Cromwell Investment Co Ltd and Others v. Fook Sun Enterprises Co Ltd and Another

CACV000015/1975

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. 15 OF 1975

(On appeal from Original Jurisdiction Miscellaneous proceedings No.118 of 1974)

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Coram: Huggins, McMullin & Trainor, JJ.

Date of Judgment: 5th December 1975.

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JUDGMENT

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Huggins, J.:

There are in this appeal two points calling for decision. They can be stated quite shortly but cannot be so shortly disposed of.

2. The Plaintiff in the action sues for an order under s.6 of the Partition Ordinance for the sale of a tenement held by it in common with the first and second Defendants. That tenement is situate at and known as Nos. 136 and 138 Queens Road Central, Hong Kong and the Plaintiff owns more than 60% of the undivided shares. The first facts which introduce difficulty into an otherwise straight-forward case are that the first and second Defendants (the other tenants in common) have mortgaged their undivided shares and that the dates for redemption are still a long way in the future. The originating summons was taken out on 18th March 1974. On 17th November 1973 the first Defendant had mortgaged its undivided share to Yien Chi-Ren (the last named of the three second Defendants). The principal is not repayable until 16th November 1983. On 10th December 1973 the three second Defendants mortgaged their undivided shares to the fourth Defendant. The principal sum there is not repayable until 9th December 1985. On 21st December 1973 the three second Defendants gave a second mortgage of their undivided shares to the fifth Defendant. Under that mortgage the principal is not repayable until 20th December 1976.

3. Another fact which introduces difficulty is that at all material times the tenement in suit has been let to "The Lin Heung Tea House", although we have not been referred to any Lease or Agreement and we do not know what are the terms of the tenancy. It is common ground that the premises are protected under Part I of the Landlord and Tenant (Consolidation) Ordinance.

4. It must further be mentioned that the adjoining house, No. 140 Queen's Road Central, although not subject matter of the suit is owned by the Plaintiff and has, it would seem, been let to "The Lin Heung Tea House" also, for the tea house runs its business in part of all three houses. The only parts of Nos.136 and 138 which are not used for the tea house business are two shops on the ground floors, these having been sub-let. The aim of the Plaintiff is itself to purchase Nos. 136 and 138 if an order for sale is made and then to redevelop all three houses as a unit.

5. It is, I think, more logical to deal first with the second of the two points which have been argued, as Trainor, J. has done in the judgment which he has just read. Mr. Swaine, for the first and second Defendants (the first and second Appellants before us), contends that the Plaintiff has no interest which entitles it to sue under the Partition Ordinance at all. He does not, of course, deny that it is tenant in common with his clients but submits that anyone claiming under the Ordinance must have an estate in possession and that by reason of the tenancy granted to "The Lin Heung Tea House" the Plaintiff's estate is in reversion and not in possession. He emphasises that the tenant in possession does not merely have a contractual tenancy (and I gather it to be a periodic tenancy which has not been duly terminated) but also a right to retain possession under Part I of the Landlord and Tenant (Consolidation) Ordinance.

6. The Partition Ordinance does not state in terms that only a tenant in common in possession may sue under its provisions, but authorities have been cited to show that that was the position under the old law, the principle being, it was said, that a reversioner had no need of partition and should not be allowed to disturb the existing state of things when there was an interest in possession: Cantwell v. Hassard (1858) 7 Ir. Ch. R. 370. Two matters require consideration: (1) whether the Plaintiff has in truth no interest "in possession" which would have entitled it to partition under the old law, and (2) whether the Ordinance must be construed as having abrogated the old law.

7. The Common Law right to partition was confined to coparceners. The Plaintiff and first and second Defendants in the present case having become tenants in common by act of parties were not coparceners. The right to partition was extended to joint tenants and tenants in common in estates of inheritance in their own rights or in the rights of their wives by the Act of 31 Henry VIII Cap. 1 and further extended by 32 Henry VIII Cap. 32 to joint tenants and tenants in common for terms of life or years. Both acts remained in force in Hong Kong, either by virtue of the Supreme Court Ordinance or of the Application of English Law Ordinance, until 4th July 1969, on which date the Partition Ordinance came into force.

8. It is submitted, and I readily accept, that no order for sale under s.6 can be made unless a plaintiff would be entitled to partition under s.4. The right to sell has been added, here as elsewhere, only as an aid to partition where that is more beneficial.

9. Mr. Swaine then relies on the statement in Walker's Partition Acts (2nd Ed.) p.7:

"But no one can successfully institute an action for partition whose estate is not an estate in possession. A reversioner cannot maintain such a suit: 'this rule is not merely technical, but is founded on good sense in not allowing the reversioner to disturb the existing state of things; there might be a tenant for life of the whole, and several tenants in common in reversion in which case the inconvenience would be obviously very great; at all events the rule is unquestionably settled' (per Lord Hatherley, L.C., Evans v. Bagshaw L.R. 5 Ch. 340)."

In the case there cited a bill for partition was filed by a married woman and her husband and their mortgagee. The wife was tenant in common in fee in one sixth. The husband was a bankrupt before the execution of the mortgage and all his interest was then vested in the assignees in bankruptcy. After action brought the mortgagee bought the life estate from the husband's assignees and the bill was amended accordingly. It was held that an action did not lie on the original bill because the married woman was in effect the owner of a reversion only: nor could the plaintiffs by subsequently acquiring a title by purchase of the bankrupt's estate obtain a right to a decree in that suit, even if the bill was amended. On the other side Mr. Litton argues that although a reversion expectant upon the termination of a life interest may not be an estate in possession a reversion expectant upon the termination of a term of years is. He rightly says that the only cases cited against him were cases where there was a tenant for life and he relies upon passages in Megarry and Wade's Law of Real Property (3rd Ed.). It must, of course, be borne in mind that the passages are dealing primarily with the law of England after 1925. First there is the passage at p.144:

"'In possession' means that the estate must be immediate, and not in remainder or reversion. Remainders and reversions are now equitable interests, taking effect behind a trust of the legal estate. But, in order to prevent temporary interests such as leases from disturbing the legal ownership, 'possession' is defined so as to include not only physical possession of the land but also the receipt of rents and profits or the right to receive them, if any. Thus a fee simple is still 'in possession even though the owner has granted a lease, for he is entitled to the rent reserved by the lease, and even if the land has also been mortgaged, for he is entitled to the rents and profits, if any, in excess of any interest payable to the mortgagee".

