Re Ho Chung Development Ltd and Another

DCMP 2358/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 2358 OF 2011

BETWEEN

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JUDGMENT

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1.The Applicants now apply for the following orders:

(a)  an order that the 1st and 2nd Applicant may at liberty to pay into Court to the credit of these proceedings the sum of HK$448.00 being the principal plus notional interest at the rate of 20% per annum for 107 years due under a mortgage in favour of Lai Kwan Yau Tso with Lai Un Shang as trustee dated 27 March 1905 (“the Mortgage”)  in respect of the properties known as The Remaining Portion of Lot No. 1120 (“the 1^st Property”), The Remaining Portion of Section A of Lot No. 1123 (“2^nd Property”) and Section B of Lot No. 1139 (“the 3^rd Property”) (collectively called “the said Properties”); and

(b)  a declaration that upon payment to Court of the said sum of HK$448.00 or such other sum as this Honourable Court may direct, the said Properties be freed from and discharged from the Mortgage. 

2.Section 12A of the Conveyance and Property Ordinance, Cap. 219, Laws of Hong Kong reads:

“Discharge of encumbrances by the court

(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) In this section, "court" (法院) means the Court of First Instance unless the party to the application submits to the jurisdiction of the District Court.

3.The Applicants have proceeded in the application on an ex parte basis.

4.In fact, Lam J in the case of Re Cheung Chi Wang and Another HCMP6097/2001 says he sees no reason why initially proceedings could not be commenced by way of ex parte originating summons.   He says the Court seized with the matter can still consider the facts of the case before he decides whether notice need be given to the encumbrancer or other parties. 

5.On the evidence before this Court, I agree that the case can proceed on ex parte basis.

6.Further, it is said in the case of Fu Sum & Ors v. Fu San Fat HCMP1072/2008 by Chung J that the word “party” in an ex parte application at least before any encumbrancer enters Court appearance must mean the Applicant. 

7.Accordingly in the present case, the Court does have jurisdiction to deal with the application. 

8.Given the long lapse of time since the Mortgage, there is high probability that the said Lai Kwan Yau Tso was no longer in existence and the trustee, Lai Un Shang has died.  Evidence also shows that the encumbrancer or his trustee, if any, could not be located. 

9.In view of the record in Land Registry against the said Properties, this Court treats the Mortgage as still subsisting.  This Court accepts also that the sum of HK$448.00 is the aggregate sum of principal of HK$20.00 plus notional interest calculated at 20% per annum since year 1905 i.e. 107 years plus a margin of around HK$2,000.00, the total sum of HK$2,448.00 should be adequate to satisfy whatever interest the encumbrancer have in the said Properties.

10.The 20% notional interest rate was adopted by Deputy Lam J (as he then was), in the case of Man Chi Kan and Man Tsak Lun, HCMP4945/2002. 

11.In the circumstances of the case, I exercise my discretion and grant the following orders:

(1) The 1st and 2nd Applicants be, within 14 days from today’s date, at liberty to pay into Court the sum of HK$2,448.00, being the balance of the principal and interest in respect of the Mortgage created in favour of Lai Kwan Yau Tso in respect of the said Properties.

(2) A declaration that upon payment to the Court of the said sum of HK$2,448.00 the said Properties be freed and discharged from the Mortgage.

(Discussion re costs)

12.As the Applicants make no application for costs, I order that there be no orders as to costs.

Mr Chan, of Messrs. Lee Chan Cheng, for 1^st and 2^nd Applicants