Yu Pei Tseng v. Mong Wing Ho Alexander

Case No.DCCJ 4272/1976

Court

District Court

Date—

Judge—

Case Document

100%Judiciary

DCCJ004272/1976

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 4272 OF 1976

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BETWEEN
	YU PEI TSENG	Plaintiff
	and
	MONG WING HO ALEXANDER	Defendant

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Coram: Judge Liu, Q.C. in Chambers.

Date of Judgment: 17th February 1978

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DECISION

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1. This is an application for a Charging Order Nisi to be made absolute.

2. On the return date of the Order Nisi to show cause, counsel for the judgment debtor contended that no Charging Order could be effectively made against the property of which the judgment debtor is admittedly one of the three joint owners.

3. The history of this case is far from being uneventful. On the 30th March 1977, a judgment was obtained by the judgment creditor in the sum of $20,000.00 with costs to be taxed. The judgment debt has been wholly unsatisfied. On the 7th of June 1977, on the application of the judgment creditor through his former solicitors, a Charging Order Nisi was made by Judge Silke. Thereafter, on the 10th of June 1977, the former solicitors of the judgment creditor, apparently being astounded at the decision in Irani Finance Ltd. v. Singh & Others⁽¹⁾, withdrew the application. Thereupon, the learned judge ordered the return date to be vacated. On the 9th September, 1977, the plaintiff's present solicitors caused to be successfully applied for and obtained from Judge Bewley a similar Charging Order Nisi to show cause. It is common ground that the judgment debtor, his father and one Madam Yau are the three joint owners of the landed property against which this Charging Order Nisi is now being sought to be made absolute. The Order Nisi granted by Judge Bewley was returnable today.

4. At the commencement of these proceedings, some anxiety was felt as to whether an allegation of trust of the judgment debtor's interest in favour of his father would adversely affect the plaintiff's application. On the 22nd September 1977, the Order Nisi made by Judge Bewley was caused to be duly registered in the Land Office against the said property without any notice of such alleged trust. Priority has been gained.

5. In opposition, Counsel for the judgment debtor wisely confined himself to the one and only ground raised in paragraph 2 of the judgment debtor's affidavit filed herein on the 5th of December 1977. Therefore, the sole issue for determination is whether or not a charging order can effectively be made against this jointly owned property which is free from any express trust for sale.

6. This is by no means the first occasion on which execution on property in joint ownership has arisen for my consideration. In LAU Ching-kam v. CHEUNG So-cheung⁽²⁾, on an uncontested application to charge property in joint ownership, an order nisi was made absolute in the absence of the judgment debtor.

7. Upon perusal of the provisions of the Application of English Law Ordinance Cap.88, what so prominently stands out is the very fact that the 1925 property legislation in England has not been adopted for local application in this Colony. In England, by virtue of section 36(1) of The Law of Property Act, 1925, a trust for sale was statutorily engrafted onto an ownership enjoyed in the form of a joint tenancy.⁽³⁾ In other words, where there is no express trust for sale, the 1925 English legislation would impose a statutory trust for sale on a joint tenancy.⁽⁴⁾ None of the 1925 English legislation has been extended to Hong Kong, and we continue to strive against the undercurrents of the pre-1926 era.

8. Order 50 rule 1 of our Rules of Supreme Court reads as follows:-

"The Court may for the purpose of enforcing the judgment or order for the payment of money to a person, by order impose on any land or interest in land of a debtor as may be specified in the order a charge for securing the payment of any money due or become due under the judgment or order. Such an order may be made absolutely or subject to conditions as to notifying the debtor or as to the time when the charge is to become enforceable or as to other matters."

Our Order 50 rule 1 is couched in somewhat different terms from its English equivalent. In particular, our Order 50 rule 1 makes no reference to section 35 of the Administration of Justice Act, 1956 subsection 3 of which makes a charge which is not registrable under the Land Charges Act, 1925 or the Land Registration Act, 1925 incapable of being created under subsection 1. Furthermore, a charging order in Hong Kong is registrable under the Land Registration Ordinance. However, the same term, "interest in land", has found its way into the Hong Kong counterpart, and this application falls to be decided on whether or not that term includes the judgment debtor's joint interest in the property under consideration.

9. Counsel for the judgment debtor laid great stress on the case of Irani Finance Limited⁽⁵⁾ in his submissions that an "interest in land" does not include a joint lessee's interest here and that consequently no charging order may be effectively made in Hong Kong against the interest of a joint owner in landed property held under the Crown.

10. There is much to be said for adhering to the same meaning for an identical term in both the English Order 50 rule 1 and ours. In England, the term "interest in land" has been construed to include an interest under a trust for sale of land in a different context,⁽⁶⁾ but for years it has been taken as being inapplicable to an interest in land held under a trust for sale for the purpose of a charging order in execution, as the beneficial interest of joint tenants in England is an equitable joint tenancy in the proceeds of sale and in the net rents and profits until sale. In the Court of first instance in Irani Finance Limited⁽⁷⁾, Buckly J. summed up succintly:

"To a lawyer the beneficial interest of a person whose interest arises under a trust for sale and is a beneficial interest in the proceeds of sale is not one which is appropriately described as being 'an interest in the land', although, as I have indicated, in a non-technical use of language, the beneficiary may be said to have a real interest in the land, or at any rate in the way in which the trustees deal with the land. But he has no estate or interest in the land itself, although he may be entitled to receive the rents and profits so long as the land remains unsold."

