Thian's Plastics Industrial Co Ltd and Others v. Tins' Chemical Industrial Co Ltd and Another
Read the full judgment text of CACV 42/1970 on BabelCite. This Court of Appeal judgment.
1. This is an appeal against a judgment given on November 17th, 1970 in which the court ordered that the lis pendens registered in the Land Registry against certain properties which belong to the first and second plaintiffs should be vacated. In making that order the learned judge stated that he was exercising the inherent jurisdiction of the court.
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CACV000042/1970 IN THE SUPREME COURT OF HONG KONG APPELLATE JURISDICTION CIVIL APPEAL NO. 42 OF 1970 (On Appeal from Original Jurisdiction No.773 of 1969) -----------------
----------------- Coram: Full Court (Briggs, Huggins and Pickering, JJ. in court) Date of Judgment: 9th June, 1971. ----------------- JUDGMENT ----------------- Briggs, J. 1. This is an appeal against a judgment given on November 17th, 1970 in which the court ordered that the lis pendens registered in the Land Registry against certain properties which belong to the first and second plaintiffs should be vacated. In making that order the learned judge stated that he was exercising the inherent jurisdiction of the court. 2. The grounds of appeal are (1) that the judge was wrong in holding that the properties were not in litigation between the parties; and (2) that the court had no inherent jurisdiction to make the order appealed from, or that if there were such an inherent jurisdiction, there were no circumstances to justify the use in the present case. 3. The lis pendens in question is Original Jurisdiction Action Number 773 of 1969, namely the action in which the present proceedings have been brought. The writ in the action was issued on June 24th, 1969. The third plaintiff registered the lis pendens against the properties owned by the first and second plaintiffs immediately after. It was the writ in the action which was so registered. The Statement of Claim was only filed on November 3rd, 1970, i.e. 16 months after the issue of the writ. 4. I will refer to the first plaintiff as "Plastics" and to the second plaintiff as "Enterprises" in this judgment. 5. The third plaintiff and the second defendant are or at least were closely allied in business. The Articles of Association of Plastics entitled the second defendant to hold office as Managing Director for life. And he remains a member of the Board of Directors while he continues in that office. The third plaintiff was a substantial shareholder and a Director of Plastics. 6. The Articles of Association of Enterprises entitle the second defendant and the third plaintiff to hold office as Managing Director and Assistant Managing Director respectively, and they are not subject to retirement from the Board while they continue in office. 7. In September 1968 a dispute arose between the third plaintiff and the second defendant and this action is a consequence of that dispute. 8. Reading the plaintiffs' claim as a whole it is obvious that this action concerns the inner working and relationship of the first and second plaintiffs and the conduct of the second defendant. 9. Among other matters the plaintiffs ask for an injunction to restrain the second defendant from acting as a director of the first and second plaintiffs and there is a claim for damages against him for fraud. 10. It is common ground that we are here only concerned with five paragraphs of the endorsement on the writ of the plaintiffs' claim. I will retain the original lettering. 11. These are:
12. In order to succeed in this appeal the appellants must show that the lis pendens is registrable under the Land Registration Ordinance (Cap. 128). 13. For our present purposes the only lites pendentes which are registrable are those which "affect" land. Section 15 of the Ordinance deals with the contents of the memorial of a lis pendens which it is sought to register. It is there stated that it must contain the name of "the defendant or person whose estate is intended to be affected thereby." 14. A great deal of time during the appeal was taken up with an attempt to interpret those words. Section 19 of the Ordinance gives power to the court to order the vacation of the registration of a lis pendens in certain cases. The section states "the Court or Judge before whom any property sought to be bound is in litigation" may vacate the registration of a lis pendens against such property in certain circumstances. 15. The learned Judge in the court below had this to say:
