The Incorporated Owners of Century Centre v. Bank of China (Hong Kong) Ltd and Another

HCMP 166/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 166 OF 2011

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BETWEEN

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Before: Hon Sakhrani J in Court

Date of Hearing: 15 June 2011

Date of Judgment: 27 June 2011

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J U D G M E N T

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1.Pursuant to an order of Yam J made on 29 April 2009 obtained by the plaintiff in Miscellaneous Proceedings No. 328 of 2009 the plaintiff sold the property known as Unit No. 5, 10th Floor, Century Centre, Nos. 44-46 Hung To Road, Kowloon (“the property”) for HK$2,130,000.

2.The sale of the property was completed on 14 January 2011.

3.These are interpleader proceedings taken out by the plaintiff against the 1^st defendant (“BOC”) and the 2^nd defendant (“HSBC”) who have competing claims to the balance of the proceeds of sale of the property.

4.By the order of Master Ho made on 29 April 2011 it was ordered, inter alia, that the plaintiff do within 14 days pay the net proceeds of sale into Court in the sum of HK$1,734,357.71 with interest if any.  It was also ordered that the plaintiff be excused from further attendances before the Court and that an issue be tried before a judge.

5.The issue to be tried as ordered by the master is: Who is the person entitled to the net proceeds of sale?

6.On 6 May 2011 the plaintiff paid the sum of HK$1,734,357.71 into Court.

7.The plaintiff has no further interest in these proceedings and has been excused from further attendance.

8.BOC and HSBC each claim that it has the right to payment of the sum paid into Court in priority to the other.  Both have registered charging orders against the property and the question to be determined is who has priority over the other.

9.The relevant facts are undisputed.

10.BOC obtained a charging order nisi against, inter alia, the property on 12 June 2001 in enforcement of a judgment dated 1 December 2000 in HCA 7501 of 2000.  The charging order nisi was registered at the Land Registry on 14 June 2001.

11.BOC’s charging order was made absolute on 7 July 2001 (“BOC’s charging order absolute”).  It was registered at the Land Registry on 23 July 2001.

12.HSBC obtained a charging order nisi against the property on 12 August 2002 in enforcement of an order dated 24 June 2002 in Miscellaneous Proceedings 1919 of 2001.  The charging order nisi was registered at the Land Registry on 17 August 2002.

13.HSBC’s charging order was made absolute on 27 September 2002 (“HSBC’s charging order absolute”).  It was registered at the Land Registry on 18 October 2002.

14.On 13 August 2005 BOC’s charging order absolute was re-registered at the Land Registry.

15.On 7 September 2007 HSBC’s charging order absolute was re-registered at the Land Registry.

16.On 29 September 2010 BOC’s charging order absolute was re-registered at the Land Registry. 

17.Ms Sit, for BOC, contended that BOC’s charging order absolute has priority over HSBC’s charging order absolute so that an order should be made that the amount paid into Court by the plaintiff should be applied in the following priority:

(1)   in discharge of what shall be due to BOC under the BOC’s charging order absolute; and

(2)   the balance if any, in discharge of what shall be due to HSBC under the HSBC charging order absolute.

18.Mr Pao, for HSBC, contended that HSBC’s charging order absolute has priority over BOC’s charging order absolute and that the whole amount paid into Court by the plaintiff should be paid out to HSBC there being no dispute that the amount outstanding under HSBC’s charging order absolute far exceeds the amount paid into Court.

19.The answer to the question of which charging order has priority over the other turns upon the proper construction of the relevant provisions of the Land Registration Ordinance (Cap. 128) (“the Ordinance”).

20.It is important to bear in mind the relevant principles of statutory construction which are not disputed.

21.The starting point in statutory interpretation must always be the ordinary linguistic meaning of the words used (per Litton NPJ in Chan Tin Shi & Others v Li Tin Sung & Others (2006) 9 HKCFAR 29 at paragraph 10).

22.On the question of statutory interpretation, Bokhary PJ in Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at page 152 said  

“ Statutory interpretation

The issue before the Court is one of statutory interpretation. There is a good deal of discussion in the cases and in academic writings of the rules or so-called rules of statutory interpretation. No useful purpose would be served by attempting to catalogue, let alone calibrate, all of them. But a proper appreciation of the law’s history being essential to its structured and enlightened development, it is worthwhile noting that historically the most significant rules of statutory interpretation appear to have been:

(i)   the “literal rule” which accorded primacy to the literal meaning of the language used in the legislation unless and until some other factor or factors demonstrated that some other meaning represented the true intention of the legislature;

(ii)   the “golden rule” which was that, whatever the literal meaning of the language which the legislature used, there was a presumption that it did not truly intend to bring about an absurd result; and

(iii)   the “mischief rule” which presumed that the legislature has targeted a particular mischief and provided a remedy for it.

