Kung Wong Sau Hin v. Kung Kwok Sun and Others

HCAP000002/1982

HEADNOTE

Charging order - whether it can be registered on land owned by judgement debtor and a stranger to the action as joint tenants - position in England distinguished as no equivalent legislation to Law of Property Act 1925 enacted in Hong Kong whereby joint tenancies give tenants a beneficial interest interest in proceeds of sale rather than an actual interest in land - a joint tenancy is an actual and registrable interest in land in Hong Kong and thus is encompassed within Sec. 20 of Supreme Court Ordinance.

IN THE SUPREME COURT OF HONG KONG

PROBATE JURISDICTION

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BETWEEN

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Coram: Deputy High Court Judge O'Dea in Chambers

Date of hearing: 5 September 1985

Date of handing down of judgment: 11 October 1985 (file in 1986 HCA file)

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JUDGMENT

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1. This is an appeal from the decision of a Master who ordered that the registration of an order imposing a charge on certain land be vacated. This Probate Action was originally tried in the High Court in August, 1983 when judgment was given in favour of the Plaintiff together with costs. The defendants appealed and a new trial was ordered on a limited issue and the order for costs made in the Court below and the costs of the appeal were awarded to the Plaintiff. Both the costs of the original trial and the appeal were subsequently taxed and their recovery in the subject of the present proceedings.

2. The 1st defendant owns a flat at Braemar Hill as a joint tenant with his wife, NG She Woon.

3. On 2nd May 1985 a Mester in Chambers ordered that unless sufficient cause to the contrary be shown the 1st defendant's interest in the said property should, and in the meantime it was ordered that it did, stand charged with the payment of the taxed costs payable. The plaintiff took steps to register a sealed copy of the order to show cause in the Land Office against the said property.

4. By an inter-partes summons dated 23rd August 1985 the 1st defendant applied to have the registration of the order vacated and after hearing argument the learned Master made the order as sought. The plaintiff now appeals.

5. The central issue to be decided is whether the Court has power to impose on land owned by the judgment debtor and a stranger to the action as joint tenants a charge securing payment of the judgment debt and, if so, how it should exercise the discretion clearly given to it pursuant to Sec. 20 of the Supreme Court Ordinance This provision reads as follows:-

"The High Court may, for the purpose of enforcing a judgment or order of the High Court for the payment of money to a person, by order impose on such land or interest in land of the debtor as may be specified in the order a charge for securing the payment of any moneys due or to become due under the judgment or order. "

6. Apart from the discretion vested in the Court it is to be noted that the power only exists in relation to "such land or interest in land. " It is this restriction which distinguishes the position in Hong Kong from that existing in England because as a consequence of the passing of the law of Property Act 1925 joint tenancies create statutory trusts giving the tenants a beneficial interest in the proceeds of sale rather than an actual interest in the land.

7. In "Irani Finance Ltd v Singh" [1971] Ch. 59 the Court of Appeal dismissed an appeal against a decision of a single judge and held that a charge against an interest in land could not be made unless that interest was registrable and, since a trust for sale of land was not an interest in land but an interest in the proceeds of sale it was not chargeable. That remains the position with respect to joint tenancies in England but the situation in Hong Kong is quite different as no similar legislation to the Law of Property Act has been enacted here.

8. A joint tenancy in Hong Kong is clearly a registrable interest in land and is acknowledged as such in the records of the Land Office. I would, therefore have little difficulty in imposing a charge on the property if the joint tenants were jointly liable on the judgment debt. Indeed, this appears to be one of the principal factors taken into account by Waller J. in: "National Westminster Bank v Allen" [1971] 2 Q.B. 718 where the Court was considering the position where the defendants, a husband and wife, were jointly and severally liable on two joint accounts which were overdrawn. The defendants were joint owners of a house property as joint tenants holding on trust for sale. The plaintiff was seeking a charging order nisi. The Court distinguished the "Irani Finance" case by showing that the defendants, acting together, were perfectly entitled to charge their land and as the plaintiffs were seeking to charge that which the defendants could validly charge, namely, their joint legal interest in the land, it was proper to make a charging order.

9. Counsel for the defendant before me stressed that by its very nature a joint tenancy is an undivided interest and the only way it can be otherwise is for it to be severed and separately valued. It was further argued that as the 1st defendant's wife, as a joint tenant, was a stranger to the action her interest in the land would be encumbered through no fault of her own and she would be prevented from obtaining certain bank finance intended to be secured upon her interest in the property. This is where I am of the view that the fallacy in that argument becomes apparent because it is not her interest in the property that the plaintiff seeks to charge but rather that of the 1st defendant. As the law stands in Hong Kong at the present time each joint tenant must be regarded as having a registrable interest in land. Accordingly it is my ruling that such interest in land is that contemplated by the legislature under Sec. 20 of the Supreme Court ordinance as being capable of having imposed on it a charge for securing the payment of moneys due under a judgment or order.

10. That leaves open the question of whether, in the present circumstances, the Court should, notwithstanding that it has the power, exercise its discretion and refuse to impose a charge on the 1st defendant's interest in the land. Although this is an appeal from the decision of a Master and one would ordinarily be slow to interfere with the manner in which a discretion is exercised in a Court below this appeal is by way of a re-hearing and as the parties are entitled to adduce new evidence and expand or vary the arguments heard by the Master I propose to assess the evidence and Counsel's submissions afresh in deciding in whose favour any discretion which I may have should be exercised. The only factor upon which the 1st defendant can hope to have the charging order declined is the plea that considerable injustice would be caused to his joint tenant if the property were charged. If I have correctly interpreted Sec. 20 of the Supreme Court Ordinance it gives the Court the power to charge either "such land or interest in land of the debtor". I can only repeat that I could not countenance the imposition of a charging order on the land itself but it is open to me to impose a charge on the 1st defendant's interest in the land and it is this distinction that removes any real injustice being caused to the other joint tenant.

11. For the reasons given I do not see any good grounds for the plaintiff's registration of the order to show cause to be vacated and I will allow the appeal and the plaintiff will be entitled to his costs before the master as well as of this appeal.

Representation:

Edward Chan instructed by T.L. Ip & Co. for Plaintiff

Rupert Spicer instructed by John Ip & Co. for 2nd Defendant