SHINELAND CORPORATION LTD v. GLADFORD LTD AND OTHERS

HCMP 1972/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1972 OF 2017

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DECISION

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A. INTRODUCTION

1.  This is an application by Glendale Holdings Limited (“Glendale”), the entity originally named as the 3^rd defendant in this matter, by Summons dated 27 October 2017 (“the Summons”), for various reliefs in relation to the attempted registration of the Originating Summons dated 19 September 2017 in this matter (“the OS”) by the plaintiff in the Land Registry as a lis pendens against properties in the name of Glendale.

2.  The facts I set out at §§3 – 10 below are not in dispute.

3.  Glendale was at all material times and is the registered owner of two properties, namely Units 9 and 10 on the 15^th floor of Tower One, Ever Gain Plaza, 88 Container Port Road, Kwai Chung (“the Properties”).

4.  On 19 September 2017, the plaintiff issued the OS.  In the OS:

(1) The plaintiff claimed to be a beneficiary under a trust called the Jennex Trading Trust (“the Trust”).

(2) As stated above, Glendale was named the 3^rd defendant. Intermax International Limited (“Intermax”) was named the 2^nd defendant.

(3) The 1^st defendant was said to be a trustee of the Trust.

(4) The only reliefs claimed by the plaintiff, apart from costs (on an indemnity basis against all three defendants), were declarations that certain shares in Intermax and Glendale held by the 1^st defendant were held by it as trustee of the Trust.  There was no claim to the Properties, which were not alleged to be trust properties, and the Properties were even not mentioned in the OS.

5.  The OS has not been served on Glendale.  Glendale has not filed any acknowledgment of service.

6.  On 20 September 2017, the plaintiff caused to be lodged in the Land Registry a sealed copy of the OS against the Properties.

7.  On 6 October 2017, an agreement for sale and purchase dated 19 September 2017 for the sale of the Properties by Glendale was lodged at the Land Registry.  The agreement was registered on 24 October 2017.  Completion of the sale and purchase is to take place on 2 January 2018.

8.  On 30 October 2017, solicitors for Glendale (“PCW”) filed the Summons.  Solicitors for the plaintiff (“dBL”) say that they received the Summons on 31 October 2017.

9.  Also on 31 October 2017, dBL applied on behalf of the plaintiff to the Court ex parte for leave to amend the OS.  The application was granted by Master Hui on 14 November 2017.  Under the Amended Originating Summons (“the AOS”):

(1) Intermax and Glendale’s names are deleted as defendants.

(2) The 1^st defendant remains the same and is still said to be a trustee of the Trust.

(3) As shown in the current title of this matter, five other companies are added as the 2^nd to 6^th defendants respectively.  The (new) 2^nd and 3^rd defendants are said to be trustees also of the Trust, while the 4^th, 5^th and 6^th defendants are said to be beneficiaries of the Trust.

(4) The claims for declarations regarding the shares in Intermax and Glendale held by the 1^st defendant (§4(4) above) remain.  The plaintiff then adds claims for orders that it be granted leave to bring a derivative action in the name of the 1^st defendant on behalf of the Trust in relation to Intermax, as well as:

“ an order that the Plaintiff be granted leave to bring a derivative action in the name of the 1^st Defendant on behalf of the Jennex Trading Trust to wind up Glendale Holdings Limited, being a company incorporated in Hong Kong with Company Number: 0952450, under Section 177(1)(f) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32), and to liquidate the assets of the Glendale Holdings Limited, including, inter alia, the properties located at Unit 9 and Unit 10, 15^th Floor, Tower One, Ever Gain Plaza, No. 88 Container Port Road, Kwai Chung, New Territories.”

10.  Under the Summons, the marginal note of which refers to section 19 of the Land Registration Ordinance (Cap 128) (“the LRO”) and the inherent jurisdiction, Glendale seeks the following reliefs:

(1) a declaration be made that the OS is not registrable at the Land Registry against the Properties;

(2) the attempted registration of the OS be withdrawn and forthwith removed from the register of the Properties at the Land Registry, including any references to their registration as pending and/or being withheld; and

(3) indemnity costs.

11.  I have been informed by the parties that the Land Registry did not register the OS but returned the same to dBL.  However, notwithstanding this, there is still a record of the OS being a “deed pending registration”, but with the registration withheld, at the Land Registry.  Such a record still has the effect of informing potential buyers, or the actual purchaser in this case, that someone was trying or had tried to register a notice against the Properties, and had the effect of putting them off: see Sun Ngai International Investment Ltd v Zhang Su Hua [2009] 1 HKLRD 48 at §7 per Deputy High Court Judge Carlson.  The effect of a deed pending registration is practically the same as that of a registered deed.  See Wong Kum Chi v Lee Tit Ying [2003] 1 HKLRD 594 at §§4 – 5 per Deputy High Court Judge A Cheung (as he then was), Tai Yip Dyeing Factory Ltd v Kong Hoi Sang [2007] 1 HKLRD 608 at §34 per Saunders J, and Crowning Success Ltd v Brightland Corp Ltd [2008] 4 HKC 305 at §8(d) per Master J Wong.