Then at p.185 the learned authors observe:

"A reversion is such part of a grantor's interest as is not disposed of by his grant; a remainder is such part as is disposed of, provided that it is postponed to some estate in possession created at the same time. Thus if a tenant in fee simple grants a life interest, the fee simple which he retains is a reversion. His estate in fee simple in possession has become a fee simple in reversion. If, on the other hand, he creates a lesser estate and by the same instrument disposes of some or all of the residue of his estate to one or more other persons, the interests of those other persons are not reversions but remainders."

and at p.186 they continue:

"From its very nature it follows that a reversion is a vested interest; for it is the remnant of an estate which has never passed away from the grantor, and he or (if he is dead) his representatives stand ready to receive the land as soon as the particular estate determines. According to feudal principles, moreover, a freehold reversioner on a term of years has an estate which is vested not only in interest but also in possession, for the grant of a lease does not deprive a grantor of seisin, and he therefore has what is properly called a freehold in possession subject to the term. From this point of view a reversion on a lease is not a reversion or, indeed, a future interest at all. This technicality is a relic of the ancient doctrine that leases were not even estates and were to be disregarded for feudal purposes. But, as has been seen, leases have long since achieved the status of estates, and it is therefore common and correct to speak of a landlord's reversion".

Therefore, Mr. Litton says, the Plaintiff is a reversioner in possession. Seisin the Plaintiff in this case did not have, but a leasehold could be partitioned. A.H. Simpson, C.J. in Robinson v. Robinson (1902) 2 N.S.W.S.R. 197 (Eq.) appears to have thought on a preliminary view of the matter, he having heard argument on one side only, that there could be a partition where there was a sub-lease. The plaintiff and defendant were assignees of the residue of a term of 99 years as tenants in common, the plaintiff being entitled to more than a moiety. The assignor had sub-let a portion of the land for the residue of the term then existing less six months. The Chief Justice said at p. 198:

"I have looked into the authorities, and though the point does not actually appear to have been decided by the English courts, the tendency of the authorities seems to show that in the case of freehold estates only an estate in possession is necessary to support a present right to partition, and that therefore the existence of an outstanding lease for years is no objection to the making of a decree for partition. But it may very well be that the leaseholder is a necessary party to the suit, so that being served with the decree, if it became necessary to make a partition of the rents, he would be bound by the order".

That a coparcener could have partitioned where there was a term of years as distinct from a tenancy for life was clear from Co. Lit. 167a, the reason being that a tenancy for life is an estate of freehold. It will, however, be noticed that the Chief Justice thought it might well be that the leaseholder for years was a necessary party. Mr. Swaine relied upon Cantwell v. Hassard (supra) for the proposition that one had to consider who had the substantial interest and he submitted that by virtue of the statutory protection against eviction conferred by the Landlord and Tenant (Consolidation) Ordinance the tea house was a necessary party. I confess that I have had difficulty in extracting from the judgments in that case the true ratio decidendi. The shares of coparceners had been demised for lives renewable for ever. It was alleged and, seemingly, had been proved that the cestuis que vies were all dead. It must be assumed that the tenant had remained in possession and had paid rent, for it was argued that he still had an interest as tenant from year to year. Although it is not entirely clear I understand the basis of both judgments to have been that the lessee was not a party to the proceedings. The Lord Justice pointed out the embarrassment which would be caused to the lessee by a partition, for he would not know how to pay his rent. If that be the basis of the decision then the mere existence of any sub-lease would be enough to defeat partition in the absence of the sub-tenant. However, Napier, L.C. cited a case where the interest to be partitioned was not the reversion but a term of years and said that the same principle was very applicable to the case before him. He appears to have thought it material to ask who had "the substantial interest in the land" in the eyes of the Chancery Courts and he considered the "covenant for perpetual renewal" still to be material despite the deaths of the cestuis que vies. I do not think that Cantwell v. Hassard really supports the Appellants' case. Mr. Swaine then submitted that the learned judge in Robinson v. Robinson misunderstood the English authorities. With respect I do not think the judge did misunderstand the English authorities. Whether, as counsel suggested, the learned Chief Justice in the present case misunderstood Cass v. Wood (1874) 30 L.T. 670 it is difficult to say in the absence from the report of that case of any statement of the argument. I take the view that under the old law the Plaintiff could successfully have sought a decree of partition: the substantial estate is in the tenants in common and the statutory status of irremovability given to the sub-tenants does not, in my opinion, alter that. It has not been suggested that the existing law in Hong Kong, under the statute, is less wide than the old law and therefore I am satisfied that the Plaintiff had an interest which entitled it to sue for partition.

10. It is then contended by the Appellants that the action did not lie because the consent of the mortgagees had not been obtained. Mr. Ching relies upon s.3(1), but it is convenient to set out s.2 and s.3(2) as well:

"2. Subject to this Ordinance, where any property in land is held by two or more persons, whether as joint tenants or tenants in common, the Court may -

Mr. Ching submits that sub-s.(2) is applicable in the present case because "the property in [the] land" is "subject to [a] mortgage", a mortgagee of an undivided share having an interest in the whole of the land. On the other side it is contended that "the property in [the] land" means the entire property, i.e. all the undivided shares, and that the only concurrence required is that of a mortgagee of all the undivided shares: if the contrary had been intended the Legislature would have said "where any property in land held in the manner referred to in s.2, or any part of such property, is subject to any mortgage ...". However, the phrase is not "subject of" but "subject to". Clearly the property in the land which is held by these tenants in common is not "subject of" any mortgage: it is some of the undivided shares which are subject of mortgages. Property would be "subject to" a mortgage if it were affected by that mortgage. Land can be affected by the mortgage of an undivided share in it, because the mortgagee may enforce his rights against it. Thus a mortgagee of an undivided share can sue for fore-closure and for partition or sale in lieu of partition: see Robinson v. Aston (1845) 9 Jur. 224. Equally, a mortgagee of an undivided share has an interest in the land which may be affected by partition: Sinclair v. James 1894 3 Ch. 554.

