LI SHASHA LI SHASHA v. LEUNG YUK HING

DCMP 3189/2017

[2018] HKDC 644

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3189 OF 2017

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REASONS FOR DECISION

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Introduction

1.  The matter concerns two lots of land which the plaintiff has purchased in 2012 and 2013 from the vendor who had owned the lots since 1955.  The vendor had in 1957 mortgaged the lots to the defendant and had since then not yet repaid the loan, nor redeemed the mortgage.  The plaintiff cannot locate the defendant, and applied to the court by Originating Summons for a declaration under Section 12A of the Conveyancing and Property Ordinance that the lots be free from the mortgage.  The matter came to me on 30 April 2018.

2.  I am satisfied that the defendant could not be found, and the mortgage is subsisting, and I have on 30 April 2018 exercised my discretion to direct that a sum of HK$10,000 be paid into court, on terms, as a first stage of the application under Section 12A(1).  Here is the reason for the decision.

Factual background

3.  The plaintiff purchased from one Mr Au Yeung Yuet Shang Lot No 977, Demarcation District No 100, North New Territories, by an assignment dated 3 December 2012 and Section B, Lot No 975, Demarcation District No 100 by an assignment dated 9 April 2013.  Mr Au Yeung acquired the two lots in March 1955.  By an affirmation of Mr Au Yeung dated 16 March 2018, he deposed to the circumstances leading to his mortgaging the two lots to the defendant in 1957 as he raised cash to give to his father to meet his father’s need.  On the introduction of a fellow villager, the defendant lent HK$300 to Mr Au Yeung, and a mortgage dated 28 January 1957 was entered into and was registered in the Land Registry.  Mr Au Yeung deposed that he had not repaid the loan to the defendant, and have since lost contact with the defendant.  As such, the plaintiff submitted that the mortgage has not been redeemed and is still subsisting.  The land search of the two lots has not contained any entry of instrument to the effect of discharging the mortgage.

4.  As to the terms of the mortgage, the memorial of the mortgage Memorial No N136927 records that the consideration was HK$300 paid to the mortgagor by the mortgagee and the mortgage was to secure payment in a year by 27 January 1958 of HK$300 with interest at the rate of HK$7.5 per month.  There was no mention as to default interest, and Mr Au Yeung deposed that there was no discussion with the defendant on default interest.

5.  The actual mortgage instrument has not been able to be retrieved from the Land Registry and Mr Au Yeung cannot locate a copy of it.

Legal principles and application

6.  The legal principles governing the exercise of discretion under Section 12A of the Conveyancing and Property Ordinance is well settled.  Proceedings can be commenced on ex parte basis for the purpose of the first stage of considering whether  payment into court of the sum sufficient to redeem the encumbrances; in Re Cheung Chi Wan & Anor [2002] 1 HKLRD 409 at 417G to 418J, Deputy High Court Judge Lam has decided that section 12A has impliedly authorised that proceedings for an order of payment into court as the first stage can be commenced on ex parte basis, and the wording of Section 12A(2) envisage that in a proper case, proceedings could be conducted without notice to the mortgagee.

7.  I believe that this case is a proper case that proceedings can be commenced without notice being served on the defendant.  The root of the matter necessitating the present application is that the defendant cannot be located:-

(a)  It is helpful that pursuant to the indication of Deputy District Judge C Chow at the first hearing on 27 February 2018, the plaintiff has obtained the direct evidence of Mr Au Yeung, whereby he deposed in his Affirmation to his losing contact with the defendant very soon after the mortgage was entered into.  They were not acquainted at all save for the entering of the mortgage and for the loan.  Mr Au Yeung has also deposed to not having any more means to trace the defendant, and in particular, the villager introducing the defendant to him has died;

(b)  The plaintiff has deposed, in three Affirmations dated 6 November 2017, 2 February 2018 and 16 March 2018, to her visiting the defendant’s only last known address at 2^nd Floor, 71 Lion Rock Road, Kowloon as recorded in the memorial of the mortgage but found that it is only a construction site now;

(c)  The plaintiff also deposed to attempts being made to serve, by post, the Originating summons on the defendant at that address but the post was returned;

(d)  The plaintiff has tried to enquire with local people living near the lots to look for the defendant and for her whereabouts but the attempts were in vain.

(e)  Her solicitors have conducted death search in Hong Kong and had made enquiries with the Probate Registry and all the solicitors which had taken out probate for deceased of the same name as the defendant.  All these efforts also have not led to a finding that the defendant has passed away.

8.  I am satisfied that the plaintiff has made all reasonable efforts to locate the defendant, and the ground under Section 12A(1) is satisfied in that the defendant cannot be located.

9.  It occurred to me though that the possibility of the defendant having died by now is real.  Therefore, the learned Deputy District Judge C Chow has rightly indicated that she had a query first as to whether these proceedings should be brought against the estate of the defendant and secondly whether the Official Solicitor should be approached to represent the estate.  Regarding the first issue, I accept Ms Yu’s submission that there is really no evidence as to the passing away of the defendant.

10.  As regards the second query, it seems that Deputy High Court Judge Lam has in Re Cheung Chi Wing, supra, at 418E-G, considered the possible role of an Official Solicitor and has observed that generally an application under Section 12A could be commenced without notice to the defendant, and it was more practical to engage Section 12A without a necessity as a matter of course to involve the Official Solicitor.

11.  The three stage approach formulated by Deputy High Court Judge L Chan (as he then was) in Re Light Time Investments Ltd [2010] 4 HKC 64 has added to the reasons that the application could be commenced without notice to the defendant.  The decision has introduced the stage 2 measure of advertising the payment in order, before the application for declaration of redeeming of the mortgage is to be made as stage 3. 

12.  The plaintiff calculated that the amount to redeem the mortgage is HK$5,812.5, ie, (2018-1957) x 12 + 3 x HK$7.5 + HK$300.  She offered to increase the payment to HK$10,000 to provide for contingency expenses, costs and interest.  Adhering to the three stage approach, she also offered to advertise the order of payment into court.

Order

13.  Accordingly, I follow the three stage approach, which is also consistently applied in decisions following Re Light Time, and have ordered on 30 April 2018 as follows:-

(1)  Leave be granted to the plaintiff to pay into court a sum of HK$10,000 being a sum sufficient to redeem the Mortgage dated 28 January 1957 registered in the Land Registry by Memorial No N135927 made between Au Yeung Yuet Sang as the Mortgagor and the defendant as the Mortgagee with respect to Lot No 975B in Demarcation District No 100 and Lot No 977 in Demarcation District No 100 within 14 days;

(2)  Within 7 days after the payment into court above, the plaintiff do advertise in a widely circulated local Chinese newspaper a notice making known this Order and the fact that payment having been made into court pursuant to this Order and stating that any person interested in the mortgage and/or the payment aforesaid may apply within 14 days to be joined as a party to these proceedings;

(3)  The plaintiff may after the 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, Cap 219 for a declaration that the aforesaid land be free from the aforesaid mortgage; and

(4)  There be no order as to costs of the proceedings.