12.  Since it is the OS, and not the AOS, which is the subject matter of the attempted registration, and the Summons, it is the propriety of the attempted registration, and the registrability, of the OS, and not the AOS, which I should consider. 

13.  As the OS has now been amended, one would have thought that the Summons could be disposed of in a sensible manner, with the question of the registrability of the OS not necessary to be dealt with, with no further incurring of unnecessary costs.  However, at the first hearing of the Summons before me on 17 November 2017, after taking instructions at my invitation, dBL was unable to inform me what further actions, if any,the plaintiff was going to take regarding the registration of the OS.  Further, PCW informed me that unless the plaintiff wrote to the Land Registry formally withdrawing the application to register the OS, the notation of its registration being “pending” as against the Properties would remain.  dBL did not have instructions to undertake that the plaintiff would withdraw the application to register the OS.  The parties were further unable to resolve the question of costs of the Summons.  The position is regrettable and I had no choice but to give directions for affidavits to be filed and for the Summons to be fully argued as a matter of urgency (in light of the imminent completion date), which took place before me on 28 November 2017.

B. THE LAND REGISTRATION ORDINANCE

14.  The following provisions of the LRO are relevant.

15.  Section 2(1) of the LRO provides as follows:

“ The Land Registry shall be a public office for the registration of deeds, conveyances, and other instruments in writing, and judgments; and all deeds, conveyances, and other instruments in writing, and all judgments, by which deeds, conveyances, and other instruments in writing, and judgments, any parcels of ground, tenements, or premises in Hong Kong may be affected, may be entered and registered in the said office in the prescribed manner.”

16.  Section 14 of the LRO provides as follows:

“ The provisions of this Ordinance relating to judgments (subject to the provisions hereinafter contained) shall extend to lites pendentes.”

17.  Section 1A of the LRO defines “lis pendens” as

“ (a) any action or proceeding pending in a court or tribunal that relates to land or any interest in or charge on land; and

(b) a bankruptcy petition.”

18.  Section 19 of the LRO provides as follows:

“ The court or judge before whom any property sought to be bound is in litigation, may on the determination of the lis pendens, or during the pendency thereof, where the said court or judge is satisfied that the litigation is not prosecuted bona fide, or for other good cause shown, make an order for the vacating of the registration in the Land Registry of such lis pendens without the consent of the party who registered it, and may direct the party on whose behalf the registration was made to pay all the costs and expenses occasioned by the registration or the vacating thereof, including the costs of the application to vacate, or may make such other order as to such costs or any of them as to the said court or judge may seem just.”

19.  Section 20 of the LRO provides as follows:

“ The application to vacate a lis pendens under section 19 may be in a summary way by petition or motion in court or by summons in chambers, and may be made by any person interested in the property against which the lis pendens has been registered, whether such person is a party to the lis pendens or not.”

C. THE PLAINTIFF’S OBJECTIONS

20.  The plaintiff has taken a number of objections to the Summons taken out on behalf of Glendale, at a time when it had not been served with the OS.  I shall deal with each objection in turn.

C1. No service or acknowledgment of service of the OS

21.  First, it is said that the OS has not been served on Glendale, and it has not filed (and is not entitled to file) any acknowledgement of service.  Thus, it is submitted, without an acknowledgment of service, Glendale may not invoke the jurisdiction of this Court, and I have no jurisdiction to consider this application by way of the Summons.  Now that Glendale is no longer a party, it can no longer filed an acknowledgement of service, and in any event even if it has remained a party, if there is no service, it cannot file an acknowledgment of service gratis: see Abu Dhabi Helicopters Ltd v International Aeradio plc [1986] 1 WLR 312.

22.  The issue then is one of jurisdiction over the parties, or a party,to the OS and the Summons. In making this submission, the plaintiff refers to Hong Kong Civil Procedure 2018 at §10/0/2:

“ Anyone may invoke or become amenable to the jurisdiction, provided only that the defendant has been served within the jurisdiction with a writ of summons, or its originating equivalent.”

23.  That passage refers to someone invoking the jurisdiction of the Court, and to someone being amenable, ie subject, to the jurisdiction of the Court, but it is only the “defendant” that has to be served, and not the party invoking the jurisdiction, ie the plaintiff.  The reason for this is obvious.  A party invoking the jurisdiction of the Court must have by his act of invocation submitted, and becomes amenable, to the jurisdiction of the Court, and service of anything is not necessary to make him so amenable. For the defendant, it is normally the service of the originating process that makes him amenable to the Court’s jurisdiction (but even then this is not an absolute rule: see §28 below).  But a defendant not served or properly served can make himself amenable to the jurisdiction of the Court by an act which constitutes a voluntary submission to the Court’s jurisdiction (say, by appearing in a motion: see Boyle v Sacker (1888) 39 Ch D 249).  Or, as in this case, by himself invoking, and thereby submitting and becomes amenable to, the jurisdiction of the Court.