11. We have been invited to consider the law as it stood in 1969, when the Partition Ordinance was passed, in order to ascertain what was the "mischief" which the statute was intended to remedy. As I understand the position the concurrence of a mortgagee was never a condition precedent to the institution of a suit for partition. Where the entire land was mortgaged the mortgagee was not even a necessary party to such a suit, because he would not be affected by any decree which might be made (Waite v. Bingley (1882) 21 Ch. 674): his security was the entire interest of all the tenants in common and it mattered not to him whether as amongst themselves the owners of the equity of redemption had divided or undivided shares. A mortgagee of the entire land might concur in the institution of the suit but

"the court cannot make a mortgagee agree to a partition, because he is entitled to the whole": Swan v. Swan (1820) 8 Pr. 518.

What, then, were the consequences of his agreeing? He made himself subject to any decree and if a sale were ordered he could not prevent the sale even though the result might be that the mortgage was paid off before the due date. If he did not concur in the suit he was not a proper party (per North, J. in Sinclair v. James) and he could not be compelled to accept early redemption: Brown v. Cole (1845) 14 Simon 427. It was suggested that s.7(2), which lays down the order in which the proceeds of sale (or as the marginal note prefers it "the proceedings of sale") are to be applied and includes "the discharge of any incumbrance affecting the property directed to be sold", made Brown v. Cole no longer good authority in the present circumstances, but I cannot accept that. Mr. Ching argues that the mortgagee of the entire land did not require the protection which would be afforded to him if s.3(2) of the Ordinance were intended to prohibit the institution of a partition suit without his consent: the effect of the provision would be to require the concurrence of a person who, in the absence of his concurrence, would be completely unaffected by the decree.

12. The position of the mortgagee of an undivided share was very different:

"If a partition were made he would be a mortgagee of a divided share": Sinclair v. James 1894 3 Ch. 554, 556.

For that reason he could, I think, be a necessary party to a suit for partition. Of course, where one of the other tenants in common was the mortgagee the mortgagor could not enforce a partition except upon payment of the mortgage (Watkins v. Williams (1851) 3 Mac. & G. 622 and Gibbs v. Haydon (1882) 47 L.T. 184), although presumably the mortgagee might, at least in theory, consent to the institution of a suit. Certainly the court could not make him agree any more than it could make a mortgagee of the entire land agree. The reasoning of Fry, J. in Gibbs v. Haydon would equally apply where the mortgagee was not one of the other tenants in common, if a mortgagee of an undivided share is in truth a proper party to a suit for partition. When North, J. said in Sinclair v. James at p.556 that "no action can be brought against him except an action to redeem" it must be borne in mind that in that case the party seeking partition had mortgaged his share to one of the other tenants in common. If, however, McMullin, J. is right and the mortgagee of an undivided share was not a proper party even though he would be affected by a decree, there would be even more reason for the Legislature to give him the protection which is said to be conferred by s.3(2).

13. I am not unmindful of the argument which found favour with the learned Chief Justice at the trial, namely that it would be absurd that one tenant in common (however small his undivided share) could always frustrate any attempt at partition by mortgaging to a person who was unwilling to concur in the institution of proceedings - possibly another tenant in common. Perhaps the Legislature thought the danger of abuse of s.3(2) was out-weighed by the desirability of giving a "genuine" mortgagee of an undivided share additional protection. Be that as it may, the requirement of the concurrence of a mortgagee of an undivided share would at least provide that additional protection, whereas, as I have indicated, if the concurrence required was only that of an overriding mortgagee the sub-section could serve no useful purpose.

14. I have come to the conclusion that the Plaintiffs were required to obtain the concurrence of the mortgagees. Accordingly I would allow the appeal and enter judgment for the Defendants with costs.

5th December 1975.

Representation:

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. 15 OF 1975

(On appeal from Original Jurisdiction Miscellaneous proceedings No. 118 of 1974)

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Coram: Full Court (Huggins, McMullin & Trainor, JJ.)

Date of Judgment: 5th December, 1975.

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JUDGMENT

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McMullin, J.:

I too would allow this appeal upon the single ground argued by Mr. Ching. We are primarily concerned with the interpretation of Section 3(2) of the Partition Ordinance and I think it is important to keep it in mind that there is no similar provision in the English legislation. Under the law prior to 1925 in England a tenant in common who had mortgaged his undivided share to another tenant in common could not maintain an action for partition without first redeeming the mortgage [Gibbs v. Haydon (30 W.R. 76)] but there was no provision obliging a tenant in common who sought partition to obtain the concurrence of any mortgagee who sought partition to obtain the concurrence of any mortgagee who was not himself a tenant in common and it would seem that such mortgagees were never proper parties to such an action. In Sinclair v. James⁽¹⁾ certain estates which were mortgaged passed under the will of a testator to certain other persons who took them as tenants in common. One of the persons who was entitled to an undivided share of the property in those estates mortgaged his undivided share to an outsider and subsequently brought an action for partition in which he sought to join both the original mortgagees of the property and the mortgagee of his own undivided share therein in addition to the other tenants in common. Upon the motions of the mortgagers the action was dismissed as against them. North J. said (page 556) :

"First, to take the case of the overriding mortgagees, I cannot see any reason why they should be parties to this action, and no partition of the interest of persons entitled to the equity of redemption can affect them. A partition of the equity of redemption cannot diminish or affect their right. That point is covered by the authority cited : Swan v. Swan (8 Price, 518)".

He went on to say :

"The matter stands on a differnt footing as far as regards the mortgagee of the Plaintiff's particular share. It cannot be said that he has no interest in the partition of the property. His mortgage is a mortgage of an undivided share of an equity of redemption. If a partition were made he would be the mortgagee of a divided share, and the nature of his security would be altered. But no action can be brought against him except an action to redeem."

