating from the judgment in Re Wilks.

30.  In the context of the facts in Ho Wai Kwan, by applying Williams v Hensman as qualified, the Deputy Judge concluded that the charging order not sever the joint tenancy. He reasoned that the charging order had been discharged well before the time when the vendor became entitled to the entirety of the beneficial interest in the property by virtue of the right of survivorship upon the passing of the other joint tenant who died subsequent to the discharge of the charging order. That reasoning is premised on the joint tenancy at law not having been severed by the charging order but that is the very question to be determined. Thus, the reasoning is akin to a case of pulling oneself up by one’s own bootstraps.

31.  The Williams v Hensman test as qualified by Re Wilks implicitly requires a wait-and-see approach instead of determining the legal effect upon the making of the charging order. This is despite the fact that the IPA is expressed to be irrevocable so long as the loan remained outstanding.

32.  Should one adopt a wait-and-see approach, the outcome would vary, depending on the sequence of future events. For example, on the facts of the present case, the result would have been different had Mr Yip died before, rather than after, the discharge of his loan.

33.  The qualification to the Williams v Hensman test requires closer consideration. The correctness of Re Wilks has been questioned. In Burgess v Rawnsley [1975] 1 Ch 429, Lord Denning MR made the following observations:

“I doubt whether In re Wilks, Child v Bulmer [1891] 3 Ch 59 can be supported. A young man who had just become 21 applied to the court to have one third of a joint fund paid out to him. He died just before the application was heard. Stirling J held that, if he had died just after, there would have been a severance: but, as he died just before, there was not. Ironically enough too, the delay was not on his side. It was the delay of the court. Nowadays I think it should have been decided differently. The application was a clear declaration of his intention to sever. It was made clear to all concerned. There was enough to effect a severance.”

34.  Sir John Pennycuick noted that section 36 (2) of the Law of Property Act 1925 had radically altered the law in respect of severance such that pre-1925 judicial statements (as those in Re Wilks) must be read in light of that alteration in the law[9]. He considered that in appropriate circumstances the commencement of legal proceedings by writ or originating summons or an affidavit sworn in those proceedings could satisfy the notice requirement in section 36 (2) of the LPA. In other words, the irrevocability requirement would not be applicable.

35.  The applicant in Re Wilks was seeking to obtain his own share of the trust fund. Had the court made the order, it would have been sufficient to sever the joint tenancy.

36.  The Defendant submitted that if the execution of the IPA amounts to an equitable charge, then its creation entails the joint tenant dealing with his own share, which is sufficient to effect a severance.

37.  In §44 of the Plaintiff’s written submissions Mr Lee cited various authorities to the effect that the execution of a mortgage/charge by one of the joint tenants alone would result in severance of the joint tenancy[10]. The Defendant noted that those cases involved mortgages. However, no one has suggested that the execution of the mortgage itself is insufficient to effect a severance and that it will only take place when the mortgagee exercises his powers under the mortgage.

38.  In Ho Wai Kwan, after reviewing a number of authorities[11], the Deputy Judge held that a charging order has the same effect as an equitable charge and entailed no passing or conveyance and thus no disposition or alienation, of any interest of a proprietary nature to the chargee.

39.  Mr Chan’s position is that if the chargor had done something to his share in the joint property, it would be sufficient to effect a severance. He submitted that Ho Wai Kwan was wrongly decided for the reasons considered below.

(1)  The position under English law

40.  In First National Securities Limited v Hegerty [1985] QB 850 the husband forged the wife’s signature and purported to execute a legal charge of the matrimonial home and, on his default, the chargee obtained judgment and a charging order absolute on the husband’s interest in the property. Bingham J held that the legal charge was a sufficient act of alienation to sever the beneficial joint tenancy and, in any event, the disposition created an equitable charge in favour of the chargee in respect of the husband’s beneficial interest[12].

41.  The Deputy Judge distinguished it on the basis that

“Again, in the English context as explained above, it is not difficult to understand why the act of the husband was considered as disposition and alienation of his beneficial interest; and that that served to sever the beneficial joint tenancy.”

42.  The Deputy Judge took the view that in England, the position was that a joint tenant, by simply executing the legal charge, disposed of his beneficial interest in the joint property causing a severance.