24.  In this case, the plaintiff, by issuing the OS, has submitted, and becomes amenable, to the jurisdiction of the Court.  Equally, Glendale, although not having been served or acknowledged service, by issuing the Summons, has submitted, and becomes amenable, to the jurisdiction of the Court.  Thus, both the plaintiff and Glendale have submitted, and become amenable, to the jurisdiction of this Court, and I must have jurisdiction to hear any application properly made in these proceedings as between the plaintiff and Glendale.  Service is the usual manner of the Court assuming jurisdiction over a party but that is not the only manner.  Jurisdiction can arise by the parties submitting itself to the same.

25.  Since the jurisdiction over the plaintiff and Glendale is founded on submission and not service, in my judgment the authorities cited by the plaintiff on pre-service jurisdiction is not relevant.  In any event they do not assist the plaintiff.

26.  The plaintiff relies on Dresser UK Ltd v Falcongate Freight Management Ltd [1992] QB 502 at 523A–D, where Bingham LJ (as he then was), in the context of article 22 of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (“the Convention”), concerning when a court in a contracting state is first seised of an action, said that, when a defendant not served with a writ, it:

“ … is not obliged to respond to the plaintiff’s claim in any way, and not entitled to do so save by calling on the plaintiff to serve or discontinue.”

27.  In my judgment, what Bingham LJ was saying is that a defendant not served cannot “respond to the plaintiff’s claim”, which of course is contained in the originating process and the procedure for response is governed by the rules of procedure including the giving of an acknowledgement of service after proper service, and not that the defendant cannot invoke the jurisdiction of the Court himself by submitting to the Court’s jurisdiction by making a proper application in the proceedings against a party already submitted to jurisdiction, other than responding to a claim by the plaintiff.  Here, Glendale is not “responding” to the plaintiff’s claim in the sense of defending any substantive claim made by the plaintiff against it (and there was none in the OS).

28.  Rather, earlier in his judgment, after explaining that a plaintiff does not have to serve a writ that has been issued, and that it is the service of proceedings which ordinarily activates the litigious process and impose procedural obligations on the parties (518H), Bingham LJ went on to say (at 519B–C):

“ It would of course be wrong to suggest that the court has no jurisdiction to make orders against a person until he has been served. Mareva injunctions, Anton Piller are orders and other injunctive orders may be and very regularly granted and made before service.”

29.  If jurisdiction can be invoked against a person before service (and who has not even submitted to jurisdiction), a fortiori, jurisdiction must be able to be invoked by a person in an appropriate case before he has been served against an existing party which has already submitted to the Court’s jurisdiction.  When the Summons was issued, Glendale was named as a defendant and it could invoke the jurisdiction of the Court against the plaintiff, already amendable to the Court’s jurisdiction, in these proceedings.  The fact that the plaintiff has now deleted Glendale as a defendant cannot, in my judgment, take away the jurisdiction already invoked and vested.

30.  Mr Andrew Lynn, appearing for the plaintiff, submits that pre-service jurisdiction is highly exceptional and should not be found to exist other than in well-established categories such as Mareva injunctions and Anton Piller orders.  Alternatively, if such jurisdiction does exist, it should not be exercised except in such well-established categories.

31.  First, as I said, this is not strictly a pre-service jurisdiction case. 

32.  Second, I do not understand why any such jurisdiction only exists or is exercisable only in “well-established categories”.  When a Mareva injunction or an Anton Piller order was granted for the first time, neither was “well-established”.  The jurisdictional foundation of an Anton Piller order granted ex parte is the Court’s inherent jurisdiction (Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 at 61A–B per Lord Denning MR), and the jurisdictional foundation of a Mareva injunction is section 21L of the High Court Ordinance (Cap 4) (Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509 at 510 per Lord Denning MR), but section 21L does not in its terms expressly authorise pre-service grant.  In either case, it is ultimately the interest of justice which requires the Court to exercise, and justifies the Court in exercising, jurisdiction over a party who has not been served (Anton Piller at 61B; Mareva at 510). 

33.  Equally, in a case where a document is lodged for registration in the Land Registry and it is said that the document is not registrable thereat, because of its immediate effect on the property and its owner (see §11 above), in my judgment the interest of justice requires that the Court should exercise its jurisdiction (see section C2 below) to deal with the question of its registrability, and to order its vacation (either from the registered or pending section) if it is found that the same is indeed not registrable, even if the party invoking the jurisdiction has not been served with the originating process, provided there is no injustice to any party in the process.  Where in such a case both parties (the party applying to register and the party seeking the vacation) have sufficient notice so as to be able to prepare for evidence and arguments properly, I can see no injustice in the Court in dealing with the application in the proceedings even if one of the parties has not been served with the originating process.