If these passages correctly represent the state of the law applicable to Hong Kong prior to the passing of the Partition Ordinance - and for my part I believe that they do - then Mr. Ching is clearly right to maintain that the Legislature, in Section 3(2), must be presumed to be trying to remedy whatever weakness was discerned in the existing law rather than to be attempting to bridge a gap which did not and does not exist. The argument put forward for the plaintiffs, and which the learned Chief Justice accepted, was that Section 3(2) could only apply to the case where the entire property in the land held by the tenants in common has been mortgaged. If however that provision is intended - as it evidently is - to protect the mortgagee it can scarcely be interpreted as applying to the kind of mortgagee who, upon the common law principle as enunciated in Sinclair v. James⁽¹⁾, needs no such protection. On the other hand the mortgagee of the undivided share who, upon the same authority, stands at risk of having the nature of his security altered and who might therefore be said to need protection is not - as the law then stood - to have even such protection as might be afforded him by obliging his mortgagor to join him as defendant in the action. I cannot agree therefore that the words "where any property and land is held" etc. which appear in Section 2 are to be interpreted as meaning: "where the whole of any property is held" etc. for as Mr. Ching observes, that would in effect reverse the situation as it existed at common law and it would need the clearest words to provide the proof of an intention to affect so radical a change. It may be said, however, that a distinction ought to be drawn between the case where the applicant for partition is himself the mortgagor of his own share and the case where, as here, he has no connection with the mortgage or the mortgagee whatsoever. Once again, however, I believe that if that had been the intention nothing would have been simpler than to have said so :

"... no proceedings under this Ordinance shall be instituted by the mortgagor of an undivided share ..."

or some such phrase would surely have been employed. But in any event I do not see that any valid distinction can be drawn between the need to protect a plaintiff's mortgagee of an undivided share and the need to protect any other such mortgagee once it be assumed that the whole purpose of the provision is to draw the mortgagee of any such share into the action as a party with an interest to protect.

2. There is another consideration which bears upon the problem from a somewhat different angle. As Mr. Ching points out there is a certain ambiguity in the reiterated phrase: "where any property in land is held ..." which appears in Section 2 and in Section 3(1) and which is reflected again in Section 3(2) in the phrase :"where any property held in the manner referred to in Section 2 ...". On its first appearance in Section 2 it can scarcely mean anything other than "where any land is held by two or more persons ... as ... tenants in common ..." etc. If it be read as "any estate or interest in land" then the only estate or interest with which we are concerned is the estate represented by the undivided share of a tenant in common. But it cannot mean "where any undivided share in land is held ..." etc. in common because each such share is held in severalty. The same reasoning would seem to apply to Section 3(1) and I would think also to Section 3(2). At first sight this might seem to support the contention that the mortgage or charge must be one resting upon the whole of the property held in common in the sense that the land itself is, in the instrument of charge, expressed to be the security and not, as in the present case, any individual share or proportion of shares therein. But I think Mr. Ching is right when he points to a further ambiguity. Both in the court below and upon the hearing of the appeal counsel in the course of argument resorted frequently to the notion of a mortgage upon the whole of the property as distinct from that upon a part. But strictly speaking there can only be said to be a mortgage upon the whole of the property where, as in Sinclair v. James⁽¹⁾, the land which has passed to the tenants in common has come to them already charged in its entirety by the former owner. In that case, although they take as tenants in common of the equity of redemption the mortgage rests directly upon the land and it is the entire and unshared estate in the land which has been made the security. But when a tenant in common executes a mortgage he can only charge the land to the extent of his individual share. There can be no question of his charging or mortgaging a part of the land; on the other hand when he does mortgage his individual share it is the whole land which then stands charged in security for his debt - but only to the extent of that share. No doubt tenants in common might combine to give a mortgage of the "whole property" in the sense that they could agree that the sum total of their undivided shares should stand charged but I cannot see why the restriction upon the institution of proceedings created by Section 3(2) should be limited to that case. If each one had mortgaged his share separately it might in that case also be said that the "whole property" was subject to mortgage but yet the wording of the subsection, applied to such a case, would seem clearly to inhibit the proceedings upon the non-concurrence of even a single mortgagee. Whichever way one looks at it I do not think it is possible to read Section 3(2) as requiring less than the concurrence of any mortgagee with subsisting rights over the land before an action for partition can be instituted.

3. It is true that the mortgagees in the present case would stand in little danger of suffering a diminishment in the value of their security despite the alteration of its nature which would follow upon sale. If the figures mooted in the various affidavits give a fair and realistic indication of the present market value of the property the prospect of the mortgagors being unable to repay, following upon a sale, may be discounted. There may, no doubt, be an element of unreality - or even of absurdity as the Chief Justice thought - in a situation which would permit a reluctant tenant in common to frustrate partition or sale by a timely and collusive mortgage of his share. It is however not suggested that anything of that kind has happened here and the reluctant tenants in common can scarcely be blamed for taking the law as they find it and insisting upon it to the letter. In my view the appeal must be allowed.

Representation:

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO. 15 OF 1975

(On Appeal from Original Jurisdiction Miscellaneous Proceedings No. 118 of 1974)

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Coram: Full Court (Huggins, McMullin and Trainor, JJ.)

Date of Judgment: 23rd-25th June, 1975 at 10 a.m.

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JUDGMENT

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Trainor, J.:

This is an appeal from a decision of the learned Chief Justice whereby he ordered a sale, pursuant to the Partition Ordinance, Cap.352, of the premises 136 and 138 Queen's Road Central, Hong Kong.

2. The plaintiff in the Court below (the first respondent before this Court) is a tenant in common, to the extent of about 60%, with the 1st and 2nd defendants (the 1st and 2nd appellants), they being entitled to different extents, in the residue of a term of 999 years in a Crown lease of the premises. The premises were sub-let to The Lin Heung Tea House in 1928 which in turn sub-let the ground floor of the premises No.138 to the Yu Wah Company. What the terms of the sub-lease to the Lin Heung Tea House, or its sub-lease to Yu Wah Company, are is not revealed in any document before the Court, nor was the Court informed (there is a reference in one affidavit to a monthly income, suggesting a monthly tenancy), but it was common case that the Lin Heung Tea House was entitled to the protection of the Landlord and Tenant (Consolidation) Ordinance. It might be noted here that while Part 1 of the Ordinance gives protection to the tenants and sub-tenants of property to which the part applies nevertheless Section 4 provides for the exclusion of such property by the Governor either on terms, such as to compensation, or otherwide in his absolute discretion. I would incline to the view that the Ordinance does not affect the issue in this case, but having regard to my conclusion on the appeal I do not propose to express any considered opinion on the point.

3. On the 17th November, 1973 the first appellant mortgaged it interest to Yen Chi-ren, one of the 2nd appellants, the redemption date of which mortgage is the 16th November, 1983. On the 10th December, 1973 the 2nd appellants mortgaged their interest to the 3rd appellant, the date of redemption of which mortgage is the 9th December, 1985. On the 21st December, 1973 and 2nd appellants again mortgaged their interest, this time to the 4th appellant. The redemption date of this mortgage is the 20th December, 1976.

