Cheng Sin Yau and Another v. Wong Kam Piu Dicky

HCMP 98/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 98 OF 2015

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J U D G M E N T
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1.This is a vendor-purchaser summons brought pursuant to s 12, Conveyancing and Property Ordinance (Cap 219). The relevant sale and purchase agreement was dated 23 December 2014 (“the S&P agreement”). Completion of the sale and purchase is scheduled for 12 March 2015. The plaintiffs are the vendors of the suit property, a residential unit at Whampoa Garden; the defendant is the purchaser.

2.This application raises the interesting question of how far can the court be asked to give its “blessing” to a transaction effectively only to give the parties thereto “comfort”.  The facts giving rise to this can be summarized as follows.

3.The plaintiffs became the registered owners of the suit property:

(a) since January 1989, together with their late father;

(b) since September 2001 (when their late father passed away).

4.Five charging orders (“the said orders”) have been registered against the suit property.  The latest registration (including re-registration) of the said orders was 8 December 1999 (about 15 years before the date of the S&P agreement).

5.The relevant provision of the Land Registration Ordinance (Cap 128) is s 17.  It provides:

“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” (emphasis supplied).

6.It is obvious from para 4 above the latest registration of the said orders fell on a date much longer than the time period prescribed in s 17, Cap 128.

7.Further, the said orders have their roots in two judgments: one dated 2 April 1990 and the other 17 December 1990 (“the said judgments”).

8.The statutory provision related to the said judgments is s 4(4), Limitation Ordinance (Cap 347).  It provides:

“An action shall not be brought upon any judgment after the expiration of 12 years from the date on which the judgment became enforceable … ” (emphasis supplied).

9.Again the time period between the said judgments (latest 17 December 1990) and the date of the S&P agreement far exceeds the prescribed period.

10.Despite the above, the S&P agreement contains (among others) a clause which in effect obliges the plaintiffs to make this application seeking in effect declarations that the said orders and the said judgments do not constitute any “blot on title”. 

11.Understandably the plaintiffs contend to that effect.  The correspondence concerning requisitions on title (especially the letter dated 19 December 2014) does not show the defendant’s ground(s) for saying that they can constitute such “blots”.  Defence counsel adopts a neutral stance in this application.

12.It is common ground a declaration is a discretionary relief.  In determining whether to grant a declaration, the following ought to be borne in mind:

(1) in exercising its discretion the court will consider whether any useful purpose would be served by granting declaratory relief: Tsang Yuen Ling v Incorporated Owners of Siu Lung Court [2001] HKEC 1121;

(2) a declaration will not be made against a person who has asserted no right nor formulated any specific claim: Re Clay [1919] 1 Ch 66 CA;

(3) similarly, a declaration will not be granted where there is no breach and no threat or intention to commit a breach of agreement: Mellstrom v Garner [1970] 1 WLR 603.

13.Further, the court of appeal, in refusing to grant a declaration, made the following observations in Fred Jackson v Attorney General, CACV 58/1979 (13 May 1980):

“Neither counsel in the present case in dealing with the Guaranty Trust Co. case [Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536] sought to urge the claims of any of the many later decisions in which that case has been considered. It is in the latest of those cases Malone v. Commissioner of Police (No. 2) [[1979] 2 WLR 700] however, that I find, in the judgment of Sir Robert Megarry V-C, a commentary upon this part of the judgment of Lord Justice Bankes which, to my mind, effectively explains it and limits the wide reach of the words used by that learned judge …

At page 707 the learned Vice-Chancellor says:

‘… True, a plaintiff who seeks such a declaration may have no cause of action; but it suffices if he is claiming “relief”. This, I think, means relief from “[some] real liability or disadvantage or difficulty” which affects him … ’

To my mind what the plaintiff was seeking in that case was in the nature of a purely advisory judgment of the court. No doubt if such declarations had been made they might have been of some practical use to the plaintiff inasmuch as he might have relied upon them …

… I do not think however that we have any right or authority to give such an advisory opinion. …” (emphasis supplied).

The court of appeal said later:

“I … consider that as judicial courts what we deal with are justiciable issues not mere questions of construction nor academic questions. There is no jurisdiction in the court to make a declaration in respect of a hypothetical or academic question nor to act in an advisory capacity whether between subject and subject … or between subject and the Crown … ” (emphasis supplied).

14.In making the above observations, the courts were mindful of the risk of “opening the floodgate” if the discretion were exercised differently.  Thus, the court of appeal said (quoting from Barnato, Deceased [1949] 1 Ch 258):

“… for the trustees this was a practical instant question, because, he said, without guidance from the court on this doubtful question, the trustees will be unable to act … Unfortunately, it is not only trustees who may find themselves in that kind of difficulty … Any ordinary subject may find himself in precisely the same difficulty, and if these trustees could ask the court to bring the Crown here … merely because they want guidance as to the ordering of their affairs, I can see no end to the litigation that would inevitably follow … ”.

15.The court of appeal also said (quoting from the Malone decision):

“I shall not discuss the engaging examples which emerged in argument, ranging from moral obligations to the decisions of referees in football matches. I shall only say that I cannot believe that the court could, or should, grant a declaration that, for instance, a referee was right (or wrong) in awarding a penalty kick … ”.

16.The above observations apply equally to this application.  In addition, in the context of conveyancing transactions, if an application such as the present were acceded to, there does not seem to be a sensible distinction between doing so, and a case (perhaps an extreme case) where the conveyancers seek the court to examine the whole conveyancing file and declaring its general “approval” (or “disapprove”) of the vendor’s title.

17.By reason of the above matters (namely, that the declarations sought herein are in the nature of an advisory judgment, and the risk of “opening the floodgate” if the declarations were granted), I decline to exercise my discretion (assuming the same exists) to grant the declarations sought herein.

18.As have been agreed between the parties, there will be no order as to the costs of this application.

Mr Kenneth Shum Ka Hei, instructed by Kevin Li & Co, for the plaintiffs

Mr Fung Pak Kay, instructed by Rene Hout & Co, for the defendant