LAU KAM SING v. CHUNG CHO DEVELOPMENT LTD

HCMP 361/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 361 OF 2014

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J U D G M E N T

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1. The plaintiff is the owner of Lot No 433 in Demarcation District No 236, Sai Kung in the New Territories.

2. In or about 1996, he deposited with the defendant the title deeds to the said property as some form of security for payments of between 500,000 and 900,000 Hong Kong dollars which appear to have been advanced in a number of tranches.  The actual total amount of the loan is disputed, but that is of no consequence in this dispute. 

3. There is a pre‑existing Chineseagreement dated 12 October 1994, at least a year before the deposit of the title deeds.  There is apparently no specific document or agreement in respect of the deposit of the deeds at the time, otherwise it would have been identified and disclosed as such.  At best, it seems to have been an informal deposit or lodging of the deeds consequent upon the Chineseagreement. 

4. The Chinesedocument of 12 October 1994 is entitled “Joint Development Agreement”.  It was in respect of the joint development of a small house on the lot of land.  The defendant company was to build it.  There were provisions concerning the division of the house and land between them.  The defendantagreed to pay to the plaintiff $900,000 in instalments.  The plaintiff undertook not to develop the land with anyone else and agreed to hand over the title deeds for safe custody until all provisions were complied with.

5. The plaintiff, if in breach, had to return the money, described as “security money”, and pay other identified sums.  If the defendant was in breach or he withdrew from the venture, the plaintiff need not return the money.

6. There were other details in the provisions with which I do not need to be concerned. 

7. It is now 20 years since the agreement and 18 years since the deeds were informally lodged for safe custody.  No proceedings have been taken by either party to enforce the agreement.  There is no lis pendens which could be registered.  The Limitation Ordinance has some clear‑cut provisions. 

8. On or about 15 July 2010, some 15 or 16 years after the Chineseagreement and the later payments, the defendant purported to register what is described as a “Notice of Deposit of Title Deeds re Lot No 433 in Demarcation District No 236”. 

9. The plaintiff’s case is that this document, to describe it loosely, is not registrable and should be removed.  It is in very simple form, and no more than a unilateral notice unaccompanied by any other document.  It does not even refer to the Chineseagreement.  I repeat its contents simply to underline its brevity and nature:

“Notice is hereby given to Lau Hon Por...”

(the registered owner and plaintiff)

“... and all parties intending to deal with the property that for valuable consideration given by us to Lau Hon Por, the title deed in respect of the property, i.e, the new Grant No 8936 dated 8 October 1996, has been deposited with us since in or about 1996 and is now in our possession.”

10. Section 2 of the Land Registration Ordinance, Cap 128 identifies the Land Registry as the,

“... public office for the registration of deeds, conveyances and other instruments in writing, and judgments; by which any parcels of ground, tenements, or premises may be affected.”

11. The notice is certainly not a deed or a conveyance or a judgment; that much is agreed. 

12. Is it an “instrument in writing?”  Certainly it is in writing, but can it sensibly be termed an “instrument?”  If it is, may it affect any parcels of ground, tenements, or premises? 

13. Under the Land Registration Regulations, Cap 128A, rule 2 defines “instrument” as including “any deed, conveyance, lis pendens, judgment or other instrument in writing”, which regrettably does not carry the matter any further. 

14. A straightforward view is that the written notice does not approximate to a deed, conveyance or lis pendens, nor to a judgment. 

15. The Oxford English Dictionary defines “instrument” as,

“...a formal legal document, a formal authenticated record of any transaction.”

16. The defendant’s notice does not come anywhere near that definition, and I do not accept Mr Ko’s suggestion that it is a technical quibble with which we are concerned. 

17. But there is legal authority on the point which I regard as conclusive.  In Financial and Investment Services for Asia Limited v Baik Wah International Trading Co Ltd [1985] HKLR 103 at 110 starting at paragraph F, Hunter J (as he then was) said:

“The phrase ‘other instruments in writing’ has to be construed in its context. It is easy to give it what I regard as its primary meaning of instrument underhand namely (and I quote from 12 Halsburys Laws paragraph 1436)...”

That would then be the reference, of course available to Hunter J in or about 1984 rather than the current reference, and I quote:

“ ‘...a document in writing which either creates or affects legal or equitable rights or liabilities, and which is authenticated by the signature of the author but is not sealed by him’. This is supported by the cases collected in Stroud Judicial Dictionary pps. 1387/8.

It is more difficult to determine...”

He went on,

“...whether a more extended meaning can properly be given that was appropriate to cover documents in writing, which did not themselves create or affect rights, but evidenced rights: for example a note or memorandum of an agreement sufficient to satisfy what is now section 3(1) of the Conveyancing and Property Ordinance.”

18. But this note cannot be elevated to the status of evidence.  I would find that approach perhaps rather bold since the context and circumstances can vary so much and, in any case, what Hunter J had in mind, as an example, was section 3(1) of the Conveyancing and Property Ordinance note or memorandum, and this notice is certainly not on a par, in any respect, with that. 

19. It is clear from the bare notice that there is no agreement to grant an equitable charge over the land in question.  There is nothing signed by the plaintiff in any event.  This approach is aided by the decision of the Privy Council in Anstalt Nybro v Hong Kong Resort Co Ltd [1980] HKLR 76 at 81 per Lord Lane, a case in which Hunter J, as he then was, appeared as counsel, but which somewhat oddly was not cited before him in the Baik Wah case.  Lord Lane said:

“It is only where the agreement may create some interest, legal or equitable in the parcel of ground that the instrument can be the subject of registration under the ordinance.”

20. There is, of course, no agreement or memorandum in the case before me, and so the simple notice in writing cannot constitute a legal or equitable interest.  A simple deposit of the title deeds without more will not constitute an equitable mortgage: see Baik Wah.

21. Mr Ko has argued that had the Chineseagreement been registered, it would have made the position clearer.  That, I feel, rather begs the question.  I have to ignore that.  In any event, there may be arguments concerning the enforceability of that particular agreement. 

22. In my judgment, this registration was a misuse of the facility.  It was entirely inappropriate to seek to use a unilateral notice potentially to inhibit matters which could have been satisfactorily resolved years ago by litigation in respect of the Chineseagreement of 1994. 

23. I am satisfied that it is not registrable and Mr Wang having declared that this is what he seeks, I so order.

[Discussion as to costs]

24. I think this is a proper case for the usual order to follow, the plaintiff having succeeded on the first, in any event, perhaps the most important aspect.  I will order that the defendant pay the plaintiff’s costs to be taxed if not agreed.