WONG KUM CHI v. LEE TIT YING

HCMP 363/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 363 OF 2002

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J U D G M E N T

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1. The Plaintiff is the widow and the administratrix of the estate of Lee Wing Chong, deceased. The deceased was the registered owner of a property known as Flat U on 14th Floor (or Flat on 14th Floor of Block U), Man Wo Garden Mansion, No. 38 Yuet Wah Street, Kowloon. Letters of Administration of the estate of the deceased were granted to the Plaintiff on 11 December 1998. The Letters of Administration have been duly registered in the Land Registry.

2. The Defendant is one of the beneficiaries of the intestate estate of the deceased and is in fact a natural son of the deceased. On a date unknown to the Plaintiff, the Defendant took possession of the property without authorization or permission from the Plaintiff as the administratrix of the estate. Proceedings were commenced in the District Court by the Plaintiff against the Defendant for the recovery of vacant possession of the property. The matter was heard by Master Chow of the District Court on 15 January 2001. The learned Master made an order in favour of the Plaintiff against the Defendant for the recovery of possession of the property.

3. An appeal against the master's order was dismissed by His Honour Judge Lok on 9 March 2001. Vacant possession of the property was recovered by the Plaintiff on 12 March 2001. In the proceedings in the District Court, the Defendant relied on a letter of instructions written by the deceased to a firm of solicitors, instructing the solicitors to prepare documents for the transfer of the subject property to the Defendant, as giving him an interest in the property and justifying his possession of the property as against the Plaintiff. That defence was rejected by Judge Lok when he dismissed the Defendant's appeal. His Honour ruled that the letter of instructions did not give the Defendant any interest in the subject property. It was a situation of an incomplete gift. From the decision of Judge Lok, there was no appeal by the Defendant. In those circumstances, the decision was and is clearly binding on the parties.

4. Yet on 10 March 2001, i.e. one day after the appeal was dismissed, the Defendant through his solicitors lodged the letter of instructions (i.e. the so-called "instrument of transfer") for registration in the Land Registry against the property. The Land Registry rightly, in my view, withheld registration of the so-called instrument of transfer which was lodged for registration by Memorial No. 8332048. That notwithstanding, a land search of the property in question clearly shows under the caption "Deeds pending registration" that there is pending for registration with the Land Registry against the property the so-called instrument of transfer.

5. I totally agree with Mr Tracy, counsel for the Plaintiff, that that quite unjustifiably introduces a doubt on the good title of the administratrix to the subject property, even though the so-called instrument of transfer has not been formally registered by the Land Registry. The mere fact that it appears in the land search record as a document pending registration is, in my judgment, sufficient to introduce a doubt on the title of the administratrix.

6. Proceedings were duly commenced by the Plaintiff in the District Court by way of originating summons asking for an order to vacate the registration of the so-called instrument of transfer from the Land Registry.

7. The matter came for hearing before Judge Lok again on 2 January 2002. On 4 January 2002, the learned judge made an order that these proceedings be transferred to the Court of First Instance for adjudication on the ground that the District Court did not have jurisdiction to handle the matter: [2002] 1 HKLRD 420. This set in motion the provisions in Order 78 of the Rules of the High Court (Cap. 4) governing the procedure relating to proceedings transferred or removed from the District Court to this Court. Amongst other things, rule 2 of that order requires the Registrar to give notice to all parties to the proceedings in the District Court that the action has been transferred to this Court and requires the defendant in the proceedings to acknowledge service of the notice. Rule 4 provides that if the defendant fails to acknowledge service of the notice and give notice of intention to defend, the plaintiff may, with the leave of the Court, enter judgment against the defendant with costs.

8. The Defendant did not acknowledge service when the proceedings were commenced in the District Court. The Defendant did not acknowledge service when notice was given to him by the Registrar that the proceedings had been transferred to this Court.

9. In those circumstances, the Plaintiff took out an application pursuant to Order 78 rule 4(1) for leave to enter judgment against the Defendant upon his failure to give notice of intention to defend. The matter came before Master K Y Chan for hearing. At the suggestion of the master, the originating summons was amended: instead of asking for the vacating of the registration of the supposed instrument of transfer, the Plaintiff now asks for a declaration that the instrument is not registrable. This is clearly a sensible amendment because as I said, the so-called instrument of transfer has never been registered formally by the Land Registry; it only appears in the land search record as a document pending registration. The master also made an order that the application of the Plaintiff be dealt with by a judge. That was how the matter came before me this morning for adjudication.