These old rules are of a complementary nature or at least have the potential for complementing each other.  Elements of each of them can still be found in how the courts interpret statutes nowadays.  And the modern tendency to give statutes a purposive construction may, I think, be viewed as being to an appreciable extent a development from the mischief rule in particular.”

23.With those observations I turn to the relevant provisions of the Ordinance.

24.The purpose of the Ordinance is to provide for the registration of deeds, conveyances, judgments and other instruments affecting real or immovable property, the keeping of Land Registry records and for other matters relating to land registration.

25.Section 2(1) provides that the Land Registry shall be a public office for the registration of, inter alia, deeds, conveyances, judgments and other instruments in writing affecting land in Hong Kong.

26.It is provided by section 2(2) that judgments include judgments and orders of, inter alia, the Court of First Instance.

27.Section 3 which deals with the priority of registered instruments and the effect of non-registration provides

“3. Priority of registered instruments;

effect of non-registration

(1) Subject to this Ordinance, all such deeds, conveyances, and other instruments in writing, and judgments, made, executed, or btained, and registered in pursuance hereof, shall have priority one over the other according to the priority of their respective dates of registration, which dates shall be determined in accordance with regulations made under this Ordinance.

(2) All such deeds, conveyances, and other instruments in writing, and judgments, as last aforesaid, which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same parcels of ground, tenements, or premises, be absolutely null and void to all intents and purposes:

………………………………………………………………………..”

28.It seems to me to be plain that section 3(1) deals with the order of priority of the deeds, conveyances, instruments in writing and judgments registered in the Land Registry whereas section 3(2) deals with the effect of non-registration.

29.Priority is determined by the respective dates of registration of the deeds, conveyances, instruments in writing and judgments (section 3(1)).

30.The effect of non-registration is that all such deeds, conveyances and other instruments in writing and judgments which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same property be absolutely null and void to all intents and purposes (section 3(2)).

31.Section 4 provides that no notice whatsoever, either actual or constructive, of any prior unregistered deed, conveyance or other instrument in writing or judgment shall affect the priority of any such instrument as is duly registered.

32.Thus it is clear that the question of priority is to be determined in accordance with section 3(1).  Even if one were to have actual or constructive notice of any prior unregistered instrument or judgment affecting land section 4 clearly provides that this does not affect the priority of instruments or judgments which are duly registered.

33.Section 17 of the Ordinance provides

“ 17. Expiry and re-registration

The registration of a judgment, order or lis pendens shall cease to have effect at the end of 5 years from the date of registration, but the judgment, order or lis pendens may be re-registered from time to time and, if so re-registered, shall have effect for 5 years from the date of re-registration.”

34.The first part of section 17 provides that the registration of a judgment, order or lis pendens shall cease to have effect at the end of 5 years from the date of registration.  This clearly provides that the protection provided by registration does not last forever.  At the end of 5 years from the date of registration the registration ceases to have effect.

35.The second part of section 17 provides that the judgment, order or lis pendens may be registered from time to time and if so re-registered, shall have effect for 5 years from the date of re-registration.  It does not set out or state what the effect is.  It only provides that it shall have effect for a period of 5 years from the date of re-registration.

36.Ms Sit submitted that the provision for re-registration in section 17 is a means for the judgment creditor or chargee to protect himself against the lapse of the effect of registration so that as long as he re-registers from time to time he will continue to be protected.

37.Mr Pao submitted that section 17 provides that at the end of 5 years from the date of registration a judgment, order or lis pendens ceases to have any effect.  The judgment, order or lis pendens may be re-registered from time to time but if re-registered it shall have effect for 5 years from the date of re-registration.  It was his contention that when BOC re-registered the BOC’s charging order absolute the effect of the re-registration only commenced from the date of re-registration.  Mr. Pao submitted that the consequence of this was that BOC’s charging order absolute had lost its priority over HSBC’s charging order absolute.

38.I am unable to accept Mr Pao’s submissions.

39.In considering what the word “effect” means in section 17 one must consider the provisions of the Ordinance.

40.I would observe that section 18 which deals with the effect of registry and re-registry provides that every lis pendens registered or re-registered and also every judgment or order re-registered shall have the same force and effect as a judgment registered and not further or otherwise.