16. Mr. Bernacchi, Q.C. for the appellants has pointed out that sections 14-18 of the Land Registration Ordinance date from 1856 while sections 19-21 only date from 1896. He says that the expression "in litigation" appearing in section 19 should not be, as it were, incorporated in an interpretation of the earlier section, section 15, and of section 2 which is earlier still in date. In other words the expressions "may be affected" in section 2 and "intended to be affected" in section 15 do not only refer to lands which are "in litigation". They bear a much wider meaning. 17. I do not think that the above quotation from the learned Judge's judgment in the court below is wrong. The expression "affects" is not a term of art. It can have a very wide meaning. In one sense any judgment given against a person who owns land may affect that land. For the successful litigant may only be able to recover any damages awarded to him by the sale of such land. However it has not been suggested that any proposed action can be registered as a lis pendens simply because the intended defendant owns landed property. Various authorities were quoted from other branches of the law in an effort to arrive at a more exact definition of the word "affects" but I did not derive any help therefrom. 18. That the doctrine of lis pendens does not apply to personal property other than chattel interests in lands is settled law: See Wigram v. Buckley (1894) 3 Chancery 483. In In re Barned's Banking Company ex parte Thornton (1867) 2 Chancery Appeal Cases 178 - Cairns L.J. said that a lis pendens "always implied a claim of right, or a claim to charge some specific property. That was always a necessary ingredient in a lis pendens ....." 19. I adopt these words and accept the words I have quoted from the judgment of the court below as being a correct statement of the law. 20. I will now deal with the relevant individual paragraphs of the claim endorsed on the writ as set out above. 21. Paragraphs (g), (h) and (i) can be disposed of together. We are here dealing with a lis namely with a dispute. There is no dispute as to the ownership of the properties mentioned in paragraphs (g) and (h) of the writ. They are registered in the name of Enterprises. I cannot see how in these circumstances the first or third defendants can "sell" such properties. Enterprises may sell but not the first and second defendants. If relief is sought to prevent the sale of these properties it must be directed to the person who has the power to sell i.e. to Enterprises: not to the Managing Director of Enterprises or the first defendant Company. These paragraphs obviously refer to a dispute within the Company. There is no lis, no dispute here. It is clear, I think that the writ is not registrable as a lis pendens affecting land because of these paragraphs. 22. The other two paragraphs ask for relief against the second defendant. If judgment is given in accordance with the terms of the relief sought in these paragraphs the second defendant will be enjoined not to exercise any of his powers as Managing Director of both Plastics and Enterprises. For example, he would be forbidden by the court to sign a conveyance on behalf of either of the companies. 23. The court is not being asked to make an order that the second defendant shall cease to be the Managing Director of Plastics. Such would not be possible because of the Articles of Association. The order sought is that he shall not exercise any of his powers. And if such an order were granted he would remain Managing Director. 24. But this would not affect the land. A mandatory order forbidding a Managing Director to use his power to sign a conveyance of land of his company as Managing Director does not affect the land. It affects the Managing Director. It is a personal order to him and disobedience to it may involve contempt of court. But such an order would not prevent the proprietors of the land, the Company, from dealing with the land. 25. None of these paragraphs affect the ownership of the land. There is no claim to any land or to any interest in land, nor is there a claim to charge some specific property. 26. In my view this lis pendens was clearly not registrable. 27. The second point raised in the appeal concerns the jurisdiction of the court. It is common ground that as the learned Judge found that the lis pendens should not have been registered he was precluded from using his power to vacate its registration under section 19 of the Ordinance. 28. It is clear from the authorities that the court has an inherent jurisdiction to vacate in a proper case. See Heywood v. B.D.C. Properties Ltd. (No.2) 1964 W.L.R. 971 and Taylor v. Taylor 1968 W.L.R. 378. 29. In Heywood v. B.D.C. Properties (No.2) Harman L.J. was dealing with the registration of a lis pendens "which ought never to have been made." He said:-
30. It was argued that even if that were so the court would not exercise its inherent jurisdiction except where there is an abuse of the process of the court. And that it is not enough only to show that the registration is wrong in law and should never have been made. It was pointed out that if a lis pendens has been wrongly registered it could be vacated by bringing separate proceedings. That may be so but in my view 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. I do not think it would be proper to leave a person to any other remedy he may have unless he was claiming damages flowing from the wrongful registration. In such a case I agree that a court might be slow to exercise its inherent jurisdiction and to order a vacation. But 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. 31. In my view the learned Judge in the court below came to the right conclusion and this appeal must be dismissed with costs, which are to be paid by the third plaintiff.