4. By a summons dated the 18th March, 1974 the first respondent sought an order for sale under the Partition Ordinance of the leasehold property and other consequential relief, citing the Attorney General, the 2nd respondent, as a party, as provided in the Ordinance.

5. There are two grounds of appeal:

6. I propose to deal with the second ground, argued by Mr. Swaine, and initially with a point raised by him: that an order for sale may only be made under Section 6 of the Ordinance where an order for Partition might be made.

7. Section 6(1) reads:

"In any proceedings under this Ordinance, where it appears to the Court that a partition of the property would not be beneficial to all the persons interested by reason of -

the Court may make an order for the sale of the property."

8. I do not intend to traverse the arguments of Mr. Swaine or the other learned counsel in the case on this point. I think the language of the sub-section is clear. It means that a Court hearing an application for sale must first decide if a partition could be ordered, because it is only when it does so can it decide whether or not it would be beneficial or otherwise to all the persons interested. The Partition Act, 1868, to which I shall later refer, is even more explicit on this.

9. Mr. Swaine argued that in the instant case a partition may not be ordered for the reasons given in the second ground of appeal: the first respondent's interest is in reversion and not in possession. In support of this he cited a number of cases, and quoted a number of learned authors.

10. It might be of interest briefly to trace the history of partition in English law.

11. Originally only coparcaners were entitled to partition, and with regard to them Coke wrote in his commentaries on Littleton (167(a)):

"..... Now of what inheritance partition may be made by the writ of partitione facienda' may partly appear by that which hath been sayd. Moreover, it is to be observed that the words of the writ 'de partitione facienda' be 'quod cum eaedem A and B insimul et pro indiviso tenant tres acras cum pertinen etc' and note that this word (tenet) in a writ doth always imply a tenant of the freehold. And therefore if one coparcener maketh a lease for years yet a partition doth lie."

12. To stop there for a moment it will be noted that according to Coke partition may be ordered on the application of a coparcener even though a tenant for a term of years occupies the land.

13. He continues:

"But if one or both make a lease for life, a writ of partition do not lye between them; because non insimul et pro indiviso tenant, they do not hold the freehold together and the writ of partition must be against the tenant of the freehold ....."

14. By the Act 31 Hen.8 C.1 the right to partition was extended to joint tenants and tenants in common in any estate or estates of inheritance "in like manner and form as coparceners by the common laws have been and are compelled to do .....". This was further extended by the Act 32 Hen.8 C.32 to include tenants whose interest was for life or for years, but that act provided that partition should not be prejudicial to any person, their heirs or successors other than such as were parties to the partition. By the Partition Act, 1868 (31 and 32 Vict. Cap.40) it was provided that:

"In a suit for partition where, if this act had not been passed, a decree for partition might have been made then if it appears to the Court that by reason of the nature of the property ....., the number of the parties interested ..... or any other circumstance, a sale ..... would be more beneficial for the parties than a division of the property between ..... them, the Court may, if it thinks fit ..... direct a sale ....." (S.3)

15. Thus after the passing of the Partition Act, 1868 the law in England was that freehold and leasehold property was liable to partition or sale subject to the partition not being prejudicial to third parties who were not parties to the partition. In Hong Kong the position remained governed by the acts of Henry 8.

16. It will be seen that the antipathy that always existed to multiple contemporaneous ownership of different interests in property, undefined as to the physical portion of the individual owner, developed, not with undue haste, until the position was reached where any property owned by co-owners would be partitioned on the application of one or more of them; or sold (despite the dissent or disability of the others) if the Court considered that to be more beneficial.

17. On the enactment of the Partition Ordinance, Cap.352 in 1969 the Acts 31 Hen.8 C.1 and 32 Hen.8 C.32 ceased to apply to Hong Kong.

18. It was against this background that Mr. Swaine argued that under the old law in England partition would have been refused in the instant case; that the laws of partition in England i.e. the two acts of Henry 8, once applied here; that the development of the concept of partition in Hong Kong has been similar to that in England; and although the Partition Ordinance is what governs the position here nevertheless the philosophy behind the development in both places was the same.

19. The first respondent in the instant case, he argued, has an interest postponed to that of the lessees of the premises and is, therefore, a reversioner and not in possession. He referred to Daniel's Chancery Practice, 8th Edition, 1170 where it is stated that only a tenant in possession may apply for partition. He cited Lord Hatherly, L.C. in Evans v. Bagshaw (1869-70) 5 Chancery 340, 341 where he says:

"The case therefore falls within the ordinary rule that the Court will not allow a partition suit to be maintained by a reversioner. This rule is not merely technical, but is founded on good sense in not allowing the reversioner to disturb the existing state of things. There might be a tenant for life of the whole, and several tenants in common in reversion, in which case the inconvenience would obviously be great. At all events, the rule is unquestionably settled."

20. The plaintiffs in the Evans case were: a married woman entitled in common to an estate in fee in the property to the extent of one-sixth, her husband and their mortgagee. At the time of the mortgage the interest of the husband, who as such was entitled to a life interest in his wife's estate, was bankrupt and, therefore, all his interest was vested in his assignee in bankruptcy. The case was dismissed on the grounds that the wife was merely entitled to an estate in reversion on the death of her husband, and his life interest was vested in the assignee in bankruptcy at the time of the mortgage. It was sought to remedy the position by the mortgagee buying in the life estate from the assignee in bankruptcy and amending the proceedings, but it was held that the plaintiffs could not carry on the proceedings based on a title different to that originally stated.

21. Mr. Swaine also cited Cass v. Wood (1874) 30 L.T. (N.S.) 670. I can get no help from this case as reported. It is true that it was held that the Court had no jurisdiction to order a sale under the Partition Act but in his judgment Sir George Jessel went on to say:

"A Petition will have to be filed under the Leases and Sales of Settled Estates Act."

In that case the property sought to be partitioned had been devised to trustees upon certain trusts. When a testator indicates an intention that the property he devises shall be held on specified trusts a court will not order partition if it would override his intention (see Taylor v. Grange (1880) 15 Ch.165; Biggs v. Peacock (1882) 22 Ch.284) and it is impossible to say from the judgment whether the Court refused to partition because of the trusts, or because of lack of an estate in possession in the applicants, as suggested by Mr. Swaine. The named defendant would appear to be one of the trustees of the will.