41.That brings us back to section 3 which clearly provides what the effect of registration and non-registration is.

42.The effect is that by section 3(2) the documents not registered shall as against any subsequent purchaser or mortgagee for valuable consideration of the land be absolutely null and void to all intents and purposes.  It shall be null and void only against subsequent and not antecedent purchaser or mortgagee for valuable consideration of the land.

43.Ms Sit helpfully took me through the legislative history of the Ordinance.

44.Sections 17 and 18 of the Ordinance first appeared as sections 17 and 18 of the Land Registration Ordinance 1844 (“the 1844 Ordinance”).

45.Section 17 of the 1844 Ordinance provided that

“ 17. So much of the said Acts of Parliament and of the Acts of Parliament 3 & 4 Victoria, chapter 82, and 18 & 19 Victoria, chapter 15, as requires the re-registering of judgments and lites pendentes after every successive period of five years, beginning from the entry thereof respectively, shall extend to all judgments, lites pendentes and orders, registered in the Land Office, and by which it is intended to affect any estate.”

46.Section 18 of the 1844 Ordinance provided that

“ 18. Subject to the provisions of section 11 of the Act 18 & 19 Victoria, chapter 15, for the relief of purchasers and mortgagees for valuable consideration against the judgments, Crown debts, and liabilities of paid-off mortgagees (which provisions are hereby extended to this Colony), every lis pendens registered or re-registered, and also every judgment or order re-registered in manner aforesaid, shall have the same force and effect as a judgment registered and not further or otherwise.”

47.Section 17 of the 1844 Ordinance referred to and incorporated the relevant provisions of the English Acts of Parliament 2 & 3 Vict. c.11 [Judgments Act 1839], 3 & 4 Vict. c.82 [Judgments Act 1840] and 18 & 19 Vict. c.15 [ Judgments Act 1855].

48.Those provisions have been considered in Beavan v The Earl of Oxford (1855) 6 De G. M. & G. 492 and Shaw v Neale [1858] 6 HL Cases 581 which support BOC’s contentions.

49.In Beavan the question related to the priority of three judgment creditors. Taylor’s judgment was registered on 27 January 1849 and re-registered within 5 years on 26 January 1854.  Brockell’s judgment was registered on 19 August 1841, re-registered on 27 February 1847 and again after 5 years on 20 April 1852.  Corfield’s judgment was registered on 5 September 1848, and re-registered after 5 years on 28 November 1854.

50.Brocknell and Corfield had in the year 1849 priority over Taylor and the question was whether they lost that priority by not having re-registered within 5 years.

51.It was held that Brocknell and Corfield did not lose their priority to Taylor.

52.The Lord Chancellor said at page 498

“ It was contended on behalf of Mr. Taylor that though when he first registered his judgments, on the 27^th of January 1849, Corfield whose judgment was registered in September 1848 and (subject to an observation I will presently advert to) Brockell whose judgment was registered in February 1847 had by the statute precedence over him, yet that precedence was lost when within five years after the 27th of January 1849 they suffered more than five years to elapse from the dates of their respective registrations. The meaning of the statute it was argued was to postpone every judgment creditor who should omit within five years to re-register, and so at the end of that period to give priority to all judgment creditors then duly appearing on the registry. This is not the construction which I put on the Act. The object of the enactments was to give security to purchasers mortgagees and creditors by enabling them to ascertain whether the lands of the person from whom they are purchasing or taking a mortgage or judgment are subject to any prior [499] judgment. If a judgment once registered were to bind a subsequent purchaser after any lapse of time the search must be indefinite, and must necessarily occasion great and almost insuperable difficulties. To obviate this the statute provides that no intended purchaser, mortgagee or creditor need search for more than five years, requiring at the end of that time re-registry in order to affect purchasers mortgagees or creditors.

The question is what is the effect of an omission to re-register in its operation on previous purchasers mortgagees or creditors?  I think it has no operation at all.  When once a person has become a purchaser mortgagee or creditor with notice on the register of an existing judgment, he knows that such a charge exists and has no shadow of complaint if it is enforced.  The object of the statute was to enable him to ascertain with certainty what judgments exist, not to give him a chance of improving his title by the possible subsequent neglect of a judgment creditor to re-register.  Such neglect will of course deprive the judgment creditor of his rights against subsequent purchasers mortgagees or creditors becoming so before any re-registry has taken place, and so will operate as a protection to them; but there could be no object in protecting those who had thought fit to become purchasers, mortgagees or creditors in spite of a judgment of which the register had already apprized them. …………………………………………………………………………………………………………………………………..………………………………………………………………………….. The sole object of registering and re-registering is to enable persons intending to become purchasers mortgagees or creditors to ascertain how far it may be prudent in them to do so having regard to existing judgments.  When once the transaction whether of purchase mortgage or loan has been completed, the necessity for a register has to those interested in such completed transactions altogether ceased.  My opinion therefore is that, treating Brockell and Corfield as being both duly on the register within five years prior to January 1849 when Taylor first registered his judgment, they had a priority which was not affected by their subsequent omission to register at the end of five years.”