Representation: Judgment handed down. Bernacchi, Q.C. & Asome (Brutton & Stewart) for appellants. Litton, Q.C. & Chang (Ho & Wong) for respondents. IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 42 OF 1970 (On Appeal from Original Jurisdiction No. 773 of 1969) -----------------
----------------- Coram: Full Court (Briggs, Huggins & Pickering, JJ.) Date of Judgment: 9 June, 1971. ----------------- JUDGMENT ----------------- Huggins, J.: 32. I agree that this appeal should be dismissed. 33. Two questions have to be answered, (1) whether the action registered was registrable under the provisions of the Land Registration Ordinance and (2) if it was not so registrable whether the Court had an inherent jurisdiction to vacate the lis pendens. I do not understand the learned judge in the court below to have construed s.14 in the light of s.19, which was enacted many years laters what he said was that a lis does not "affect" land within the meaning of s.14 unless that land is "in litigation" within the meaning of s.19. That is a very different thing and in my view it is right. No doubt the word "affect" can, and does, have "a large meaning". It needs the citation of no authority to satisfy me as to that. The important point to notice is that the land must be affected by the lis itself. My Lord has set out those remedies sought by the Plaintiffs which are relied upon as showing that the land is affected. The title to the land is not in dispute. What is in dispute is whether the 2nd Defendant has acted in a manner which makes it equitable that he be restrained from exercising legal powers which have admittedly been given to him. Those powers are not dependent upon the title to the land, although as the land is owned by the 1st or 2nd Plaintiffs and the 2nd Defendant is the authorised agent of those companies the existence of those powers would enable him to deal with the land. But how can it be right to prevent the companies, who have an unchallenged right to deal with the land, to act through such agent as they think fit? What the 3rd Plaintiff is endeavouring to do is to regulate the internal affairs of the companies. If he succeeds in the action the judgment will affect the persons who are entitled to deal with the properties on behalf of the companies, but it will not affect the properties themselves. A preservation order is distinguishable because by its very nature it is intended in effect to "freeze" the title to the land. 34. 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. Not surprisingly the Ordinance assumes that only those matters will be registered which it allows to be registered and therefore it provides no machinery for vacating an unauthorised registration. If the Court has no inherent 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 that we have power to do what is asked or that we ought to exercise that power in order to prevent a manifest injustice. 35. 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. 36. The application to vacate was made, or at least purported to have been made, on behalf of the 1st and 2nd Plaintiffs and "the 3rd Defendant". The solicitors who filed the Notice of Motion signed it on behalf of the 1st and 2nd Plaintiffs only. They are in fact the solicitors acting on behalf of the Respondents (the Defendants). There is no 3rd Defendant in the action. But the Notice was addressed to the solicitors for the 3rd Plaintiff. The Defendants were therefore not party to the motion and it would appear from the order made by the judge in the court below that they did not appear at the hearing. What happened at the hearing was that the 1st and 2nd Plaintiffs together and the 3rd Plaintiff were separately represented. As I understand it both Messrs. Brutton & Stewart and Messrs. Ho & Wong have purported to act on behalf of the 1st and 2nd Plaintiffs in the same action and how the latter firm can think it right to act for both the Defendants and for some of the Plaintiffs is beyond my comprehension. There is nothing in the papers before us to indicate which counsel appeared on behalf of the parties represented at the hearing, nor the course which the proceedings took. Again, how the Defendants have appeared before us as Respondents to an appeal against an order made in a proceedings to which they were not party is a little difficult to understand. However, Mr. Bernacchi before us has held himself out as appearing on behalf of all the Appellants, i.e. all three Plaintiffs, who were apparently not all on the same side in the court below. The truth is that there is a serious dispute whether the joinder of the 1st and 2nd Plaintiffs has been authorised by them. It was the 3rd Plaintiff who registered the lis pendens and it is really he who is objecting to the order of the learned judge. 37. The position is Gilbertian, with the 1st and 2nd Plaintiffs speaking with two voices which are not in harmony. It seems to me singularly unfortunate that the summons to strike out the 1st and 2nd Plaintiffs from the action should have been adjourned sine die as long ago as 8th November 1969 and that at the date of the hearing of this appeal nothing had since been done to obtain a decision upon the fundamental issue raised by that summons. Neither the 3rd Plaintiff nor the 2nd Defendant seems to have been willing to take steps to have a meeting held to determine the wishes of the board of directors of the two companies. I confess I have little sympathy with any of the parties concerned. However, it was the 3rd Plaintiff who registered the lis pendens and for that reason I concur with the order for costs proposed by Mr. Justice Briggs. Representation: IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO.42 OF 1970 (On Appeal from Original Jurisdiction No. 773 of 1969) -----------------
----------------- Coram: Full Court (Briggs, Huggins & Pickering, JJ.) Date of Judgment: 9 June, 1971. ----------------- JUDGMENT ----------------- Pickering, J.: 38. I agree, for the reasons stated by the learned President, that the appeal should be dismissed with costs against the third Plaintiff. 39. Since the hearing of this appeal the original summons to strike out the names of what I will continue to call for present purposes "the first and second Plaintiff Companies" has been restored before me and I have ordered accordingly with liberty to the third Plaintiff to join these companies as defendants and to amend the writ of summons generally and thereafter the Statement of Claim. It may therefore be that almost two years after the issue of the writ, the third Plaintiff's grievances are about to be ventilated in a form susceptible of their determination. I have been closely associated with the limping history of this case and may again find myself involved in what I trust will be its accelerated progress. Having regard to that contingency I prefer to express no opinion upon the matters referred to by my brother Huggins J. in the latter half of his judgment. Representation: |