LAU CHI WAN AND ANOTHER v. SHING KAI KWAN

DCMP 601/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 601 OF 2010

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REASONS FOR DECISION

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1. This is an application by the Plaintiffs for a declaration that the mortgage ("the Mortgage") in favour of one Shing Kai Kwan (成啟坤) stated in the Schedule to the Block Government Lease dated 27 March 1905 in respect of the land known as Lot No. 1027 in Demarcation District No. 243, Sai Kung, New Territories, Hong Kong ("the Lot") be discharged under s.12A of the Conveyancing and Property Ordinance (Cap. 219)(“CPO”). 

2. The Plaintiffs are the executors of the Will of their late father Lau Sun Choi (劉辛財) ("the Deceased") dated 24 August 2007.  The Deceased passed away in Hong Kong on 30 August 2007 and on 2 July 2008 the Grant of Probate in respect of the said Will (No. HCAGO11637/2007) was issued by the Court of First Instance and was registered at the Land Registry by Memorial No.  08073100190046.  The estate of the Deceased includes the Lot in question.  In the Schedule to the Block Government Lease, insofar as the Lot is concerned, it is stated that the Lot is mortgaged to the Defendant for the sum of HK$14 (“the Mortgagee”).  The Plaintiffs affirmed in their affirmation dated 10 February 2010 in support  that,  prior to the death of the Deceased, the Deceased never mentioned to them anything about the Mortgage; nor had they heard from the Deceased that the Defendant or his successors in title had ever come forward to claim any rights under the Mortgage.  As the Block Government Lease was some 105 years ago, it is their averment as well as the submission of Mr. Lee for the Plaintiff, that the Defendant has passed away.

3. In the present case, the Plaintiffs have made considerable efforts to locate the Defendant and his successors in title including enquiries made with the Probate Registry of the High Court, the Registry of Births and Deaths, the Land Registry as well as the District Lands Office under whose jurisdiction the Lot falls.  Further enquiries have been made to the Hang Hau District Rural Committee to no avail.  The Plaintiffs have not been able to locate anyone who claims to have an interest in the Mortgage.  On this basis, I accept that this is the case where the encumbrancers cannot be found or, in the case where the Defendant has died, the encumbrancers are unknown or uncertain.  

4. Turning first to the issue of jurisdiction, Mr. Lee for the Plaintiffs has helpfully drawn my attention to paragraph 12 of the Judgment of H H Judge Lok in Harvest Development Ltd v. the Personal Representative of the Estate of Liu Wa Fuk (廖華福) (DCMP 1367/2006) where the claim of that case was based on the premise that the Mortgage was still subsisting and as the Mortgagee and his successor in title could not be located, the Plaintiff was asking the Court to declare that the mortgage was discharged once the money owed under the mortgage including interest was paid into Court.  In that case, the Learned Judge held that the claim could be regarded as an action for redemption of a mortgage and since the annual rent of the Lots in that case was nominal, the District Court had jurisdiction to entertain such a claim under Section 37 of the District Court Ordinance ("DCO").  The case before me is the same as that in Harvest Development Ltd and likewise I agree that the Court has jurisdiction to entertain this claim under s.37 of the DCO. 

5. The Plaintiffs have brought this application on an ex parte basis in light of the fact that the Defendant and his successors in title cannot be found.  In proceeding on that basis, Mr. Lee for the Plaintiffs has drawn my attention to the dicta of Mr. Justice Lam in Re Cheung Chi Wang (HCMP 6097 of 2001) and Re Man Chi Kan (HCMP 4945/2002) and I agree that an application under s.12A of the CPO does allow an application on this basis although it is ultimately a matter of discretion of the Court to decide depending on the facts of each case. In the present case, I am satisfied that an application on an ex parte basis is appropriate for the reasons stated above.

6. Mr. Lee for the Plaintiff has submitted that from the various searches conduct in respect of the Lot at the Land Registry, there is no evidence of discharge of the Mortgage in question. I agree and I am prepared to proceed on the basis that the Mortgage itself is subsisting now and that the Plaintiffs are seeking to discharge the Mortgage under  s.12A of the CPO.

7. As to the amount to be paid into Court in discharge of the Mortgage, the Plaintiffs have applied a notional interest rate of 20% per annum for 105 years which results in interest in the sum of HK$294.  Coupled with the principal of HK$14, a sum of HK$308 is arrived at.  The Plaintiffs have proposed an additional margin of HK$1,000 which brings to a total of HK$1,308.  This is the same formula approved Deputy Judge Lam, as he was then, in Re Cheung Chi Wang and H H Judge Lok in Harvest Development Ltd.  I am satisfied that this amount should be adequate  to satisfy whatever interest the Mortgagee might have in the Mortgage.

8.  An application under s.12A of the CPO consists of different stages.  First there is the application to the Court to make the payment-in; secondly, the Court will decide whether to make a declaration that the property in question should be discharged from the encumbrancers.  Mr. Lee has asked that I compress the two stages into one as it is highly unlikely that the Court will be presented with new materials for the purposes of deciding whether a declaration under s.12A should be made especially when the Defendant or his successors in title cannot be found or located.  On the basis of the materials before me and following the approaches of the Court in Harvest Development Ltd, Deputy High Court Judge Gillin Re Queen Cheers Development Ltd (HCMP No. 2731 of 2003)and Deputy High Court Judge Saunders, as he was then, in Re Lung Cheung Development Co Ltd (HCMP No. 960 of 2004).  I agree  to adopt this approach and I hereby order as follows :-

(a)    within 14 days from the date of this Order, the 1st and 2nd Plaintiffs be at liberty to make payment into Court for the sum of HK$1,308 being the balance of the principal and interest in respect of the Mortgage created in favour of the Defendant in respect of the Land known as Lot 1027 in Demarcation District No. 243, Sai Kung, New Territories as stated in the Block Government Lease dated 27 March 1905;

(b)    upon the abovementioned payment into Court for the sum of HK$1,308 having been made, a declaration be made that the Mortgage of the land referred to in paragraph (a) above be discharged;

(c)    there be no order as to costs in this action.