22. I find another case cited by Mr. Swaine to be of little help, Morrison v. Morrison (1917) Dom. L.R.677. In that case a widow in Ontario, Canada had a right to dower in the estate of her deceased husband under the provisions of the Dower Act. She was also entitled under the Devolution of Estates Act. On her application for partition the learned Chief Justice who tried the case pointed out that on the death intestate of the husband his estate devolved on his personal representatives and not his heirs; the widow had not taken out representation. He held that only the person who could compel partition might apply for it, and that unless and until the widow elected to take under the Dower Act and not the Devolution of Estates Act she was not such a person. As I understand the decision it was that her application was refused not because she was a reversioner but that she had no vested interest at all.

23. Cantwell v. Hassard (1858) 7 Irish Chancery Rep.370 was also cited. That was a case where a lease for lives renewable for ever was granted by coparceners. The reversion devolved as to one third on the plaintiff, the remaining two thirds being in the defendant. At the time the proceedings were brought, the lives in the lease had ceased to exist, it was said, and it was argued and, apparently accepted, that the lessee had therefore, merely a tenancy from year to year arising by operation of law. Partition was refused. The Lord Chancellor of Ireland in his judgment referred to the passage from Co. Litt which I have earlier quoted and said that by granting the freehold lease the coparceners had rendered the estate of the lessors indivisible. He went on to say, however, that although the tenant might only hold from year to year nevertheless he held a very substantial interest; the landlord having only "a dry reversion"; nothing but a rent issuing from the land. He further said that although a commission of partition was as much a right in a court of Chancery as was the old right of partition in a court of Law yet there was a qualification that the right of third persons not before the Court should not be prejudiced. (Obviously he had legislation in mind). He said:

"Now see the effect of that here. Behind the back of the parties claiming under the lease, and who have the real and substantial interest, we are pressed to make a separation of the interest out of which the covenant for perpetual renewal is to be satisfied. This might create very great embarrassment in obtaining future renewals and giving proper effect to the covenants."

24. It is difficult to decide from the judgment on what ground the learned Lord Chancellor refused partition. Was it because the grant of a freehold interest by the coparceners, leaving them only reversioners, had rendered their estate forever indivisible (even though the interest of the lessee later ceased to be freehold and only personality in the form of a tenancy from year to year) or was it because an order for partition might be prejudicial to parties not before the Court.

25. I do not think it is possible to conclude that he based his decision on the ground that the plaintiff had only a reversionary interest.

26. As I understand the Common law position as developed by Coke with regard to coparceners and extended by legislation that reversioners could not obtain partition, it is that when land is held (tenet) as to a freehold interest by co-owners and they grant a freehold estate out of it, e.g. an estate for life, they no longer hold (tenant) the freehold, "non insimul et pro indiviso tenant", they are out of possession. If what they grant is less than freehold, even a lease for 1,000 years, as this does not dispossess them, they hold insimul et pro indiviso, they could. Where a prior estate in freehold ceases to exist the estate reverts to the grantor. That would be the position where, by the failure of the lives conditional on which the freehold lease was to be renewed, a tenancy from year to year arises by operation of law; and the co-owners of the estate could partition. In other words Cantwell v. Hassard was decided not on the grounds that the plaintiff was a reversioner (he was in possession if it were established that all the lives had dropped) but because of the possible prejudice to third parties, the lessees, who had a neal and substantial interest but who were not before the Court. This view is, I think, supported by the reference made by the Lord Chancellor to North v. Guinan, Beatty 342:

"This case ..... is, in principle very much in point. There was a bill for a partition of a house in College Green, held under a lease for years, at a rent, the plaintiff and the defendant were entitled to the lessee's interest; Sir Anthony Harte refused to make a decree for partition saying: 'The present tenure is for the unexpired residue of a term of years, subject to a rent and covenants. The important interest in the estate is in the reversion."

In the Cantwell case it would appear then, that the Court decided that it would not entertain an application for partition, even though the applicant was in possession, where a person with "the substantial interest" was not before the Court.

27. I cannot get much assistance in the instant case from those cited, as in Evans v. Bagshaw the plaintiffs' interest was a reversion on a freehold interest, which is not the case here, and it is difficult to ascertain from the others whether the decisions were based on the ground that those seeking partition were not seized of an estate in possession, but in reversion, or on the statutory provision against ordering partition to the prejudice of absent, interested third parties.

28. I can see no difficulty in extending the principle that coparceners whose estate is postponed to a freehold estate, a state in possession, cannot obtain partition to the case of joint tenants and tenants in common "in an estate of inheritance" (31 Hen.8, C.1) it is so provided in the act by the words "in like manner and form as coparceners". However, it is the existence of a prior freehold estate which prevents the partition.

29. That is not the position in the case at Bar. The tenants in common in this case are only sub-lessors and it is on the existence of the further sub-lease granted by them that Mr. Swaine relies to justify his contention that the tenants in common are not "in possession", but only reversioners to the sub-lessees. His argument can, of course, only be based on analogy, because none of the parties have a freehold interest and none of them are in possession in the sense that no one holds (tenet) a freehold estate. Equally by analogy it could be argued that the owner of a leasehold interest for 999 years who is in receipt of rent from, and is entitled to determine a sub-lease on breach of covenant, or re-enter on the expiration of a term remains in possession.

30. The Act 32 Henry 8, C.32 only dealt with estates for life or for a term. At that time there can be no doubt that a co-tenant of a life estate subject to a lease could compel partition. Was it intended that a co-tenant of a term of years subject to a sub-lease was to remain deprived of his right to partition?

31. Mr. Swaine referred to the Australian case of Robinson v. Robinson (1902) N.S.W.R.197. That was a case where it was held that the existence of a sub-lease does not prevent the sub-lessors from obtaining a decree for partition. In it the learned Chief Justice of New South Wales asked the question "Can parties obtain partition of the portion subject to the sub-lease. The general rule is that only parties in possession can obtain partition"?

32. In his judgment he said:

"I have looked into the authorities and though the point does not appear to have been decided by English Courts, the tendency of the authorities seems to show that in the case of freehold estates only an estate in possession is necessary to support a present right to partition, and that therefore the existence of an outstanding lease for years is no objection to the making of a decree for partition. But it may very well be that the leaseholder is a necessary party to the suit, (a point not taken in the instant case) so that being served with the decree, if it became necessary to make a partition of the rents, he would be bound by the order."

He then went on to order an enquiry as to whether all the parties interested in the leasehold were before the court, and reserved further consideration.

