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A A
B HCMP 166/2011 B
C C
IN THE HIGH COURT OF THE
D HONG KONG SPECIAL ADMINISTRATIVE REGION D
COURT OF FIRST INSTANCE
E E
MISCELLANEOUS PROCEEDINGS NO. 166 OF 2011
F ------------------- F
IN THE MATTER of ALL THOSE
G 14/4,805th of and in All Those pieces or G
parcels of ground registered in the Land
H H
Registry as Kwun Tong Inland Lot No. 276
and Kwun Tong Inland Lot No. 278 (“the
I I
Land”) and of and in the messuages
J erections and buildings thereon now known J
as “Century Centre” (hereinafter called “the
K Building”) TOGETHER with the full and K
exclusive right and privilege to hold use
L L
occupy and enjoy ALL THAT UNIT NO. 5
on 10th FLOOR of the Building (“the
M M
Property”).
and N
N
IN THE MATTER of Order 17 of the Rules
O O
of High Court, Cap. 4, Laws of Hong
Kong.
P P
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Q Q
BETWEEN
R R
The Incorporated Owners of Century Centre Plaintiff
S S
and
T T
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st
Bank of China (Hong Kong) Limited 1 Defendant
C C
The Hongkong and Shanghai Banking 2nd Defendant
D Corporation Ltd. D
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E E
Before: Hon Sakhrani J in Court
F F
Date of Hearing: 15 June 2011
G Date of Judgment: 27 June 2011 G
H H
I JUDGMENT I
J J
K 1. Pursuant to an order of Yam J made on 29 April 2009 obtained K
by the plaintiff in Miscellaneous Proceedings No. 328 of 2009 the plaintiff
L L
sold the property known as Unit No. 5, 10th Floor, Century Centre, Nos.
M 44-46 Hung To Road, Kowloon (“the property”) for HK$2,130,000. M
N N
2. The sale of the property was completed on 14 January 2011.
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3. These are interpleader proceedings taken out by the plaintiff
P P
against the 1st defendant (“BOC”) and the 2nd defendant (“HSBC”) who have
Q
competing claims to the balance of the proceeds of sale of the property. Q
R 4. By the order of Master Ho made on 29 April 2011 it was ordered, R
inter alia, that the plaintiff do within 14 days pay the net proceeds of sale into
S S
Court in the sum of HK$1,734,357.71 with interest if any. It was also
T ordered that the plaintiff be excused from further attendances before the Court T
and that an issue be tried before a judge.
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5. The issue to be tried as ordered by the master is: Who is the
C person entitled to the net proceeds of sale? C
D D
6. On 6 May 2011 the plaintiff paid the sum of HK$1,734,357.71
E into Court. E
F F
7. The plaintiff has no further interest in these proceedings and has
G
been excused from further attendance. G
H 8. BOC and HSBC each claim that it has the right to payment of H
the sum paid into Court in priority to the other. Both have registered
I I
charging orders against the property and the question to be determined is who
J has priority over the other. J
K K
9. The relevant facts are undisputed.
L L
10. BOC obtained a charging order nisi against, inter alia, the
M property on 12 June 2001 in enforcement of a judgment dated 1 December M
2000 in HCA 7501 of 2000. The charging order nisi was registered at the
N N
Land Registry on 14 June 2001.
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11. BOC’s charging order was made absolute on 7 July 2001
P P
(“BOC’s charging order absolute”). It was registered at the Land Registry
Q on 23 July 2001. Q
R R
12. HSBC obtained a charging order nisi against the property on 12
S
August 2002 in enforcement of an order dated 24 June 2002 in Miscellaneous S
Proceedings 1919 of 2001. The charging order nisi was registered at the
T T
Land Registry on 17 August 2002.
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13. HSBC’s charging order was made absolute on 27 September
C 2002 (“HSBC’s charging order absolute”). It was registered at the Land C
Registry on 18 October 2002.
D D
E 14. On 13 August 2005 BOC’s charging order absolute was E
re-registered at the Land Registry.
F F
G
15. On 7 September 2007 HSBC’s charging order absolute was G
re-registered at the Land Registry.
H H
16. On 29 September 2010 BOC’s charging order absolute was
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re-registered at the Land Registry.