This meaning of an "interest in land" under the English Order 50 rule 1 is so entrenched that that of the same term in our Order 50 rule 1 cannot be assumed to have materially departed from it merely by the absence of any reference to section 35 of the Administration of Justice Act, 1956. In fact, a similar line of argument was canvassed before but was not favourably received by the Court of Appeal in the case of Irani Finance Limited⁽⁸⁾ where it was unsuccessfully sought to put a different interpretation on the term "interest in land" in the same field on account of the language of a subsequent codifying enactment. At page 78G, Cross L.J. in delivering the judgment of the Court of Appeal recounted counsel's submission:

"He further pointed out that an interest under a trust for sale of land may, in an appropriate context, be described as an 'interest in land'; and in that connection he referred to Cooper v. Critchley 1955 Ch.431, where this Court expressed the opinion, albeit by way of dictum only, that the interest under a trust for sale of land was an 'interest in land' for the purpose of section 40 of the Law of Property Act, 1925."

At page 79A, the learned lord Justice continued:

"	In dealing with section 35(3) he did not, as we understood his argument, go so far as to say the charges on the interest of the Singhs which arose in favour of the plaintiffs found under subsection 1 because those interest were 'interests in land', were capable of being protected under section 59 of the land Registration Act, 1925. His submission here was that the first half of section 35(3) meant no more than that, if the charge created under section 35(1) was of such a nature as to be capable of registration, it should not be registered as a general equitable charge but should continue to be registered as a writ or order affecting land."
"	We cannot accept these arguments. In the first place, the suggested construction of subsection (3) is to our minds most unnatural. When it is said that the land Charges Act, 1925, and the land Registration Act, 1925, are to apply to orders under subsection (1) as they apply to other writs or orders affecting land, the natural assumption is that all orders creating charges under subsection (1) will be writs or orders affecting land, and this conclusion is supported by the fact that second half of subsection (3) is undoubtedly referring to all charges created under subsection (1). On this footing under the Act of 1956 as under the law of Property Act, 1925, a charge cannot be created under section 35(1) which is not registrable under the land Charges Act, 1925, or the land Registration Act, 1925."
"	But even if one accepts that the plaintiffs' construction of subsection (3) is a possible one, it is to our minds incredible that Parliament should have made so considerable a change in the law in so obscure a fashion. The words 'interest in land' are no doubt capable in an appropriate context of including interests under trusts for sale of land, and though there is no need for us to express a concluded opinion on the point we certainly do not wish to be taken to be casting any doubt on the correctness of the dicta in Cooper v. Critchley 1955 Ch.431, but for 100 years before 1956 the words, or equivalent words, have been held in this field not to include interests arising under trust for sale. If it had been the intention of Parliament in 1956 to subject interest or some interests arising under trusts for sale of land to charges for judgment debts, it would surely have done so in clear terms."

11. Even assuming the term "interest in land" in our Order 50 rule 1 to have the same narrow definition as that of its English equivalent, the conclusion I have reached in this case, on the absence of a statutory trust for sale due to the non-application of the English 1925 legislation, in favour of the judgment creditor does not call for any final view on the matter, but let it not pass without the comment that if it had been the avowed intention of the Legislature in these territories to ascribe a different meaning to the same term "interest in land" in our Order 50 rule 1, it could have said so in plain language.

12. The bone of contention truly rests on a single point viz. whether the term "interest in land" in our Order 50 rule 1 would embrace an interest in land in joint ownership. Here in Hong Kong, a joint owner is not made subject to any statutory trust for sale. He is a joint lessee held under the Crown. Unlike an English joint tenant who enjoys no estate or interest in the land by reason of the imposition of the statutory trust for sale, a Hong Kong joint tenant's interest remains in the landed property and has never been unwittingly converted into an interest in the proceeds of a sale and the net rents and profits until sale. What was decided in Irani Finance Limited is that an "interest in land" does not include an interest arising under a trust for sale, expressly or statutorily imposed. A joint tenant in this Colony is unaffected by any legislation creating a statutory trust for sale, and he retains his interest in the land. To that material extent, the case of Irani Finance Limited is distinguishable. In conclusion, without the intervention of enactments akin to that of the English 1925 property legislation, a joint owner's interest in Hong Kong is an interest in land and may be effectively charged in execution under our Order 50 rule 1 unless it is expressly made subject to a trust for sale. The judgment debtor's interest here as a joint owner is not burdened with any express trust for sale. Consequently, even accepting "interest in land" in our rule as bearing the same restrictive meaning as that of its English equivalent, the judgment debtor's interest will be included by this very term in our Order 50 rule 1.

13. Since the only point in issue has been disposed of in favour of the judgment creditor, it remains for me to make the Order Nisi absolute. It would seem that for an interest in joint ownership, the judgment creditor may have to call in aid the provisions of the Partition Ordinance Chapter 352, in particular sections 3 and 6 thereof, in the consequential sale in execution.

	( B. Liu)
	Judge of the District Court
	17th February 1978

Representation:

Messrs. Ip, Ku & Stoppa for Plaintiff/Judgment Creditor.

E. Chung instructed by Messrs. Alfred Lau & Co. for Defendant/Judgment Debtor.

(1) [1971] 1 Ch.59; [1969] 3 AER 1455 & [1970] 3 AER 198.

(2) V.C.J. 5357 of 1975, 27th December 1975.

(3) 27 Halsbury's Statutes, 3rd Ed. p. 393

(4) Megarry & Wade on the Law of Real Property 4th Ed. p.420; Cheshire's Modern Real Property 10th Ed. p.312; Snell's Principles of Equity 27th Ed. p.471.

(5) ibid.

(6) Cooper v. Critchley [1955] ch.431.

(7) ibid. at p.69E.

(8) ibid.