The Ka Wah Bank Ltd v. Product Souting Interational Ltd

HCMP002032/1984

MISCELLANEOUS PROCEEDINGS

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BETWEEN:-

Coram: The Honourable Mr. Justice Jones in Chambers

Date of hearing: 12th February 1985

Date of delivery of judgment: 12th February 1985

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JUDGMENT

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1. This is an appeal against the refusal by Master Clay on the 1st February 1985 to join the applicant as a party to these proceedings.

2. An originating summons was issued by the plaintiff on the 23rd July 1984 under Order 88 of the Rules of the Supreme Court against the defendant for possession of premises known as Jadebeach Villa, Chung Hom Kok under a mortgage dated the 30th June 1981 and a further charge dated the 28th October 1981. The applicant is the sole director of the defendant. An order for possession was made on the 29th December 1984.

3. The applicant bases his claim to be joined on the grounds that his occupation of the premises dates back to 1978 which was before the execution of the mortgage and further charge, failure by the plaintiff to register the mortgage within time, and to a contract which he alleges he entered into with the plaintiff on the 17th October 1983 which concerns his passport and the refinancing of the defendant's loan. The applicant claims that he entered into a tenancy agreement with the defendant on the 29th September 1978 to rent the premises for a period of 7 years commencing on the 1st October 1978. It is not in dispute that the tenancy agreement has not been registered.

4. On the 30th June 1981 a mortgage was executed by the defendant to secure banking facilities for $2 milllion, and a further charge for $500,000 was executed on the 20th October 1981. The applicant was not a party to either charge but signed both documents as director on behalf of the defendant. Although the applicant concedes that monies are due to the plaintiff from the defendant, he does not necessarily accept the figure claimed by the plaintiff.

5. The first charge was registered with the Companies Registry on the 1st August 1981, and the second on the 17th November 1981. Both charges were therefore registered within the period of 5 weeks prescribed by Section 80 of Companies Ordinance. However, the applicant contends that a letter dated the 22nd May 1981 from the plaintiff addressed to him as managing director of the defendant, and a credit advice dated the 3rd June 1981 should have been registered by way of an equitable charge and that as they were not registered within 5 weeks they are void for non registration. I do not accept this submission for the documents do not come within the ambit of Section 80. The documents with which we are concerned are the mortgage and the further charge which were properly registered.

6. The mortgate and further charge were registered with the Land Office on the 9th October 1981 and the 18th December 1981 respectively. The applicant submitted that as these documents were registered outside the statutory period of 4 weeks, they are void for non registration. However, that is not the effect of the legislation as set out in the Land Registration Ordinance which is directed to priority. Failure to register within time will not invalidate these documents.

7. The applicant also claimed that he registered a lis pendens on the 12th January 1985 in an action which he has instituted against the defendant. No evidence was produced to support this statement, but on the assumption that a lis pendens has been filed its priority only takes effect from the day following the date of its registration by virtue of Section 5A of the Land Registration Ordinance. It does not therefore affect the rights of the plaintiff.

8. The allegation of breach of contract is irrelevant to the present application, but in any event it is the subject matter of a counterclaim by the applicant in another action H. C. 4645/84 between the same parties and the applicant who is sued as the 2nd defendant.

9. Essentially as was submitted by Mr. Riberio who appeared for the plaintiff the only material issue to be decided is whether the tenancy agreement is binding on the plaintiff. The plaintiff was aware that the applicant occupied the premises and it is evident from the facts that he used them as a residence and for the business of the defendant. In effect he occupies the premises as an officer of the company.

10. The plaintiff does not accept the validity of the tenancy agreement, but accepting that it is in fact valid it is null and void for non registration as against the plaintiff who was a bona fide mortgagee for valuable consideration under Section 3(2) of the Land Registration Ordinance.

11. Accordingly the appeal will be dismissed with costs.

Representation:

Mr. D. W. J. Oosterveld, Appellant/Applicant in person.

Mr. R. Riberio (Woo, Kwan, Lee & Lo) for Plaintiff/Respondent.