J J
17. Ms Sit, for BOC, contended that BOC’s charging order absolute
K K
has priority over HSBC’s charging order absolute so that an order should be
L made that the amount paid into Court by the plaintiff should be applied in the L
following priority:
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(1) in discharge of what shall be due to BOC under the BOC’s
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charging order absolute; and
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(2) the balance if any, in discharge of what shall be due to HSBC
P P
under the HSBC charging order absolute.
Q Q
18. Mr Pao, for HSBC, contended that HSBC’s charging order
R R
absolute has priority over BOC’s charging order absolute and that the whole
S
amount paid into Court by the plaintiff should be paid out to HSBC there S
being no dispute that the amount outstanding under HSBC’s charging order
T T
absolute far exceeds the amount paid into Court.
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19. The answer to the question of which charging order has priority
C over the other turns upon the proper construction of the relevant provisions of C
the Land Registration Ordinance (Cap. 128) (“the Ordinance”).
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E 20. It is important to bear in mind the relevant principles of statutory E
construction which are not disputed.
F F
G
21. The starting point in statutory interpretation must always be the G
ordinary linguistic meaning of the words used (per Litton NPJ in Chan Tin
H H
Shi & Others v Li Tin Sung & Others (2006) 9 HKCFAR 29 at paragraph 10).
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22. On the question of statutory interpretation, Bokhary PJ in
J Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at J
page 152 said
K K
“ Statutory interpretation
L The issue before the Court is one of statutory interpretation. There L
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
M purpose would be served by attempting to catalogue, let alone M
calibrate, all of them. But a proper appreciation of the law’s history
N
being essential to its structured and enlightened development, it is N
worthwhile noting that historically the most significant rules of
statutory interpretation appear to have been:
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(i) the “literal rule” which accorded primacy to the literal meaning
of the language used in the legislation unless and until some
P other factor or factors demonstrated that some other meaning P
represented the true intention of the legislature;
Q (ii) the “golden rule” which was that, whatever the literal meaning Q
of the language which the legislature used, there was a
presumption that it did not truly intend to bring about an absurd
R result; and R
(iii) the “mischief rule” which presumed that the legislature has
S targeted a particular mischief and provided a remedy for it. S
These old rules are of a complementary nature or at least have the
T potential for complementing each other. Elements of each of them T
can still be found in how the courts interpret statutes nowadays.
And the modern tendency to give statutes a purposive construction
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may, I think, be viewed as being to an appreciable extent a
development from the mischief rule in particular.”
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D 23. With those observations I turn to the relevant provisions of the D
Ordinance.
E E
F
24. The purpose of the Ordinance is to provide for the registration of F
deeds, conveyances, judgments and other instruments affecting real or
G G
immovable property, the keeping of Land Registry records and for other
H
matters relating to land registration. H
I 25. Section 2(1) provides that the Land Registry shall be a public I
office for the registration of, inter alia, deeds, conveyances, judgments and
J J
other instruments in writing affecting land in Hong Kong.
K K
26. It is provided by section 2(2) that judgments include judgments
L L
and orders of, inter alia, the Court of First Instance.
M M
27. Section 3 which deals with the priority of registered instruments
N and the effect of non-registration provides N
O
“3. Priority of registered instruments; O
effect of non-registration
(1) Subject to this Ordinance, all such deeds, conveyances,
P and other instruments in writing, and judgments, made, executed, or P
btained, and registered in pursuance hereof, shall have priority one
Q over the other according to the priority of their respective dates of Q
registration, which dates shall be determined in accordance with
regulations made under this Ordinance.
R R
(2) All such deeds, conveyances, and other instruments in
writing, and judgments, as last aforesaid, which are not registered
S shall, as against any subsequent bona fide purchaser or mortgagee S
for valuable consideration of the same parcels of ground, tenements,
or premises, be absolutely null and void to all intents and purposes:
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………………………………………………………………………..”
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28. It seems to me to be plain that section 3(1) deals with the order of
C priority of the deeds, conveyances, instruments in writing and judgments C
registered in the Land Registry whereas section 3(2) deals with the effect of
D D
non-registration.
E E
29. Priority is determined by the respective dates of registration of
F F
the deeds, conveyances, instruments in writing and judgments (section 3(1)).
G G
30. The effect of non-registration is that all such deeds, conveyances
H H
and other instruments in writing and judgments which are not registered shall,
I as against any subsequent bona fide purchaser or mortgagee for valuable I
consideration of the same property be absolutely null and void to all intents
J J
and purposes (section 3(2)).
