Re The Wun Chuen Sin Kwoon Association Ltd

DCMP 1433/2023

[2023] HKDC 891

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1433 OF 2023

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D E C I S I O N

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BACKGROUND

1.This is the applicant’s application by ex parte originating summons for an order that the mortgage registered by Memorial No. N32030 (“the Mortgage”) against the subject property of the applicant, in favour of Wan Yat Kwong (“the Mortgagee”) be discharged upon payment of HK$2,000.

2.The applicant is the registered owner of the subject property referred as “the Land” in the originating summons, namely section A and the remaining portion of both subsection 1 of section A of Lot No.11 and the remaining portion of section A of Lot No.11 all in DD77.

LEGAL PRINCIPLES

3.The applicable legal principles of section 12A of the CPO, were summarised by His Honour Judge Liu in the matter of Fung Chi Hon (馮智漢) [2018] HKDC 1080 at paragraphs 9 to 11 and cited by His Honour Judge Ko in the matter of Lau Kom Wah (劉金華) [2019] HKDC 267 at paragraph 10 as follows:

“(1) The purpose of s 12A is to give the court the power to declare land to be free from an encumbrance on payment of sufficient money into court. It is not predicated upon a sale of land.

(2) Section 12A is only applicable when the land in question is subject to an encumbrance. Yet, if there is a doubt as to whether the encumbrance exists, s 12A still applies.

(3) The first stage of an application under s 12A is to obtain the direction or approval of the court regarding payment into court. Before an applicant can ask the court to exercise its discretion under s 12A, he has to establish that the encumbrancer could not be found, or is unknown. The applicant must take reasonable steps to find out the encumbrancer and place the evidence of his efforts before the court.

(4) After money is paid into court, the second stage is for the court to consider whether to exercise its discretion under s 12A to declare the land free from an encumbrance. The court has a discretion as to whether notice should be given to the encumbrancer. In practice, such notice would often have to be given by advertisement in a newspaper.

(5) In determining the amount to be paid into court, the court may take into account an additional amount on account of the contingency of further costs, expenses and interests.

(6) The matter would come back to the court at the third stage when the encumbrancer or any person entitled to the money apply for payment under s 12A(3). If there are other parties who might have an interest in the money, the court would require notice to be given to such parties before deciding on how to exercise its discretion.

(7) It is not permissible to adopt a “practical one-stage approach”, that is to direct payment into court of a sum of money sufficient to redeem the mortgage of the lot in question pursuant to s 12A(1) and, on the same occasion or during the same hearing, declare that upon payment being made, the lot be free from the mortgage. Nevertheless, the court may deal with the second stage on paper...”

THE APPLICANT’S CASE

4.On an unknown date between about 1959 to 1962, Lot No. 11 in Demarcation District No. 77 (“Lot 11”) was divided into section A (“Lot 11A”) and section B (“Lot 11B”). The said division of Lot 11 was then already subject to the Mortgage created on about 22 January 1916 in favour of the Mortgagee for securing payment of HK$80.00 on 21 January 1917.

5.On 31 May 1995, the applicant purchased Lot 11A and since then has been in physical possession and continued to keep it for his own use.

6.On or about 11 December 2006, the applicant purchased Lot 11B from Man Wah Ying Judy (“Judy”). As Lot 11B was then still subject to the Mortgage, on 12 September 2006 before the transfer Judy had obtained an order from the High Court under HCMP No. 1397/2006 for the Mortgage be discharged in respect of Lot 11B only.

7.The applicant’s representatives were informed by Judy that since she had become an owner of Lot 11B in 1982, she had been personally in physical possession of Lot 11B and continued to keep it for her own use. Upon the said transfer, vacant possession of Lot 11B was delivered by Judy to the applicant and the applicant continued to possess Lot 11B for his own use.

8.Since the applicant purchased Lot 11A in 1995 and Lot 11B in 2006, the Mortgagee or his successors have never demanded repayment of the said loan or money from the applicant and/or its predecessors-in-title. The applicant has never made any representation to anyone which might be treated as an acknowledgment of the mortgage or of any money due to the mortgagee.

