Re Cheung Koon Yeung and Another

HCMP 1592/2023

[2023] HKCFI 2820

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1592 OF 2023

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D E C I S I O N

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1.These proceedings relate to:

1.1  the property known as all pieces or parcels of land registered in the Land Registry as situate lying and being at Section A (“Section A”) and the Remaining Portion (“the Remaining Portion”) of Lot No.647 both in Demarcation District No.26, Tai Po, New Territories, Hong Kong (“the Property”); and

1.2  a mortgage registered by Mortgage Memorial Instrument No. TP 61220 in the Land Registry dated 21^st January 1925 made between Hop I Tong as mortgagee of the one part and Cheung Yi Kwan (transliteration) as mortgagor of the other part (“the Mortgage”).

2.By an ex parte originating summons filed on 20^th September 2023, the Applicants apply, inter alia, under s.12A Conveyancing and Property Ordinance (Cap.219) (“the CPO”) for:

2.1  an order that the Applicants be at liberty to pay into court a sum of $4,947.23 being the principal and interest due under the Mortgage; and

2.2  a declaration that the Property is free from the encumbrance constituted by the Mortgage.

3.Section 12A CPO provides that:

“(1) Where land is subject to any encumbrance, whether immediately realizable or payable or not, and the encumbrancer is out of the jurisdiction, cannot be found or is unknown, or if it is uncertain who the encumbrancer is, the court may, if it thinks fit, on the application of the party for the time being entitled to redeem the encumbrance, direct or allow payment into court of a sum of money sufficient to redeem the encumbrance and any interest thereon.

(2) Upon payment into court of the sum referred to in subsection (1), the court may, if it thinks fit, and either after or without any notice to the encumbrancer, as the court thinks fit, declare the land to be free from the encumbrance, and make any order for conveyance or vesting order as appropriate, and give directions for the retention and investment of the sum of money paid into court and for the payment or application of the income thereof, and for the payment of an amount certified by the court to be the reasonable costs of the applicant in making the application, such amount to be deducted from the sum of money paid into court.

(3) On application by the encumbrancer or any person entitled to the money or fund in court, the court may direct payment or transfer thereof to the persons entitled to receive or give a discharge for the same, and generally may give directions respecting the application or distribution of the capital or income thereof.

(4) In this section, court (法院) means the Court of First Instance unless the party to the application submits to the jurisdiction of the District Court.”

4.The jurisdiction under s.12A CPO was analysed in Re Cheung Chi Wang & Another [2002] 1 HKLRD 409 (DHCJ Lam, as Lam PJ then was) and Re Light Time Investments Ltd [2010] 4 HKC 64 (DHCJ L Chan, as he then was). From these decisions, and the provisions of s.12A CPO, I discern the following.

4.1  There are three stages to an application under s.12A CPO.

4.2  At the first stage, the applicant should establish the matters under s.12A(1), and obtain the direction or approval of the court to make a payment into court sufficient to redeem the encumbrance and any interest thereon, pursuant to s.12A(1). The matters to be established are that:

4.2.1  the applicant is the party for the time being entitled to redeem the encumbrance;

4.2.2  the land in question is subject to the encumbrance in question, or at least that there is a doubt as to whether the encumbrance exists;

4.2.3  the encumbrancer is out of the jurisdiction, cannot be found, is unknown, or that it is uncertain who the encumbrancer is. If it is being said that the encumbrancer cannot be found, or is unknown or uncertain, reasonable steps must have been taken to find out who the encumbrancer is and to locate him, and evidence of such steps must generally be placed before the court.

4.3  At the second stage, after the payment into court has been made, the court will consider the exercise of its discretion under s.12A(2), including whether or not to give notice to the encumbrancer. The court may at this stage grant a declaration that the land is free from the encumbrance, and make other directions under s.12A(2).

4.4  If the encumbrancer or any other person entitled to the money paid into court applies to the court for payment out, there will be a third stage, at which the matters under s.12A(3) will be considered.

4.5  The first and second stages cannot be telescoped. There is no jurisdiction to declare a conditional release of the encumbrance before payment into court has been made.

4.6  The second stage may or may not require a hearing; the hearing can be dispensed with if this can be done without any risk of injustice to the encumbrancers or their descendants, for example by making appropriate advertisement of the proceedings.

5.In the present case, having considered the evidence placed before the court in the Affirmation of Cheung Siu Fung, I am satisfied that the requirements of s.12A(1) CPO have been met.

5.1  The 1^st Applicant is the registered owner of Section A and the 2^nd Applicant is the registered owner of the Remaining Portion, and the Applicants are entitled to redeem the Mortgage.

5.2  The Property is still subject to the Mortgage, which has never been discharged.

5.3  Hop I Tong, the mortgagee under the Mortgage, cannot be found, and reasonable steps have been taken to locate it, including writing to the Tso and Tong Registry of the District Office and the Heung Yee Kuk.

6.The Applicants have revised the amount of the payment into court proposed to be made pursuant to s.12A(1) CPO. Adopting a notional annual interest rate of 20% (as has been done in a number of other similar cases), the principal of $249.86 and interest for 99 years from 1925 amounts to $5,147.12. The Applicants undertake to pay $6,000 into court.

7.I therefore order as follows.

7.1  Leave be given to the Applicants to pay $6,000 into court to redeem the Mortgage and any interest thereon.

7.2  Within 28 days after the payment into court, the Applicants should advertise in a widely circulated local Chinese newspaper a notice:

7.2.1  making known this order,

7.2.2  making known the fact that payment into court has been made pursuant to this order, and

7.2.3  stating that any person interested in the Mortgage and/or the payment into court may apply within 28 days to be joined as a respondent to these proceedings.

7.3  The Applicants may, after the lapse of no less than 35 days from the publication of the advertisement, make a paper application to the court pursuant to s.12A(2) CPO for a declaration that the Property is free from the encumbrance constituted by the Mortgage.

8.I make no order as to costs.

Mr Billy C.K. Poon, instructed by M.C.A. Lai Solicitors LLP, for the 1^st and 2^nd Applicants