33. Mr. Swaine argued that that case was wrongly decided; or at its strongest it is no more than persuasive.

34. In my opinion the decision of the learned Chief Justice of New South Wales was correct.

35. I think that the learned Chief Justice could not have had the case of Mason v. Keays (1898) 78 L.T.33 brought to his attention. If he had had he would have found in it considerable support for his view. That was an action for sale in lieu of partition. The plaintiff was the owner of one undivided moiety of leasehold premises which, he wished to have sold. The defendants were the owner of the other undivided moiety, Keays, and one, Ravet, who was in occupation of the premises. Keays in his Defence said he had no interest in the premises. Ravet in his Defence said he held a lease of one undivided moiety of the premises under an indenture of lease for seven years granted by Keays. In his judgment Rigby, L.J. said:

"The plaintiffs appear to be the owners of one undivided moiety of certain leasehold premises, which they wish to have sold, and certainly they make out a prima facie case for a sale unless it can be displaced. One of the defendants to the action is Ravet, whom it is alleged and admitted is a tenant of an undivided moiety of the property for an unexpired term of seven years. Is he as tenant of that undivided moiety a proper party to this action? I think undoubtedly he is ..... Then there being a proper plaintiff and a proper defendant, in the ordinary course the usual order would be made."

Chitty L.J. in his judgment said:

"..... The authorities show that a man in his position who holds an underlease for a long term of years in an undivided moiety of the property is not only a necessary party to a partition action, but could sue as plaintiff. Therefore I think that this action, so far as it claims a sale of this property in lieu of partition is properly constituted with Ravet as sole defendant, and that the plaintiffs are entitled to the usual order in these cases."

36. He might also have found support for his view in the case of Mayfair Property Co. v. Johnston (1894) 1 Ch.508.

37. If I may say so with respect I think Mr. Swaine was equating "possession" with "occupation" whereas in the relevant cases or writers to which he referred the word "possession" had its feudal implication that only freehold estates are in possession.

38. As I see it, then, the position after the Act 32 Henry 8 C.32, was:

"..... all joint tenants or tenants in common for a term of a year or years ..... shall be compellable by writ of partition ..... to make severance of all such ..... tenements which they hold jointly or in common ..... Provided always that no such partition shall be prejudicial or hurtful to any person or persons in, other than such which be parties unto the said partition ....."

By that Act a joint tenant or tenant or tenant in common of leasehold property was entitled as of right to partition subject to the protection afforded in it to third parties e.g. a sub-lessee. That, too, was the position in Hong Kong until 1969. When the Partition Ordinance was enacted the right to partition was in no way diminished and the proviso in the Act was retained in the Ordinance, in S.4(3).

39. S.3(1) of the Ordinance reads:

"Where any property in land is held in the manner referred to in section 2, any person interested in such property may institute proceedings ..... by way of an action for partition or sale."

40. What do the words "any property in land" mean? I consider them as used in that subsection to be the result of the draftsman's efforts to cover all the interests in land included in the Acts of Henry 8: freehold or leasehold. Accepting that meaning, as I do, then any leaseholder is entitled to seek partition, and the existence of a sub-lease does not deprive him of that entitlement.

41. I consider, therefore, despite the able and persuasive argument of Mr. Swaine, that were the appeal to rest on the second ground alone it must fail.

42. But there is the first ground of appeal. Mr. Ching contended that the existence of mortgage of the interest of a tenant in common prohibits the institution of proceedings for partition of the property without the concurrence of the mortgagee. He cited the relevant sections of the Ordinance as to when partition or sale may be ordered and who are necessary parties to proceedings where such an order is sought. It might perhaps be useful to cite now the relevant sections in question.

43. S.2 reads:

"subject to this Ordinance, where any property in land is held by two or more persons, whether as joint tenants or as tenants in common, the Court may:

44. Section 3(2) reads:

"notwithstanding anything contained in sub-section (1) where any property held in the manner referred to in section 2 is subject to any mortgage or charge, no proceedings under this Ordinance shall be instituted without the concurrence of the mortgagee or chargee.

(3) Proceedings under subsection (1) may be instituted against one or more of the persons interested without serving the other or others, and no defendant may object for want of parties, but the Crown shall be a necessary party to the proceedings."

45. It might also be useful to cite here sections 4 so far as it is relevant:

46. Section 4(1).

"In any proceedings instituted under this Ordinance the Court may, subject to sub-section (2), make an order for the partition of the property in land in any of the following ways -

47. Section 6(1) I have already quoted.

48. The basis of the appellants' case on the first ground of appeal could I think be stated as follows: a mortgagor cannot compel the redemption of a mortgage before due date and a court cannot order what the mortgagor cannot do; where land belonging to co-owners is mortgaged in its entirety, that mortgage cannot be redeemed against the will of the mortgagee and any transaction with the land, be it partition or sale, does not affect the mortgage because it remains attached to the property in toto. Such a mortgagee cannot be compelled to be a party to partition proceedings, he can stand back and say "do what you like; my security continues and remains unaffected". In other words such a mortgagee requires no protection, and the legislature did not have him in mind when it enacted s.3(2) of the Ordinance. On the other hand, the appellants say, the necessity to obtain the consent of a mortgagee to the institution of proceedings as provided in the subsection must relate to a mortgagee of an undivided share because his interest needs to be protected. His is a mortgage of the entirety but only to the extent of the mortgagor's interest. In the event of a partition of the land into aliquot parts his security no longer attaches to the entire property but only to that part allocated to the mortgagor; a much lesser security than the entirety. That being so the mortgagee of an undivided share needs to be safeguarded, and the legislature has provided that in the subsection by making his consent to the institution of proceedings a condition precedent.

49. As to the principle that an early redemption cannot be forced on an unwilling mortgagee I do not intend to say very much; it has long since been well established. There are the cases of Brown v. Cole (1845) 14 Sim.427; Bovill v. Endle (1896) 1 Ch.648; In re Metropolis Permanent Investment Building Society - Gatfields Case (1911) 1 Ch.698. All of these cases are authority for it. Neville J. in Gatsfields case at 706 said:

"The rule is stated in Fisher on mortgages 6 Ed. s.1404, as follows: 'Time (referring to the Statute of Limitations) will not run in the case of a common mortgage until the day of redemption has arrived; for the mortgagor cannot redeem before that day: Brown v. Cole'."