34.  The plaintiff also relies on Abu Dhabi Helicopters.  However, Abu Dhabi Helicopters was concerned with a defendant who had not been served with the writ but who filed an acknowledgment of service gratis.  The question is whether the plaintiff’s obligation to issue a statement of claim according to the rules was triggered by the acknowledgment of service.  It was held by the Court of Appeal that it was not, as Order 10, rule 1(5), which deems the writ to have been served on the day the defendant acknowledges service, is subject to proof to the contrary, that is, that the writ is in fact never served.  The plaintiff having so proved in that case, the filing of the acknowledgment of service was therefore not authorised.  In my judgment, that case was concerned with the sequence of service of a writ, acknowledgment of service, and statement of claim, when the performance of each step triggers the obligation of the next, and has nothing to do with the question of jurisdiction, pre-service or otherwise, over a party or parties.

C2. Jurisdiction to deal with a lis pendens pending registration

35.  It is then said that Glendale cannot rely on section 19 of the LRO as it only applies to the vacation of a lis pendens already registered, which is not the case here.

36.  It has been held that section 19 of the LRO applies not just to a lis pendens already registered, but also to a lis pendens pending registration.  In Crowning Success, Master J Wong held that the Court has jurisdiction under section 19 of the LRO to vacate a lis pendens in the “deeds pending registration” section of the Land Registry.  However, it was not alleged that the lites pendentes in that case were not registrable and the application for vacation was made on another ground.

37.  That decision was agreed to by Deputy High Court Judge Lok (as he then was) in Octopus Capital Investments Ltd v Krishom Holding Ltd [2015] 4 HKC 289, which did concern a lis pendens pending registration and said to be not registrable as it did not concern land. 

38.  In Octopus at §9, Deputy High Court Judge Lok said:

“ I take the view that the Writ is clearly not registrable in the present case, and so the conduct in attempting to register the Writ is wrongful. The court certainly has jurisdiction to make a declaration to that effect”.

39.  Mr Tony Chow, appearing for Glendale, very properly referred me to Thian’s Plastics Industrial Co Ltd v Tin’s Chemical Industrial Co Ltd (No 2) [1971] HKLR 249, which appears to suggest that section 19 of the LRO only applies to registrable lis pendens but not non-registrable ones.  That case does not appear to have been cited in either Crowning Success or Octopus.

40.  However, that point does not appear to have been argued in Thian’s (No 2) as that point was common ground: see 254 per Briggs J (as he then was).  In the premises, it may be said that the ratio of Thian’s (No 2) does not relate to the scope of section 19 and the “common ground” is not binding authority.

41.  In my judgment, section 19 is not applicable to a non-registrable lis pendens, when the objection to the registrability of the lis pendens is that it does not relate to or affect land, as in this case, and, with the greatest respect, the common ground in Thian’s (No 2) must be correct.  This is because section 19 itself in terms refers to the application being made to

“ the court or judge before whom any property sought to be bound is in litigation”,

and when the lis pendens does not relate to or affect land, the property is not “in litigation” and section 19 is not applicable.  If the applicant for vacation is correct to say that the land is not in litigation and so is not registrable, then the land is not in litigation before it.  The applicant cannot adopt inconsistent positions, on the one hand saying that the land is not in litigation and so it should be vacated, and on the other hand asking the Court to assume jurisdiction under section 19 on the basis that the land is in litigation before it. The ground for vacation being non-registrability is also conspicuous by its absence in section 19 (and it is hardly likely that it was intended to be covered by the general words “other good cause shown”).  As Huggins J (as he then was) said in Thian’s (No 2) at 257, the LRO:

“ assumes that only those matters will be registered which it allows to be registered and therefore it provides no machinery for vacating unauthorised registration”.

42.  If section 19 does not apply to a non-registrable, but registered, lis pendens, then a fortiori it does not apply to a non-registrable lis pendens that is pending registration.  For the same reason, section 20 of the LRO, relied upon by Glendale, does not apply.

43.  I respectfully differ from Octopus in so far as it held otherwise.  However, I agree with Crowning Success that section 19 applies to a registrable lis pendens the registration of which is pending, and the analysis of Master J Wong is, with respect, compelling.

44.  However, in my judgment, I do have an inherent jurisdiction (which Glendale also relies on) to order the removal or vacation of a non-registrable document, including a lis pendens, from the “pending for registration” section of the Land Registry, and to deal with the registrability of such a document:

(1) The Court has the inherent jurisdiction to deal with the question of registrability of an instrument whether it is registered or pending registration.  It was said by Deputy High Court Judge A Cheung in Wong Kum Chi at §16:

“ as is demonstrated by many authorities very helpfully cited to me by Mr Tracy this morning (including Heywood v BDC Properties Ltd (No 2) [1964] 1 WLR 971 and Thian’s Plastics Industrial Co Ltd & Others v Tin’s Chemical Industrial Co Ltd & Another [1970] HKLR 498, Thian’s Plastics Industrial Co Ltd & Others v Tin’s Chemical Industrial Co Ltd & Another (No 2) [1971] HKLR 249), this Court does have the inherent jurisdiction to vacate the registration or purported registration of any instrument in the Land Registry which does not affect or no longer affects land. For the same reason, I am fully satisfied that this Court does have the jurisdiction, in an appropriate case, to grant a declaration in relation to the ‘registrability’, as it were, of any document which has been lodged for registration with the Land Registry even though it was not lodged for registration as a lis pendens.”