43.  He had earlier (at §14) cited from the judgment of Kwan J (as she then was) in Chan Ching Kit Katherine v Lam Sik Shi[13], unrep., HCMP 2239/2000, [2002] HKEC 804, 24 June 2002 where, inter alia, she explained the difference between the nature of a joint tenancy in England and that in Hong Kong subject to a charging order. As I understand it, the Defendant sought to show that in so far as the Deputy Judge’s observations adopted Kwan J’s statements on the difference between the English and Hong Kong positions, he was on “very insecure ground”.

44.  In Chan Ching Kit, the plaintiff had obtained a charging order absolute in respect of D1’s half share in the property held by D1 and D2 as tenants in common in equal shares. He sought an order for sale of the entire property under section 3 (1) of the Partition Ordinance, Cap 352 (“PO”)[14] and prayed in aid the construction of a similar expression in section 30 (1) of the Law of Property Act (“LPA”).

45.  Kwan J adopted the informed interpretation rule to ascertain the legislative intention of the PO that was enacted in 1969. Prior to 1969, the 2 Partition Acts of 1539 and 1540 had applied to Hong Kong by the Application of English Law Ordinance. The position in Hong Kong prior to the enactment of the PO was the same as in England before the enactment of the Partition Act 1868[15].

46.  The PO was modelled substantially on the 1868 Act and the Partition Act 1876 and gave effect to recommendations of the Law Reform Commission of Hong Kong. The Report together with the Explanatory Memorandum to the Bill show that it was not contemplated that the existing law was to be changed to widen the category of persons eligible to apply for relief under the PO.

47.  The position in England was very different as is apparent from the explanation given in §§36-37 of Chan Ching Kit Katherine. The LPA[16] repealed the Partition Acts[17] and abolished the partition of land held in co-ownership. Section 30 (1) provided that land held by co-owners are subject to a statutory trust for sale and the interest of each was automatically converted into an interest in the proceeds of sale in respect of that land[18].

48.  Further, the interest of a beneficiary under a trust for sale of land did not constitute “land” or an “interest in land” for the purposes of section 35 (1) of the Administration of Justice Act 1956. Unlike the position in Hong Kong, the interest of a co-owner in England could not be charged by the imposition of a charging order until the Charging Orders Act 1979 amended the law.

49.  It will have become apparent that the legislative background and intent of section 3 (1) of the PO were very different from those of section 30 (1) of the LPA. Kwan J concluded[19] that a proprietary interest in the proceeds of sale of land should not be equated with an interest of a proprietary nature in land.

50.  The Defendant attached significance to the fact that the legal position in England was modified when the Trust of Land and Appointment of Trustees Act 1996 (the “1996 Act”) came into effect on 1 January 1997. It abolished the doctrine of conversion[20] and since it came into effect, the interest of a co-owner is an interest in land.

51.  Chan Ching Kit Katherine was decided in 2002. Mr Chan suggested that Kwan J had overlooked the 1996 Act when explaining the position under English law rendering that explanation unreliable. In fact, in §35 of her judgment, Kwan J did refer to the 1996 Act in relation to the repeal and replacement of section 30 (1) of the LPA by section 14 of the 1996 Act.

52.  Accordingly, I have some difficulty in understanding the point the Defendant sought to make under this head.

(2)  Statements in textbooks

53.  The Defendant referred to textbook authorities referred to in the Judgment. The Defendant identified relevant statements[21] that supported the Defendant’s submissions that the Deputy Judge had omitted.

54.  In relation to references made to Gray’s Elements of Land Law:

(i)  §6.1.28 (see the Judgment at §17):

“An equitable charge is created when land or any interest in it, whether legal or equitable, is expressly or constructively made liable, or specially appropriated with immediate effect, to the discharge of a debt or some other obligation. Although such a charge involves no transfer of legal or equitable ownership, it nevertheless generates for the chargee some sort of ‘proprietary interest’ or ‘security interest’ in the land. The charge confers on the creditor no right of possession or foreclosure, but only a right of realisation by judicial process in case of non-payment of the debt (usually through an order for sale or the appointment of a receiver).