53.Section 4 of the Act 2 & 3 Vict. c. 11 [Judgments Act 1839] provided

“ And be it enacted, That all judgments of any of the Superior Courts, decrees or orders in any Court of Equity, rules of a Court of Common Law, and orders in bankruptcy or lunacy, which since the passing of the said recited Act of the first and second years of the reign of Her present Majesty have been registered under the provisions therein contained or which shall hereafter be so registered, shall after the expiration of five years from the date of the entry thereof, be null and void against lands tenements and other hereditaments as to purchasers mortgagees or creditors unless a like memorandum or minute as was required in the first instance is again left with the Senior Master of the said Court of Common Pleas within five years before the execution of the conveyance settlement mortgage lease or other deed or instrument vesting or transferring the legal or equitable right title estate or interest in or to any such purchaser or mortgagee for valuable consideration, or as to creditors, within five years before the right of such creditors accrued, and so, toties quoties, at the expiration of every succeeding five years, and the Senior Master shall forthwith re-enter the same in like manner as the same was originally entered; and such officer shall be entitled for any such re-entry to the sum of one shilling.”

54.When dealing with the question whether Taylor’s judgment was entitled to priority over the judgments of Brocknell and Corfield, Turner LJ said at page 505

“ This question seems to me to depend wholly upon the enactment contained in the statute 2 & 3 Vict. c. 11, s. 4, [505] for the statute 3 & 4 Vict. c. 82, s. 2, relates only to the effect of notice; and the statute 18 & 19 Vict. c. 15, although it defines the circumstances under which re-registered judgments are to be binding, does not appear to me otherwise to alter the persons who are to be bound by them. The 4th section of 2 & 3 Vict. c. 11, is as follows :—(His Lordship read the section set out above.)

The question now raised upon this section is, whether a judgment prior on the registry, but not duly re-registered, is, by the section, made void against a subsequent judgment, which has been duly re-registered; for there is nothing to take away the priority of the antecedent judgment, unless this section has made it void against the subsequent one. My opinion has fluctuated upon this point; but the conclusion, at which I have ultimately arrived, is, that the enactment has no such operation. The section may well be divided into two parts—the first part enacting that registered judgments shall be void after the expiration of five years, unless re-registered; the second part providing the means by which they may be kept on foot after that period has expired. It is clear that the words “purchasers,” “mortgagees” and “creditors,” as used in this second part of the section, were meant to apply and can apply only to purchasers, mortgagees and creditors becoming so subsequently to the date of the registered judgment; and I think that it would not be a sound construction of the statute to give a more extended construction to the same words as used in the first part of the section. To read the words “purchasers,” “mortgagees” and “creditors” in the first part of the section as extending both to antecedent and subsequent purchasers, mortgagees and creditors, when, in the latter part of the same section, they must be read as applying to subsequent purchasers, mortgagees and creditors only, is in itself no little difficulty; but the case [506] presents a still further difficulty. We are here dealing with judgments, which are charges upon estates, and if this enactment makes an antecedent judgment not duly re-registered null and void against a subsequent judgment, its operation will be not only to convert a right to foreclosure into a mere right to redeem, but, if full effect be given to the words of the enactment, absolutely to destroy the right of redemption; and surely a very strong and clear expression of the intention of the Legislature must be required for such purposes.

For these reasons, I think that the true meaning of this enactment is, that judgments not duly re-registered shall be void against subsequent purchasers mortgagees and creditors; and this construction, as it seems to me, will work out the purposes of the Act.  Each purchaser, mortgagee or creditor will be bound to search only for five years; and judgments not registered or re-registered within that period will be void against him.”

55.Beavan was approved by the House of Lords in Shaw.