9.By a deed poll dated 22 January 2019 registered by Memorial No. 19013002010051, Lot 11A was divided by the applicant into subsection 1 (Lot11A1) and the remaining portion (Lot 11ARP). By deed poll dated 11 April 2019 registered by Memorial No. 19042402210061, Lot 11A1 was further divided into section A (Lot11A1A) and the remaining portion (Lot 11A1RP). The applicant considers Lot 11ARP, Lot 11A1A and Lot 11A1RP are still subject to the mortgage.

THE APPLICATION OF SECTION 12A OF THE CPO

10.The said loan of HK$80 under the Mortgage was originally due and payable on 21 January 1917. The applicant is of the view that prior to the commencement of these proceedings, the Mortgagee’s right to foreclosure of the Land, if any, has been extinguished and the Mortgage would be incapable of subsistence or is otherwise unenforceable by reason of the aforesaid facts and by the operation of the Limitation Ordinance, Cap 347.

11.The Mortgage was created about 107 years ago. The applicant only knows the name of the Mortgagee, ie the encumbrancer, from the Mortgage document which was created on 22 January 1916. The Mortgagee should be at the age of at least 21 years old as at 1916. If the Mortgagee were still living today, he should be 128 years old. A search at the Probate Registry has been conducted and there is no record of any probate action, caveat, or citation in relation to the estate of the Mortgagee, save that a grant of letters of administration or probate for the estate of a Wan Yat Kwong (温日光) was issued on 17 January 2018. However, as the said Wan Yat Kwong (温日光) died on 7 November 2017 according to the search results, it is very unlikely that the said Wan Yat Kwong (温日光) was the same person as the Mortgagee. Otherwise, he would have died at the age of 122.

12.According to the land search record obtained from the Land Registry on 15 March 2023, there was an entry of the Mortgage under the section for encumbrances with remarks of discharge by registration of the order of Honourable Mr Justice Chung in HCMP 1397/2006 in relation to the discharge of the mortgage against Lot 11B.

13.As to whether the Mortgage affecting the Land is still subsisting and thus whether section 12A is applicable in the present case, the applicant’s solicitor invites me to adopt a liberal approach in construing the requirement of the Land being subject to the encumbrance under section 12A following the decision by Deputy High Court Judge Lam (as he then was) in Man Chi Kan v Man Tsak Lun [2003] 2 HKLRD 489 at paragraph 9.

14.In view of the above, I am satisfied that the applicant has established that the encumbrancer could not be found or is unknown. Besides, the applicant has taken reasonable steps to find out the encumbrancer and the evidence of his efforts has been placed before the court. Therefore, it is my judgment that the applicant is entitled to redeem the Mortgage and entitled to an order for discharge pursuant to section 12A.

THE AMOUNT OF PAYMENT INTO COURT

15.According to the Mortgage, the yearly interest on the said loan was 3.2 dan (擔) of grain payable by instalment of 1.6 dan (擔) at each crop. The applicant suggested that a notional interest of 20% per annum be adopted and therefore the interest on the said sum of HK$80 for the period from 22 January 1916 to 21 January 2024, namely for 108 years, shall not exceed HK$1,728. Thus, I agree that a total sum of HK$2,000 will be sufficient to meet the contingency or further costs, expenses, and interests.

DISPOSITION

16.For the above reasons, I make an order in terms of the draft order submitted by the applicant as follows:

(1)  leave be granted to the applicant to pay into court a sum of HK$2,000 being a sum sufficient to redeem the mortgage registered by Memorial No. N32030 (the “Mortgage”) and any interest thereon;

(2)  within 14 days after the payment into court is made, the applicant do advertise in a widely circulated local Chinese newspaper a notice in Chinese making known this order and the fact of payment having been made into court pursuant to this order and stating that any person interested in the Mortgage and/or the payment aforesaid may apply within 14 days to be joined as a defendant to these proceedings;

(3)  the applicant may after the lapse of no less than 21 days from the publication of the said advertisement make a paper application pursuant to section 12A(2) of the CPO for a declaration that section A and the remaining portion of both subsection 1 of section A of Lot No.11 and the remaining portion of section A of Lot No.11 all in Demarcation District No.77 be free from the Mortgage; and

(4)  there be no order as to costs of this application.

Mr Y Chan, of David Y Y Fung & Co, for the applicant