(ii)  While he cited §7.4.73 (see the Judgment at §30), he did not mention the following statement at §7.4.79:

“It is clear that a severing ‘act’ of alienation may include a mortgage or charge. Thus if one joint tenant purports to mortgage a jointly held entitlement either at law or in equity, severance follows in precisely the same way as if there had been an outright transfer of that joint tenant’s ‘share’ …”

55.  The Defendant submitted that it is clear from the above that Gray took the view that a charge is sufficient to effect a severance.

56.  While §12-040 of Megarry & Wade, The Law of Real Property 10^th Ed is set out in §29[22] of the Judgment, it omits the passage shown in italics below which makes it clear that the execution of the mortgage or charge by one of the joint tenants would result in the severance of the joint tenancy[23]. As stated in Megarry & Wade at § 12-040:

“Although at common law the right to alienate was preferred to the right of survivorship, the right of survivorship took precedence over mere encumbrances. The distinction lay between acts which were inconsistent with the right of survivorship and those which were not. Thus a rentcharge could be satisfied out of one joint tenant’s share of the rents and profits without disturbing the joint tenancy. These distinctions may no longer be strictly applied now that the equitable rules for the severance of interests in personalty prevail. The trend of modern decisions is to treat any partial alienation by a joint tenant as a severance if it can be regarded as an act operating on that person’s share. Thus the following dispositions by a joint tenant have all been held to effect a severance:

(i) the execution of a mortgage or charge over his or her interest;

(ii) a specifically enforceable contract to grant a charge over his or her interest; …”.

57.  The Defendant also drew attention to the statement in the paragraph immediately following at §13-041:

“(3) Other situations.

Alienation is not the only way in which a joint tenant may act upon their own share so as to sever the joint tenancy. Severance may also occur if a joint tenant enlarges their beneficial interest.”

58.  The Defendant submitted that when reviewing those authorities, the Court should take the omitted passages into account.

(3)  Williams v Hensman

59.  The Defendant referred to Williams v Hensman for the proposition that the dealing by a beneficiary of his own share is sufficient to effect a severance.

60.  The analysis of the facts in Williams v Hensman (see §27 above) that gave rise to severance in each case amply supports that submission.

61.  I consider the criticisms the Defendant made under (2) and (3) above to be well-founded.

62.  I now turn to consider other matters mentioned in the course of the hearing or arising from the papers submitted.

Hong Kong authorities

63.  Under the Conveyancing and Property Ordinance, Cap 219 (“CPO”), severance of a joint tenancy is governed by §8:

“8. Severance of joint tenancy

(1) A joint tenancy of an estate or interest in land may be severed at law only by—

(a) a notice served by a joint tenant on the other joint tenants; or

(b) an instrument.

(2) A joint tenancy of an estate or interest in land may be severed in equity by a notice served by a joint tenant on the other joint tenants or by any other method that is effective in equity or that would, but for subsection (1), be effective at law.

(Replaced 31 of 1988 s. 4)”

64.  In Malahon Credit Co Ltd v Siu Chun-wah, Alice & Anor [1988] 1 HKLR 196 the Court of Appeal[24] held (at 202G) that S’s evidence was sufficient to establish that it was intended, right from the beginning, that she would share the beneficial interest in the flat jointly with N. The effect of the evidence is that while S and N were joint tenants at law, in equity, they are to be regarded as having equal shares as tenants in common. The Court of Appeal went on to say this:

“If that was not the true position and they were joint tenants in equity, then when the charging order absolute was made there was a severance and they became tenants in common.”

65.  Similar observations were made in Fortis Bank v Yu Kam Hoi Herman [2004] 2 HKC 314. After reaching the same conclusion as Kwan J in Chan Ching Kit Katherine v Lam Sik Shi HCMP 2239/2000, [2002] HKEC 804[25] on the locus point, Reyes J concluded, on the evidence, that the defendants (3 brothers) were tenants in common in equity in equal shares. Even if he were wrong on that conclusion, he considered (at §94) that the charging order of the interest of one of the brothers of one such share in the property would become severed in equity from the joint tenancy among the brothers.