Even though Wong Kum Chi was concerned with a document other than a lis pendens, in my judgment, the inherent jurisdiction to grant a declaration as to the registrability of a document as referred to must extend to a lis pendens whether registered (as held in Thian’s (No 2))or pending registration. I fail to see any reason otherwise.  Indeed, the Thian cases referred to in Wong Kum Chi concerned lis pendens (wrongly registered).

(2) In Thian’s (No 2), it was said by the Full Court:

“ … the court should and will exercise its inherent jurisdiction in all cases where it is shown in that a lis pendens has been wrongly registered. It is within the court’s powers to correct a fault … in a normal case such as this, where it is proved to the satisfaction of the court that there is a lis pendens on the Register which should not be there, the court should order its vacation” (at 255 per Briggs J);

“ Once it is conceded that the lis pendens was not registrable under the Ordinance it seems to me necessarily to follow that everyone with an interest in the land must be entitled to have the registration vacated … If the Court has no jurisdiction to order vacation of such a registration, the entry must continue in spite of the damage which may result therefrom. No court of equity could countenance such a state of affairs and I have no doubt we have power to do what is asked or that we ought to exercise that power in order to prevent a manifest injustice” (at 256-257 per Huggins J).

A fortiori, the Court must have the inherent jurisdiction to deal with a lis pendens improperly submitted for registration in the sense that the same is not a registrable instrument.  The detriment to those having an interest in the land from having such a document pending registration is as great as one actually registered (§11 above), and this Court cannot countenance such a state of affairs, and should exercise its inherent jurisdiction to declare to the effect that the attempt to register is improper.

45.  The plaintiff argues that the deployment of the inherent jurisdiction is impermissible because that would be to undermine the statutory scheme or any supplementary regulatory framework, citing Richards v Richards [1984] AC 174.  I do not see how that can be so.  I simply cannot understand how, in a case where a document is submitted for, and pending, registration, with the practical consequences that would ensue as explained in various cases (see §11 above), and its registrability as a lis pendens is raised, that for the Court to pronounce as a matter of law on its registrability is to undermine the statutory scheme and the regulatory framework.  Can it be seriously suggested that the scheme and the framework is to countenance the existence, as pending for registration in the Land Registry as a lis pendens, documents in fact not registrable as such?

C3. Declaration as to registrability

46.  The plaintiff then argues that without a counterclaim for a declaration being made in the OS, as stated in Order 28, rule 7, Glendale is not entitled to ask for one before me. Order 28, rule 7, states as follows:

“ (1) A defendant to an action begun by originating summons who has acknowledged service of the summons and who alleges that he has any claim or is entitled to any relief or remedy against the plaintiff in respect of any matter (whenever and however arising) may make a counterclaim in the action in respect of that matter instead of bringing a separate action.

(2) A defendant who wishes to make a counterclaim under this rule must at the first or any resumed hearing of the originating summons by the Court but, in any case, at as early a stage in the proceedings as is practicable, inform the Court of the nature of his claim and, without prejudice to the powers of the Court under paragraph (3), the claim shall be made in such manner as the Court may direct under rule 4 or rule 8.”

47.  This provision strictly does not in terms apply to Glendale as it has not acknowledged service of the OS, as the plaintiff is at pains to repeat many times herein.  It has also now ceased to be a defendant altogether and, again as the plaintiff is at pains to point out many times, it can no longer serve any acknowledgment of service.   

48.  Does that mean that Glendale has no remedy, if the OS is not registrable, save to commence fresh proceedings, as suggested by Mr Lynn?  Does that mean that the Court has no jurisdiction to deal with the Summons?  In my judgment the answer is no.  Order 28, rule 7, does not say that without an acknowledgment of service, a defendant is banned from invoking the jurisdiction of the Court under any circumstances.

49.  In my judgment, a person, such as Glendale, being a party to proceedings commenced by originating summons, albeit not served and so has not acknowledged service, may seek to invoke the Court’s jurisdiction by way of summons to have a matter decided summarily in those proceedings, provided:

(1) The Court has the jurisdiction over the parties concerned in the proceedings.

(2) The Court has the jurisdiction to deal with the application, and to grant the relief sought, by way of summons.

(3) The other party has been adequately informed of the relief being sought.

(4) It is appropriate in all the circumstances of the case for the Court to exercise the jurisdiction to deal with the application by way of summons summarily, in a manner as directed by the Court as it shall deem just.

50.  Regarding the four conditions stated at §49 above:

(1) I have ruled above that I have, and continue to have, the jurisdiction over both the plaintiff and Glendale in these proceedings.

(2) I have also ruled above that the Court does have the inherent jurisdiction to deal with the question of registrability of the OS as a lis pendens while its registration is pending in the Land Registry. I do not think that the plaintiff disputes that the Court can exercise its jurisdiction to make a declaration in an appropriate case other than as final relief after full trial.  The plaintiff itself cites Clarke v Chadburn [1985] 1 WLR 78 as an example but no doubt the circumstances in which the Court can do so is not confined to those similar to that case[1].  