56.The Lord Chancellor said at page 605

“ … the intention of the Legislature is clear and apparent, and that a sensible interpretation may be put upon the provision. I have no doubt whatever that what the Legislature intended was this, to give to a registered incumbrancer the benefit of that registration during the five years in which it endured, and to render it a protection to him against any purchasers, mortgagees, or creditors, who might become so during the currency of the period of registration. And so with respect to re-registration, and toties quoties at the end of every five years when registration is required; so that according to my view of the construction of this provision, if, after the expiration of the first five years, the incumbrancer omitted to re-register, and in the intervening period before his re-registration a person became a mortgagee or purchaser of the estate, that subsequent re-registration would not prevail against such mortgage or purchase, but that mortgage or purchase would have priority over the incumbrance which the party had failed to re-register within the term, and so advantage would be given to other parties to intervene and to obtain the benefit as of prior security.”

57.Lord Cranworth said at page 613

“ Now, my Lords, having looked carefully again at the case of Beavan v. The Earl of Oxford [6 De G. M. and G. 492], I can only repeat, that to the judgment which I then formed and expressed I most entirely adhere; and I think that a little light may be thrown upon it by just seeing what would be the construction of the statute if we do, what in construing a doubtful instrument we very commonly do, namely, transpose the different members of the sentence. Then it seems to me that the matter is perfectly clear. The enactment is that all judgments which shall hereafter be registered in the mode pointed out “shall after the expiration of five years from the date of the entry thereof, be null and void against lands, tenements, and other hereditaments, as to purchasers, mortgagees, or creditors, unless a like memorandum or minute as was required in the first instance is again left with the Senior Master of the said Court of Common Pleas within five years before the execution of the conveyance, settlement, mortgage, lease, or other deed.” The question is whether, if a like memorandum is not left within five years, the former register becomes null and void against a previous purchaser, as to whom it was in force when he made his purchase? Now suppose instead of reading the words as they stand in that order, we read them thus: That all judgments which are to be registered shall be null and void against lands, tenements, or hereditaments, and so, as to purchasers, mortgagees, or creditors, after the expiration of five years from the date thereof. Now it is quite clear that although that is not the order in which the different members of the sentence occur, that is plainly what is meant, and what must have been meant; because otherwise we must impute to the Legislature an intention so capricious, not to say so absurd, that we can hardly suppose that it could ever have entered into the mind of any person framing a law, because the result would be, that the object of the statute being to take care that all persons advancing money shall have the means of knowing whether there are prior charges or not, although a person has purchased knowing that there is this prior charge, the subsequent default of a formal act, which, as to him, was a mere formal act, is to better his security, and for no object in the world. Questions used to arise of a very difficult and delicate nature as to how far persons where affected by notice of prior judgments. The Legislature has very properly, I think, cut the knot and said there shall be no question of notice; the only notice available shall be notice upon the register. But when once you have got the notice upon the register, it seems absurd to say that you must repeat the notice every five years; because when you have once had notice, you know that there is an incumbrance upon the property, and there it will remain until it is paid off.”

58.Section 17 of the 1844 Ordinance was amended in 1992 by the Land Registration (Amendment) Ordinance (Ord. No. 56 of 1992) to the current section 17 of the Ordinance.  I agree with Ms Sit that the 1992 amendments replaced the old language with modern terminology and the substantive parts of section 17 of the 1844 Ordinance have not been altered.

59.Mr Pao submitted that the contentions of BOC should not be accepted as by the 1992 amendments the Legislature could have but did not adopt clear express language as it did when enacting section 36 of the Land Titles Ordinance (Cap. 585) which has not yet come into operation.

60.Section 36 of the Land Titles Ordinance provides

“ (1) Subject to subsections (2), (3) and (4)—

(a) the registration of a charging order shall cease to have effect immediately upon the expiration of 5 years from the date of registration of the order but the order may be re-registered from time to time and, if so re-registered, the re-registration of the order shall have effect for another 5 years from the date of re-registration; and

(b) if the re-registration of a charging order is made before the expiration of a current period of registration or re-registration of the order, then the order shall retain its original priority.”

61.In my view section 36 of the Land Titles Ordinance provides no assistance to HSBC.  The reason why section 36 was so drafted can be found in the LC Paper No. CB(1)2501/02-03(03) which sets out the Administration’s response to Legco.  In dealing with Clause 34 of the Bill it stated

“ Clause 34 (Charging orders and lis pendens) – Paragraph 16 of List of FUA

15. The Issue: Please check whether the wording of clause 34 as presently drafted is the same as that of the relevant provision in Land Registration Ordinance so as to ensure that the priority of a charging order will be retained upon its re-registration.