10. Mr Tracy very properly points out to me at the hearing this morning that generally a declaration cannot be obtained by default. He refers me to Order 15 rule 16 and the commentary to the rule appearing in Hong Kong Civil Procedure 2002 Vol. 1. Mr Tracy is no doubt correct about the nature of the relief sought. A declaration cannot be granted by default; it cannot be granted by consent; it can only be granted by the Court in the exercise of its jurisdiction on the merits of the case. But I see no conflict between these general principles and Order 78 rule 4. Order 78 rule 4 does not give a plaintiff an automatic right to judgment. It only entitles a plaintiff to apply for judgment; it requires the leave of the Court for the entry of judgment; and of course in considering whether the Court should grant leave, the merits of the case should be considered.

11. Moreover, as I said, the proceedings were commenced by way of originating summons; therefore, the provisions in Order 28 apply to this case. Order 28 rule 1 provides, amongst other things, that Order 32 rule 5 shall apply in relation to originating summonses as they apply in relation to other summonses. Order 32 rule 5 provides that where any party to a summons fails to attend on the first or any resumed hearing thereof, the court may proceed in his absence if having regard to the nature of the application, it thinks it expedient so to do.

12. Today's hearing may be regarded as a hearing of the originating summons. The Defendant has not appeared before me today. In my judgment, the provisions in Order 32 rule 5 are also applicable in addition to the provisions in Order 78 rule 4. I am satisfied that I can hear the Plaintiff's application for a declaration in those circumstances. The proper approach is for me to examine the merits of the case.

13. If I am of the view that further evidence has to be filed or that the matter should be set down for trial, then certainly under Order 28 I have the power to make the necessary directions.

14. On the other hand, if I am of the view that the matter can be dealt with summarily, likewise, the provisions in Order 28 would entitle me to do so, in addition to the provisions in Order 78 rule 4.

15. Turning to the merits and evidence of the case, I am fully satisfied that the Plaintiff has placed sufficient evidence before me for a case of declaration. I am satisfied that the letter of instructions does not affect land at all. I am fully satisfied that it does not give the Defendant any interest in the subject property. Furthermore, the matter has been finally adjudicated upon by Judge Lok when he dismissed the appeal of the Defendant in the earlier District Court proceedings. That determination, as I said, is binding on the parties. In other words, I am satisfied that the so-called instrument of transfer is not registrable.

16. The so-called instrument of transfer has not been lodged for registration as a lis pendens. It was lodged for registration as an instrument affecting land. In those circumstances, the statutory provisions in section 19 of the Land Registration Ordinance (Cap. 128) relating to the Court's jurisdiction to vacate a lis pendens do not apply. However, as is demonstrated by the many authorities very helpfully cited to me by Mr Tracy this morning (including Heywood v. BDC Properties Ltd [1964] 2 All ER 702 and Thian's Plastics Industrial Co. Ltd v. Tin's Chemical Industrial Co. Ltd [1970] HKLR 498, [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.

17. For all the above reasons, I am with the Plaintiff. I make a declaration that the so-called "instrument of transfer" dated 2 November 1994 that was delivered to the Land Registry on 10 March 2001 for registration by Memorial No. 8332048 is not registrable under the Land Registration Ordinance against the property known as Flat U on 14th floor (or Flat on 14th floor of Block U), Man Wo Garden Mansion, No. 38 Yuet Wah Street, Kowloon. I believe that such a declaration would serve the purpose of the Plaintiff.

18. The amended originating summons asks for costs to be paid by the Defendant to the Plaintiff on an indemnity basis. Costs should follow the event. The Defendant must pay the Plaintiff the costs of the present action by originating summons as a matter of principle. As regards the basis of taxation, in my judgment, this is one of those rare cases in which the Court should order the Defendant to pay costs on an indemnity basis. After the judgment of Judge Lok dismissing the Defendant's appeal in the earlier District Court proceedings against which there was no appeal, the Defendant had no justifiable reason for lodging the so-called instrument of transfer for registration against the property in the Land Registry. It was a total abuse of the land registration procedure. I can see no justification for it whatsoever. So I order that costs be paid on an indemnity basis.

19. My cost order is subject to one matter. As I said, the proceedings were originally commenced in the District Court; they were transferred to this Court because the District Court does not have jurisdiction to deal with the relief sought. Having heard argument from Mr Tracy, I am of the view that the costs of the hearing of the present proceedings before Judge Lok on 2 January 2002, at which hearing Judge Lok heard argument on whether the District Court had jurisdiction, should not be borne by the Defendant, although I must say I have much sympathy for Mr Tracy's position, namely, that this was a novel point and the hearing eventually resulted in a judgment handed down by Judge Lok in open court clarifying the jurisdiction of the District Court in this regard. (Indeed, Judge Lok made no order as to costs relating to that hearing.)

20. So to recap, I order that the Defendant pay to the Plaintiff the costs of the whole proceedings in this Court as well as in the District Court on an indemnity basis, save that the costs of the hearing on 2 January 2002 before Judge Lok be borne by the Plaintiff in her capacity as the administratrix of the estate.

21. Finally, I would like to express my gratitude to Mr Tracy for his very helpful and fair submission and assistance in the present case.