(3) There is no doubt that the plaintiff has been adequately informed of the relief being sought by Glendale by way of the Summons.

(4) In a case like the present, where there is no dispute on the facts, where the parties have been given the full opportunity to make submissions as a matter of law, and where a failure to deal with the issue will or may cause injustice, as in this case (see §11 above), in my judgment I should exercise my jurisdiction to deal with the Summons in a summary manner. It has been done so in, for example, Thian (No 2).  In Thian (No 2) at 257, Huggins J said:

“ It has been contended that we should not deal with this matter by way of interlocutory application but that the applicants should bring an action in the ordinary jurisdiction of the court. In my view where there has been such an obvious abuse of legal process as that in the present case the court may properly allow recourse to the procedure of application by motion and I see no substance in the objection that the alleged difficulty of the issues involved makes an application in this form inappropriate” (see also Briggs J at 255, where he did not think that the commencement of separate proceedings to vacate is necessary unless damages for wrongful registration are also being sought).

Because the OS is so clearly unregistrable (see section D below), and the plaintiff has not attempted to defend its registrability as a matter of submissions, I am of the clear view that the attempted registration of the OS is an abuse of the land registration system.  In any event, despite what Huggins J said, for the Court to deal with the question of registrability by way of summons summarily is in my judgment not confine to cases where there is an abuse of the legal process, and I do not think that Huggins J intended to confine the exercise of the inherent jurisdiction summarily to such cases, as the judgment of Briggs J in that case made clear at 255:

“ the court should and will exercise its inherent jurisdiction in all cases where it is shown that a lis pendens has been wrongly registered.”

51.  To proceed in such a manner is in my judgment consistent with fairness, as well as the spirit of Order 28, rule 7, even though strictly it may be questioned if by issuing the Summons Glendale is in fact making a counterclaim (when no substantive claim is made against it in the OS).  A counterclaim under Order 28, rule 7, comprises two elements: (i) to inform the Court the nature of the counterclaim for relief (which under Order 28, rule 7, can be done, for example, as in Ng Wing-see v Chang Chi-Ching [1973] HKLR 170, by the indication of a desire to do so in an affidavit with sufficient details); and (ii) the making of the counterclaim in a manner as directed by the Court. See Ng Wing-see at 187 per Huggins J.  Notwithstanding what Deputy High Court Judge McCoy SC said in Yeung Kwok Fan v Standard Chartered Bank [2001] 4 HKC 486 at 494F–I, I do not see why the direction under (ii) cannot be retrospective, in the sense that the Court can authorise the making of the counterclaim by an act already done.

52.  No doubt the Court can then further direct as to how the counterclaim can be disposed of, if appropriate in a summary manner, in the proceedings commenced by the originating summons.

53.  The first element referred to above is in substance fulfilled by the Summons, and the second element is adequately addressed by my directions made on 17 November 2017 as to how the claim for relief by Glendale is to be resolved.  Such directions necessarily imply that the Summons, with the claims therein, that has already been made is allowed to be proceeded with, and dealt with in a summary manner. 

54.  As I said above, the fact that Glendale has since ceased to be a party in this action cannot in my judgment affect the jurisdiction already invoked by the Summons whilst it was a party.

55.  It is then said by the plaintiff that the declaration sought by Glendale relates not to existing rights and to future rights (because the OS has not been registered yet), and the practice is that in ordinary cases the Court would not make such a declaration.  This point is utterly without merit.  What Glendale is seeking is a declaration that the OS, lodged for registration, is not registrable, and not that any actual registration is improper.  This is clearly a declaration as to the present nature and quality of the OS as a document which affects land or otherwise.  There is nothing future about it.  In any event, the plaintiff agrees that this is a point which goes to discretion and not jurisdiction.  In a case as clear as this one (see section D below), in my judgment I should exercise my discretion to make the declaration sought as well as to grant the other orders asked for in the Summons. 

56.  The plaintiff says that the making of a declaration is academic given that the OS has been amended.  I disagree for reasons stated at §11 above, and section C5 below. 

C4. Injunctive relief

57.  The plaintiff further objects to §2 of the Summons as being an application for final mandatory injunction.  However, there can be no doubt that I do have the jurisdiction to grant a mandatory injunction at any stage, even in an interlocutory application, if the matter is a clear one which ought to be decided at once: Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657 at 663 per Mustill LJ (as he then was).

58.  For the same reason as I have given in section C3 above, I consider that I do have the jurisdiction to grant the relief sought by §2 of the Summons, which is clearly necessary to give effect to my holding that the OS is not registrable, and that I ought to exercise that jurisdiction in Glendale’s favour. 

