Re Light Time Investments Ltd

HCMP 326, 328, 330-347/2010
(Heard Together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 326, 328, 330-347 OF 2010

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(Heard Together)

Before: Deputy High Court Judge L. Chan in Chambers

Date of Hearing: 25 March 2010

Date of Decision: 25 March 2010

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D E C I S I O N

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1.There are 20 applications by the applicant.  They are made under section 12A of the Conveyancing and Property Ordinance, Cap. 219 in respect of a number of lots in Tai Po, the New Territories.

2.The plaintiff is the current owner of these lots and is desirous of conducting an in situ exchange of lots with the government for the purpose of putting up a development.  However, there are mortgages registered against the lots in the Land Registry.  The government wants these mortgages to be cleared off before it will enter into the in situ exchange.  Hence, the applicant has made these applications.  They are for the purpose of seeking a declaration that these lots are free from the mortgages registered against them in the Land Registry.

3.Section 12A(1) to (3) provide:

“(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.Most of the mortgages in question were created in or before 1905 and were endorsed against the lots in the block government lease.  One mortgage was created on 27 April 1934.  However, the endorsements of mortgages on the block government lease only gave the names and no other information of the mortgagees.  The memorial of the mortgage created in 1934 gave the name and the area or village in which the mortgagee was residing but no further information.

5.Miss Leung, who represents the applicant, asks me to adopt a practical one-stage approach, that is to direct under section 12A(1) payment into court of a sum of money sufficient to redeem the mortgage of a particular lot and the interest accrued and, at the same time, declare that upon payment being made, the lot shall be free from the mortgage.  I think there are problems with this approach.

6.Section 12A(2) has given the court a discretion whether to make the declaration or other orders or grant no relief at all.  In exercising the discretion, the court has also to consider the question of notice to the encumbrancer.  But the discretion will only arise upon, and not before, payment being made under an order pursuant to section 12A(1). 

7.If I should adopt the one-stage approach, the discretion under section 12A(2) will duly arise upon payment into court.  But the discretion will also be extinguished without exercise at the same instant because a declaration freeing the mortgage upon payment into court has already been made before the payment.  This one-stage approach is, therefore, not right as it defeats the discretion before it arises.

8.Section 12A also does not authorise the court to give any remedy before payment into court.  There is, therefore, no jurisdiction to declare the conditional release of the mortgage before payment into court has been made. 

9.Furthermore, the applicant’s solicitors had only conducted probate searches which revealed nothing in connection with the mortgagees.  They have not inquired with the applicant’s predecessors for the whereabouts of the mortgagees or their descendants.

10.There has also been no advertisement of these proceedings.  If the applicant should have applied for relief under the Limitation Ordinance, Cap. 347, and the mortgagee could not be located, then there would normally be the need to advertise the proceedings under an order for substituted service.  However, if I adopt the one-stage approach, then these proceedings would be concluded quietly without any notice to the public though the hearing is open to the public.  (I would acknowledge that the applicant in the course of the hearing has agreed to advertise about the next hearing if I should decline the one-stage approach and wish to have the proceedings advertised.)

11.I have also considered the decision of Chung J in Fu Sum v Fu San Fat [2008] 5 HKLRD 271, and agree with the reasons of the learned judge for not adopting the one-stage approach.

12.For all the above reasons, I do not think I should adopt the one-stage approach. 

13.Nevertheless, it is rare for there to be any opposition to such applications.  In most cases, the further hearing under section 12A(2) is normally a short and formal one just for the making of a declaration to free the land from the mortgage.  I think the second hearing should be obviated if it can be done without any risk of injustice to the mortgagees or their descendants.

14.I have considered the affirmations filed by the applicant and the exhibits thereto.  I am satisfied that all the mortgagees in these applications cannot be found.  I am contented to make the following order which I hope will satisfy the needs of the applicant and will not create any risk of injustice to the mortgagees or their descendants.

15.I order pursuant to section 12A(1) of the Conveyancing and Property Ordinance, Cap. 219 that the applicant do make payments of the sums of moneys stated in the applications or the larger sums of money stated in the applicant’s written opening into court to redeem the mortgages as registered against the lots in question and any interest thereon.

16.I further order that within seven days after the payments into court, the applicant do advertise in a widely circulated local Chinese newspaper a notice making known this order and the fact of payments having been made into court pursuant to this order and stating that any person interested in the mortgages and/or the payments aforesaid may apply within 14 days to be joined as a respondent to the proceedings.

17.I further order that the applicant may after a lapse of no less than 21 days from the publication of the advertisement make a paper application pursuant to section 12A(2) of the Conveyancing and Property Ordinance for a declaration that the lots be free from the mortgages.

18.I make no order as to costs.

Ms Nancy Leung, of Messrs JSM, for the Applicant