16. Response: Under the current case law on registration there is an English House of Lord’s decision in Shaw v Neale (1856) 6 H.L. Case 581 (English Report Vol. 10 at p.1422) to the effect that if a second encumbrance was registered within the 5 years’ validity of the first encumbrance, then the first encumbrance is protected as against the second encumbrance even though there is no re-registration of the first encumbrance after the expiry of the 5 years’ period. No relation-back provision is required for the current s.17 of LRO.

17. For the avoidance of doubt, the Administration proposes to make appropriate amendments to Clause 34 to state clearly that re-registration of a charging order or lis pendens shall have a priority relating back to its first registration.”

62.Thus it is clear that the Administration and Legco considered that no relation back provision was required for section 17 of the Ordinance and that the provision in section 36 of the Land Titles Ordinance to state in clear express language that re-registration shall have a priority relating back to its first registration was purely for the avoidance of any doubt on the matter. I am unable to accept Mr Pao’s submission.

63.Mr Pao also relied on Ocean Rich Investment Co. Ltd v Leung Yiu Biu (HCMP 1903/1998, 6 May 1999) where Yeung J (as he then was ) said at page 7 of his judgment

“ The charging orders registered in 1991 ceased to have effect by the lapse of time. They have not been re-registered. Even if they were to be re-registered they only start to have effect from the date of re-registration.”

64.In my view Ocean Rich does not provide any assistance to HSBC.

65.Yeung J was dealing with a vendor and purchaser summons with the sole issue of whether the plaintiff had shown a good title to the property in that case.  There was a charging order nisi imposed on the property in that case registered on 21 January 1991.  It was made absolute on 19 February 1991 and then registered.  There was an attempt to re-register the charging order absolute on 19 February 1998 but the judge held that the attempt was unsuccessful and hence there was no re-registration.

66.More than 8 years had elapsed since the registration of the charging orders and there was no successful re-registration.  In those circumstances it is not surprising that it was held that the charging orders had ceased to have effect by reason of section 17 of the Ordinance.

67.What Yeung J said as set out above was clearly obiter dictum.

68.It is evident that the relevant English Acts and the cases of Beavan and Shaw were not considered by Yeung J as they were not referred to in his judgment.

69.I would also observe that at page 6 of his judgment Yeung J set out the effect of non-registration as provided in section 3(2) of the Ordinance.  That being so, it is highly unlikely, in my view, that Yeung J was intending to express a view that the effect of section 17 was to cause a prior registered charge or incumbrance to lose priority to a charge or incumbrance registered later in time if it were re-registered from time to time under section 17.  In my view he was neither dealing with nor expressing a view on the effect of re-registration on prior registered charges or incumbrances. 

70.Ocean Rich is clearly distinguishable and provides no assistance to HSBC.

71.The contention of HSBC is that as the re-registration shall only take effect from the date of re-registration BOC’s charging order absolute has lost its priority to HSBC’s charging order absolute.  Ms Sit submitted, correctly in my view, that this contention leads to different answers to the question of priority depending on when the question is asked. 

72.I set out the example given by Ms Sit where A registers in 2000, B registers in 2002 and C registers in 2004.  A re-registers in 2005 before the expiry of 5 years.

73.If the issue of priority has to be determined in 2006, on HSBC’s case, B would rank before C and C before A notwithstanding that A has fully complied with section 17 and had duly registered in time.  The consequence of this is that whether A re-registers or not he loses his priority upon expiration of the 5 years in any event.

74.If the issue of priority has to be determined in 2008 and in the meantime B re-registers in 2007, on HSBC’s case, C would rank in priority before A and A before B.

75.I agree with Ms Sit that it cannot have been the intention of the Legislature to leave the matter uncertain for persons inspecting the register. Different answers may be given to the question of priority depending on when it falls to be considered.  That would be absurd.  The purpose of registration is to provide a system of registration so that those inspecting the register know with certainty the priority of registered instruments.

76.In my judgment BOC’s charging order absolute has priority over HSBC’s charging order absolute.

77.I make an order that the net sale proceeds of the property be applied in the following priority:

(1)   in discharge of what shall be due to BOC under BOC’s charging order absolute; and

(2)   the balance if any, in discharge of what shall be due to HSBC under the HSBC charging order absolute.

78.I also make an order nisi that BOC’s costs of these proceedings be paid by HSBC such costs to be taxed if not agreed.

Ms Eva Sit, instructed by Messrs Anthony Chiang & Partners, for the 1^st Defendant

Mr Jin Pao, instructed by Messrs Mayer Brown JSM, for the 2^nd Defendant