C5. Concluding remark

59.  In the light of his submissions that the Court has no jurisdiction to deal with an application made by Glendale given that it has not acknowledged service of the OS (and will not be able to), Mr Lynn says that Glendale should have commenced fresh proceedings to seek remedies in relation to the OS existing in the “deeds pending registration” section.  However, because of his denial that any jurisdiction (whether under section 19 or inherent) exists for the Court to deal with a document pending registration, he is compelled to submit that even under fresh proceedings, the Court can do nothing even if it takes the view that the OS is not registrable unless and until it is actually registered.  But, since the Land Registry has already rejected the OS as being registrable, it will not be registered.  In the meantime, the OS remains in the “deeds pending registration” section notwithstanding the rejection with no evidence that it will be taken off without a Court order or unless the plaintiff withdraws it (which it refuses to undertake that it will).  I note that in Wong Kum Chi, the document apparently remained on the “deeds pending registration” section at the date of the hearing, more than 18 months after the Land Registry withheld registration.

60.  The position is therefore that, if Mr Lynn is correct, the OS may well exist in the “deeds pending registration” system indefinitely, despite its clear unregistrability (see section D below), and there is nothing Glendale and the Court can do about it, whether in these proceedings or in any fresh proceedings.  To issue fresh proceedings is clearly not a viable alternative to Glendale if Mr Lynn is correct.  This is a totally absurd position which cannot be correct, and to repeat what Huggins J said in Thian (No 2) at 257:

“ No court of equity could countenance such a state of affairs and I have no doubt we have power to do what is asked or that we ought to exercise that power in order to prevent a manifest injustice.”

D. REGISTRABILITY

61.  Glendale’s case is simple.  As stated in its skeleton submissions dated 14 November 2017:

“ The OS makes no reference whatsoever to the Properties. As such, the OS does not prima facie affect land and [Glendale] submits that it is therefore not a registrable instrument under the LRO.”

62.  I agree.

63.  For the OS to be registrable, it must “relate to” and “affect” the Properties. 

64.  As stated, correctly in my view, in Sihombing and Wilkinson, Hong Kong Conveyancing: Law and Practice (2017), Vol 1B, at §XIV[275]:

“ The lis pendens being registered must relate to a dispute concerning land where the registering party claims some interest in the land or a right to have something done to the land.”

An example of the latter situation is Re Ching Yue Chong (deceased) [1997] 3 HKC 548, where a claim of trespass which required something to be done to the land in question was held by Le Pichon J (as she then was) to be registrable as a lis pendens.

65.  I am simply unable to see how it can be suggested at all that the OS related to or affected the Properties as required, when they were not even mentioned therein.  There was no claim to any right or interest in whatever form to them, or to have something done to them.  Apart from costs, no substantial reliefs were claimed against Glendale or the Properties at all.  An action is not registrable as a lis pendens just because the defendant owns land: Thian’s (No 2) at 253 per Briggs J.

66.  In Sun Ngai, a wife in a matrimonial dispute registered the same as lis pendens against properties owned by a company which was (through an intermediate company) indirectly owned by another other company, which was said to be beneficially owned as to 87.5% by the husband. 

67.  The property owner’s application to vacate the lis pendens was dismissed by Deputy High Court Judge Carlson.  It was held that for a lis pendens to be registrable under the LRO the lis does not have to be between the property owner and the person seeking registration: see §24 of the judgment. 

68.  Notwithstanding that holding, what remains necessary is that the lis pendens must still be related to the land in the sense as explained at §64 above. Sun Ngai did not hold otherwise. In the divorce proceedings there, the wife was claiming a transfer of property order in respect of the properties in issue on the basis that the husband was the beneficial owner of the company which owned them.  Thus, there was a lis in which a claim to the properties was made, and the issue before the learned Judge was posed at §18:

“ the question remains whether it is necessary for this lis to be one between the two parties [i.e. the property owner and the wife] before me or whether, it is sufficient for the lis to be one pending in any proceedings to which, as in this case, the beneficial interest concerning the land in question is in issue.”

69.  In her third affirmation filed on behalf of the plaintiff in opposition to the Summons, Ms Margaret Wo, a trainee solicitor at dBL, explains the disputes between the parties relating to the Trust and the shares in Glendale held by the 1^st defendant.  But as far as I can see, on the basis of those claims, these proceedings still have nothing to do with the Properties in the sense I explain at §64 above.  Rather, the plaintiff’s case is as follows, as far as Glendale is concerned:

“ One of the trustees of the Trust, the 1^st Defendant … holds 34% of the shareholding of … Glendale … and it was the intention of the Ultimate Beneficaries that the shareholding in [Glendale] was to be an asset of the Trust. It has been suggested, however, by one of the Ultimate Beneficiaries, Thomas Scott Farnen that the 1^st Defendant holds the shares in [Glendale] subject to an alternative arrangement concluded between the Ultimate Beneficiaries outside of the Trust Structure.”

70.  Thus, the dispute between the parties under the OS was (and remains so under the AOS) whether the shares in Glendale held in the name of the 1^st defendant are assets of the Trust.  It was not claimed that the Properties were or are assets of the Trust.  The plaintiff was not seeking a transfer of the Properties or making a claim to any title or interest or right in them, not even in the name of the 1^st defendant as the trustee of the Trust of which it said it was a beneficiary.  The fight was over the beneficial ownership of the shares in Glendale, which could not affect the assets owned by Glendale, as it is trite law that a shareholder has no legal or equitable interest in the assets of the company: Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 at §34 per Ribeiro PJ.