66.  The Deputy Judge in Ho Wai Kwan declined to follow those statements as obiter dicta.

67.  That there are conflicting Hong Kong authorities on the question if the making of the charging order in favour of the plaintiff would have the effect of equitable severance is clear: see Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 (at §1.8). The Court of Appeal left that issue open for debate on another occasion.

68.  After Primecredit, the issue arose for consideration in Mak Pui Ki v Ho Wing Ha [2020] HKCFI 2705. In issue was the requisition on the possible severance of the joint tenancy in the property (then held by C and L) upon the execution by C in 2009 of a Legal Charge/Mortgage (“the Jafoon Mortgage”) in favour of J.

69.  The vendor unsuccessfully submitted that the Jafoon Mortgage was only an encumbrance and did not involve any alienation of interest in land citing Ho Wai Kwan.

70.  The Plaintiff does not dispute the correctness of the Mak Pui Ki decision but distinguishes it from the present case on the basis that the joint tenant in that case executed a mortgage to secure a proprietary interest of the finance company in the mortgaged property. The Plaintiff submitted that the powers given by Mr Yip to Credit Gain under the IPA were only to secure the performance of obligations owed by Mr Yip to Credit Gain. The IPA did not involve any disposition of interest in land.

71.  The Plaintiff’s focus on ‘disposition of interest in land’ is misplaced. In Mak Pui Ki, when C executed the Jafoon Mortgage, she was mortgaging her own interest in the property to J, thereby destroying the unity of interest with L, the other joint tenant and she and L came to hold the property as tenants in common shares. It was sufficient to effect a severance applying the Williams v Hensman test.

72.  More recently, in Winland Finance, the Court of Final Appeal made the following observations concerning an equitable charge:

“32. It is true that at common law, ‘a mortgage involves a transfer of legal or equitable ownership to the creditor, whereas an equitable charge does not’, and an equitable chargee ‘only gets a right to have the security [ie the charged property] made available by an order of the court’, but ‘gets no legal right of property, either absolute or special, or any legal right to possession’. It is also true that an equitable charge only confers on the chargee ‘rights to apply to the court for an order for sale or for the appointment of a receiver [and thus to appropriate the rents and profits of the land], but no right to foreclosure (so as to make the property his own) or [to] take possession’. Nonetheless, the availability of equitable remedies ‘has the effect of giving the chargee a proprietary interest by way of security in the property charged’, albeit that “the interest, though registrable against the chargor, remains inchoate and ineffectual until an order of the court is made”.

Conclusion

73.  In my view the IPA created an equitable charge over Mr Yip’s share Property. Applying the Williams v Hensman test, the execution of the IPA itself was sufficient to sever the Joint Tenancy.

74.  It follows that the Plaintiff is not entitled to the relief he seeks in his OS.

75.  In §23 of her affirmation filed in opposition to the OS, the Defendant counterclaimed for various relief should the Court dismiss the OS. They are itemised in subparagraphs (1) to (9) of §23.

76.  The Plaintiff only takes issue with the relief sought in subparagraph (4), being an order that the Plaintiff indemnifies the Defendant stamp duty of HK$251,400 paid by the Defendant under the Agreement.

77.  The Plaintiff’s stance[26] is that it is the Defendant’s duty to mitigate and she should apply to the Collector of Stamp for a refund. The Defendant’s written submissions did not address this point.

78.  In my view, the stamp duty paid forms part of the costs/expenses the Defendant had to incur under the Agreement. I see no valid basis for requiring the Defendant to incur further time and expense to obtain the refund. All this has been caused by the Plaintiff’s inability to convey the entirety of the Property to the Defendant free from encumbrances. The Defendant is entitled to all the relief she seeks in her counterclaim.

Order

79.  I order that the OS be dismissed with costs with certificate for 2 counsel, such costs to be summarily assessed.

80.  The parties are directed to submit an agreed draft order for approval within 7 days.

81.  I further direct that (i) the Defendant do lodge her statement of costs within 7 days hereof; (ii) the Plaintiff do lodge her list of objections (if any), limited to 2 pages within 14 days thereafter; and (iii) the Defendant do lodge her reply (if any) limited to one page within 7 days thereafter.

82.  Summary assessment will take place in Chambers.