FOOK TAI INVESTMENT CO, LTD v. SECRETARY FOR JUSTICE

HCMP 1410/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1410 OF 2013

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REASONS FOR JUDGMENT

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Introduction

1. This is yet another case where a defect in title was discovered only after one of the plaintiff’s predecessors-in-title was dissolved (“the said dissolved company”).

2. To remedy the title defect, the plaintiff commenced this action in June 2013 seeking the following principal relief:

(a)   a declaration that it is the Property’s legal and beneficial owner;

(b)   a declaration that the said dissolved company was a trustee of the legal estate in the Property before its dissolution;

(c)   an order vesting in the plaintiff all the estate right title benefit and interest in and of the said dissolved company before its dissolution.

3. After hearing the parties, I granted the relief sought.  The brief reasons for doing so appear below.

Background

4. The Property is located at Chungking Mansion, Nathan Road, Kowloon.  It was conveyed to the said dissolved company in September 1968.  Before its dissolution, the said dissolved company and the plaintiff were associated companies in that:

(a)   both shared the same registered office;

(b)   the plaintiff held about 99% of the shares of the said dissolved company;

(c)   both had 3 common directors.

5. As a result of a decision to restructure the group to which the plaintiff and the said dissolved company both belonged, an inter-company transfer of the Property from the latter to the former was effected.  For such purpose, an assignment was executed by them in February 1987 (“the 1987 assignment”).

6. Further, since February 1987, the plaintiff has possessed the Property and let it out to tenants.

7. When the plaintiff recently entered into an agreement with a purchaser to sell the Property, it was discovered that there was a mis-description of the Property in the 1987 assignment.

8. The present description therein is:

“ALL THOSE 9 equal undivided 920^th parts of shares of and in ALL THOSE 5/6^th parts or shares of and in ALL THAT one equal undivided 920^th part or share of and in ALL THAT piece or parcel of ground … ” (emphasis supplied).

The correct description should have been:

“ALL THOSE 9 equal undivided 920^th parts of shares and ALL THOSE 5/6^th parts or shares of and in ALL THAT one equal undivided 920^th part or share of and in ALL THAT piece or parcel of ground … ” (emphasis supplied).

9. For completeness, it should also be mentioned that, in September 1973, a portion of what used to be part of the Property (known as “the Green Part” in the conveyancing documents) was sold to a third party by the said dissolved company.  Consequently, the said dissolved company was no longer the owner of the Green Part when it conveyed the Property to the plaintiff in 1987.

10. The 1987 assignment ought therefore have contained the following description:

“other than all that part of the said portion as shown and coloured Green on the plan annexed to an Assignment registered at the Land Registry … ”.

This action

11. The plaintiff has helpfully cited the following authorities in support of its application in this action (in chronological order):

(a)   Wong Shuk-ying and Another v Attorney General [1987] HKLR 985, 986;

(b)   Yip Yat Tim v Secretary for Justice HCMP 3585/2000 (11 October 2000), pp 4-5;

(c)   Capital Ltd v Secretary for Justice HCMP 313/2005 (27 October 2005), p 2;

(d)   Tam Chi Kwong v Secretary for Justice [2007] 2 HKLRD 373, 375.

All the above cases were concerned with title defects related to dissolved companies, and where legal proceedings were commenced to obtain vesting orders.

12. It would appear the following legal propositions can be gathered from the above authorities:

(a)   the functions performed in England by the Treasury Solicitor are to be performed by the Attorney General in Hong Kong (there being no such separate official as the Treasury Solicitor);

(b)   one of such functions is that, where there is an application for a vesting order in relation to the legal interest in property being vested in a dissolved company (effectively as trustee), the application can be made under the Trustee Act (the equivalent being the Trustee Ordinance (Cap 29) in Hong Kong), and by making the Attorney General as the sole respondent;

(c)   the Attorney General is involved in two capacities.  First, he represents the government as the person to be divested of the property.  Secondly, he is involved in a separate capacity if it is sought to assert on the government’s behalf that the property is bona vacantia;

(d)   after having been served with the originating summons, the Attorney General will indicate by letter whether or not the government claims bona vacantia;

(e)   it remains necessary for the Attorney General to continue as a party in the first capacity even if there is no claim for bona vacantia;

(f)   there is no reason why the Attorney General should be liable for the costs (it being the applicant who seeks the relief for its own benefit), the applicant should thus not only bear its own costs, but also the costs of those required to attend the proceedings.

13. In the present case, (as has happened in the above-cited cases) the defendant did not assert a claim for bona vacantia, nor did it wish to make any claim to whatever interest that the said dissolved company had or may have had in the Property before its dissolution.

14. In these circumstances, it is just to grant the relief sought, with costs to the defendant (the amount of such costs was agreed).