71.  Indeed, Ms Wo goes on to say in her third affirmation that Glendale purchased four properties, namely the Properties, as well as two other units in the same building, and:

“ It was intended by the Ultimate Beneficiaries that the proceeds from the [four] Properties, whether generated from the rental or from the sale of the [four] Properties, would, by way of dividends, be paid to the 1^st Defendant as a trustee of the Trust, and then distributed through the Trust to the Ultimate Beneficaries.”

Glendale would be able to distribute the rental and sale proceeds from the Properties as dividend, payable of course only out of its own profits, only if it is the beneficial owner of the Properties and thus the proceeds.  Thus what is said by Ms Wo confirms the acceptance that Glendale was and is the beneficial owner of the Properties, and these proceedings do not relate to or affect them in the sense explained for the OS to be registrable as a lis pendens.  This position is in fact confirmed by the AOS: see §75 below.

72.  Ms Wo alleges that the concern of the plaintiff is that the other two units owned by Glendale were sold in 2012 but the sale proceeds have not been distributed or otherwise accounted for. The OS was lodged in the Land Registry against the Properties

“ with a view to protecting the Trust’s interest in [the Properties]” [emphasis added].

It is said that the trustees of the Trust are unable to act to protect itself and the plaintiff was apprehensive that there would be a repeat of what happened to sale proceeds of the other two units unless

“ steps were taken to make the public aware of the Trust’s interest in [the Properties]” [emphasis added].

73.  I am of course not in a position to express any view on the merits of the plaintiff’s case and the alleged concerns, nor do I need to.  Even accepting all of the plaintiff’s allegations as stated by Ms Wo for the purpose of the Summons, the fundamental problem for the plaintiff is that, contrary to what Ms Wo alleges as I relate in the preceding paragraph, a trust which holds shares in a company has no interest whatsoever in the assets of the company, when it is not alleged that the company holds the assets on trust for the trust.  A fortiori, neither do the beneficiaries of the trust have any interest in the company assets.  It is simply wrong to suggest, as Mr. Wo has, that the Trust has any interest in the Properties. What remains missing is a claim for the Properties in the sense explained for the OS to be registrable as a lis pendens. 

74.  I hold that the OS is not registrable as a lis pendens under the LRO.  In fact, no attempt is made whatsoever in the skeleton submissions of Mr Lynn, or orally, to justify the registrability of the OS.

75.  A number of points are made on behalf of the plaintiff by reference to the AOS in the skeleton dated 16 November 2017.   It is equally difficult to see how the AOS can be said to relate to or affect the Properties in the sense explained above either, and the fact that it is said in the AOS that in the winding up of Glendale its assets including the Properties should be liquidated further confirms an unequivocal acceptance that the Properties belong beneficially to Glendale with no claim being made thereto by anyone else.  However, as I said above, what is before me is the OS, and not the AOS, which is in issue, and I say no more about the latter.

E. DISPOSITION

76.  The OS is plainly not registrable as a lis pendens.  Its status as a document pending registration in the Land Registry must be removed and vacated.

77.  The attempt to register the OS should never have been made.  The plaintiff has made no attempt to justify the registrability of the OS, and it must have been plain to it that the same is not registrable.

78.  Instead of seeking to resolve the question of registrability as a substantive issue and in a reasonable manner before me, the plaintiff resorts to a number of unmeritorious procedural and technical objections to the Summons.  It is quite clear to me that the plaintiff is not interested in having the question of registrability resolved at all, but is seeking to have the OS remaining on the “deeds pending registration” section of the Land Registry as long as possible knowing all the consequences this will have on the pending completion of the sale of the Properties, with no basis (as none is advanced) to support any belief that the OS is registrable at all.  Its refusal to withdraw the OS from the Land Registry while at the same time maintaining that the Summons is academic is otherwise difficult to understand. This is an absolute abuse of the land registration system in Hong Kong.

79.  I make an order in terms of §§1 – 2 of the Summons.

80.  In all the circumstances I am of the view that this is an appropriate case for the award of costs of the Summons, including costs of the hearing on 17 and 28 November 2017, to be paid by the plaintiff to Glendale on an indemnity basis.  I make an order nisi to that effect. 

81.  If the plaintiff wishes to apply for a variation of the order nisi it is to file and serve its reasons by 4 pm on 6 December 2017.  If it does so apply, Glendale is to file and serve its response if it so wishes by 4 pm on 11 December 2017, and the plaintiff is to file and serve its reply if it so wishes by 4 pm on 14 December 2017.

82.  If the plaintiff does not apply to vary the order nisi, Glendale is to file and serve its bill of costs by 4 pm on 11 December 2017.  The plaintiff is to be file and serve its response if it so wishes by 4 pm on 14 December 2017, and Glendale is to file and serve its reply if it so wishes by 4 pm on 18 December 2017.  I shall then assess the costs summarily.