50. Again, Kekewich J. in Bovill v. Endle at 651:

"Then does Brown v. Cole make any difference? In my opinion it does not. That case decides that the mortgagor cannot, before the time limited for payment to the mortgagee expires, either insist on acceptance of a tender of the mortgage money or take proceedings to redeem. But that is because during that time the mortgage must remain as a security for the money advanced, and it is not competent for the mortgagee or the mortgagor to disturb that relation."

51. What then, is the position of a mortgagee of the entirety of land in partition proceedings. Can he be made a party and bound by any order made?

52. There is no doubt that on the authorities that prior to the Partition Ordinance he could not be made a party; and the result of the proceedings was a matter of indifference to his security.

"..... and, as I conceive, a property which is in mortgage, but which belongs to the owners of the equity of redemption in certain undivided shares, is capable of being made the subject of a partition action without touching or interfering with the mortgage at all."

53. Hall V.C. in Waite v. Bingley (1882) 21 Ch.674 at 681. In Swan v. Swan 8 Pr. 518 the judgment of the Court was:

"The Court cannot make a mortgagee (in the case, the mortgagee of the entirety) agree to a partition because he is entitled to the whole ....."

54. In Sinclair v. James (1894) 3 Ch.554 North J. at 556 had this to say:

"First, to take the case of the overriding mortgagees, I cannot see any reason why they should be parties to the action, and no partition of the interests of the person entitled to the equity of redemption can affect them. A partition of the equity of redemption cannot diminish or affect their rights."

55. What was the position of a mortgagee of an undivided share prior to the Partition Ordinance? In considering it one must have in mind the proviso with regard to the protection of third parties contained in 32 Hen.8 C.32.

56. I again refer to Sinclair v. James. That was an action for partition and sale of property which the co-owners had acquired, subject to an overriding mortgage. The plaintiff was entitled to an undivided share, and mortgaged it. He sought partition citing as parties the overriding mortgagees and the mortgagee of his own share. On motions by the different mortgagees to dismiss them from the suit North J. in dealing with the mortgagee of the plaintiff's share said:

"It cannot be said he has no interest in a partition of the property. His mortgage is a mortgage of an undivided third of an equity of redemption. If a partition were made he would be the mortgagee of a divided share and the nature of his security would be altered. But no action can be brought against him except an action to redeem."

57. He then went on to refer Gibbs v. Haydon 30 W.R.726, the decision in which, North J. said:

"..... has been taken as settled law ever since."

58. In that case Fry J. held that a tenant in common who had mortgaged his share to another tenant in common had:

"..... by his execution of the mortgage, lost his right to partition. As a general rule a mortgagor cannot enforce any right against the mortgagee unless he is at the same time prepared to redeem the mortgage."

59. To this the learned judge might have added "and the mortgagee consents to an early redemption".

60. The position then is perfectly clear so far as the mortgagee of the entirety is concerned; or when partition is sought by the mortgagor of an undivided share against the will of his mortgagee. What was the position when the applicant was the owner of an unencumbered undivided share and one of the shares of a co-owner was encumbered? Could he compel partition and force an early redemption on the mortgagee; or, alternatively, compel the mortgagee to be content with a lesser security? No authority has been cited on this nor could I find one in an intensive search. The only suggestion that he might is to be found by implication in s.2 of 32 Henry 8 C.32 - the proviso that no partition or severance shall be prejudicial or hurtful to any person who is not a party to the proceedings. This might suggest that a partition could be ordered which is hurtful to a person who is made a party to the proceedings (provided of course that the plaintiff is not a mortgagor opposed by his mortgagee).

61. But the position in Hong Kong is as established by the Ordinance and it is the Ordinance which has to be interpreted. The Ordinance does not purport to codify the law of partition, but to amend the law. In fact, as it rendered the acts of Henry 8 no longer applicable, and as the Partition Acts of 1868 and 1876 did not apply in Hong Kong, it did, to all intents and purposes, codify the law. But in interpreting it one can obtain assistance from the relevant cases such as Sinclair v. James to the effect that the interest of an overriding mortgagee is not effected by partition. The case for the first respondent is that it is only to such a mortgagee that s.3(2) refers. I do not think that to be so. Firstly I find those cases cited compellingly persuasive. If it is correct that the security of an overriding mortgagee cannot be affected by partition or, indeed, sale, as any sale must be subject to the mortgage, why should the legislature enact a subsection to give such a mortgagee the protection he does not require; such legislation would be fatuous. But to give protection to the person whose security would be adversely affected by partition makes good sense. There is nothing similar to s.3(2) in the English legislation which was applicable in Hong Kong at the time the Ordinance was enacted. If a mortgagee of the entirety did not require protection does it not appear logical to conclude that when the legislature introduced that subsection it intended to protect one who might otherwise be left with no worthwhile, or at least a considerably reduced security for his mortgage?

62. Further, there is the wording of the subsection itself. Taking, as I do, the words "any property in land" to mean "any freehold or leasehold" land and substituting those words for "any property" in the subsection the subsection might then read "..... where any freehold or leasehold land held by two or more co-tenants is subject to any mortgage ....." "Any mortgage", in my opinion, must connote an allowance for different sorts of mortgage. The words cannot, in my opinion, connote a number of mortgages similar in extent, i.e. a first, second or third mortgages on the entirety, because each of them is in the same position, differing only as to rank. Where there is a mortgage on land owned by co-tenants that mortgage attaches to all the land, whether the mortgage is of the entirety or of a co-tenant's interest. Therefore, in my opinion when the legislature referred to "any mortgage" it certainly had in mind a mortgage of an undivided share.

63. It was argued that s.7(2) provides all the protection on sale that the mortgagee of an undivided share requires. But that section only comes into operation after a sale has been ordered. What we are concerned with is the institution of proceedings. If a mortgagee of the entirety concurs with the institution of partition proceedings, and there is nothing to prevent him dong so, he is hound by the Court's order, and his mortgage is dealt with under the subsection if the Court, being satisfied that it might order partition, orders a sale; the position, in my opinion, is the same for the mortgage of an undivided share.

64. I would hold that these proceedings might only be instituted with the concurrence of the third and fourth appellants, and, accordingly, I would allow the appeal with costs to all the appellants in both Courts. The Attorney General does not seek costs.

Representation:

(1) (1894) 3 Ch. 554.