Re Kwan Tin Yu

HCMP 1578/2025

[2025] HKCFI 5967

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1578 OF 2025

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DECISION

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1.These proceedings relate to:

(1)  A property known as “all those 154 equal undivided 21,794^th parts or shares of and in all those pieces or parcels of ground registered in the Land Registry as Sha Tin Town Lot No. 605 and of and in the messuages erections and buildings constructed thereon now known as “The Entrance” together with the sole and exclusive right and privilege to hold use occupy and enjoy all that Flat B on 9^th Floor of Tower 1, the Entrance, No 1 Lok Wo Sha Lane, Sha Tin, New Territories” (“Property”); and

(2)  A third mortgage dated 17 January 2024 in relation to the Property registered in the Land Registry by Memorial No. 24031200020021 (“Mortgage”).

2.By an ex parte originating summons filed on 12 September 2025 (“OS”), the Applicant apply inter alia under s.12A of the Conveyancing and Property Ordinance, Cap. 219 (“CPO”) for an order:

(1)  For leave to the Applicant to pay into court a sum of HK$390,000 being a sum sufficient to redeem 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 the order and the fact of payment having been made into court pursuant to the 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; and

(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 s.12A(2) of CPO for a declaration that the Property be free from the Mortgage.

3.Section 12A of CPO provides:

(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 and applicable principles under s.12A of CPO as distilled from previous cases were helpfully summarized by Cheng J in Re Cheung Koon Yeung & Anor [2023] 5 HKLRD 659 which I gratefully adopt:

(1)  There are three stages to an application under s.12A of CPO.

(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:

(a)  the applicant is the party for the time being entitled to redeem the encumbrance;

(b)  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;

(c)  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.

(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)  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.

(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.

(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 Kwan Tin Yu, I am satisfied that the requirements of s.12A(1) of CPO have been meet:

(1)  The Applicant is the registered owner of the Property and is entitled to redeem the Mortgage;

(2)  The Property is still the subject to the Mortgage which has not been discharged; and

(3)  Despite reasonable steps taken to locate the encumbrancer, Tsui Yiu Lam, he cannot be found.

6.Mr Cheung and Mr Tai, counsel for the Applicant, sought to revise the amount of the payment into court to HK$526,666.67 being the principal of HK$400,000 and interest (adopting a notional annual interest rate of 20% per annum as has been done in a number of similar cases: see Re Cheung Koon Yeung, §6), being 400,000 x 20% x 19/12.

7.I therefore make an order:

(1)  Leave be granted to the Applicant to pay HK$530,000 into court to redeem the Mortgage and any interest thereon;

(2)  Within 14 days after payment into court is made, the Applicant should 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 the order and stating that any person interested in the Mortgage and/or the payment aforesaid may apply within 28 days from the date of the said advertisement to be joined as a defendant to these proceedings; and

(3)  The Applicant may after the lapse of no less than 35 days from the publication of the said advertisement make a paper application to the court pursuant to s.12A(2) of 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 Johnson Cheung and Mr Ken Tai, instructed by Messrs T.H. Chan Solicitors, for the Applicant