K K
31. Section 4 provides that no notice whatsoever, either actual or
L constructive, of any prior unregistered deed, conveyance or other instrument L
in writing or judgment shall affect the priority of any such instrument as is
M M
duly registered.
N N
32. Thus it is clear that the question of priority is to be determined in
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accordance with section 3(1). Even if one were to have actual or
P constructive notice of any prior unregistered instrument or judgment affecting P
land section 4 clearly provides that this does not affect the priority of
Q Q
instruments or judgments which are duly registered.
R R
33. Section 17 of the Ordinance provides
S S
“ 17. Expiry and re-registration
T T
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
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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
C C
date of re-registration.”
D D
34. The first part of section 17 provides that the registration of a
E judgment, order or lis pendens shall cease to have effect at the end of 5 years E
from the date of registration. This clearly provides that the protection
F F
provided by registration does not last forever. At the end of 5 years from the
G date of registration the registration ceases to have effect. G
H H
35. The second part of section 17 provides that the judgment, order
I or lis pendens may be registered from time to time and if so re-registered, I
shall have effect for 5 years from the date of re-registration. It does not set
J J
out or state what the effect is. It only provides that it shall have effect for a
K period of 5 years from the date of re-registration. K
L 36. Ms Sit submitted that the provision for re-registration in L
section 17 is a means for the judgment creditor or chargee to protect himself
M M
against the lapse of the effect of registration so that as long as he re-registers
N N
from time to time he will continue to be protected.
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37. Mr Pao submitted that section 17 provides that at the end of 5
P years from the date of registration a judgment, order or lis pendens ceases to P
have any effect. The judgment, order or lis pendens may be re-registered
Q Q
from time to time but if re-registered it shall have effect for 5 years from the
R date of re-registration. It was his contention that when BOC re-registered R
the BOC’s charging order absolute the effect of the re-registration only
S S
commenced from the date of re-registration. Mr. Pao submitted that the
T consequence of this was that BOC’s charging order absolute had lost its T
priority over HSBC’s charging order absolute.
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38. I am unable to accept Mr Pao’s submissions.
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39. In considering what the word “effect” means in section 17 one
D D
must consider the provisions of the Ordinance.
E E
40. I would observe that section 18 which deals with the effect of
F F
registry and re-registry provides that every lis pendens registered or
G
re-registered and also every judgment or order re-registered shall have the G
same force and effect as a judgment registered and not further or otherwise.
H H
41. That brings us back to section 3 which clearly provides what the
I I
effect of registration and non-registration is.
J J
42. The effect is that by section 3(2) the documents not registered
K K
shall as against any subsequent purchaser or mortgagee for valuable
L consideration of the land be absolutely null and void to all intents and L
purposes. It shall be null and void only against subsequent and not
M M
antecedent purchaser or mortgagee for valuable consideration of the land.
N N
43. Ms Sit helpfully took me through the legislative history of the
O Ordinance. O
P P
44. Sections 17 and 18 of the Ordinance first appeared as sections
Q 17 and 18 of the Land Registration Ordinance 1844 (“the 1844 Ordinance”). Q
R R
45. Section 17 of the 1844 Ordinance provided that
S “ 17. So much of the said Acts of Parliament and of the Acts of S
Parliament 3 & 4 Victoria, chapter 82, and 18 & 19 Victoria, chapter
T 15, as requires the re-registering of judgments and lites pendentes T
after every successive period of five years, beginning from the entry
thereof respectively, shall extend to all judgments, lites pendentes
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and orders, registered in the Land Office, and by which it is intended
to affect any estate.”
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D 46. Section 18 of the 1844 Ordinance provided that D
E “ 18. Subject to the provisions of section 11 of the Act 18 & 19 E
Victoria, chapter 15, for the relief of purchasers and mortgagees for
valuable consideration against the judgments, Crown debts, and
F liabilities of paid-off mortgagees (which provisions are hereby F
extended to this Colony), every lis pendens registered or
G
re-registered, and also every judgment or order re-registered in G
manner aforesaid, shall have the same force and effect as a judgment
registered and not further or otherwise.”
H H
47. Section 17 of the 1844 Ordinance referred to and incorporated
I I
the relevant provisions of the English Acts of Parliament 2 & 3 Vict. c.11
J J
[Judgments Act 1839], 3 & 4 Vict. c.82 [Judgments Act 1840] and 18 & 19
K
Vict. c.15 [ Judgments Act 1855]. K
L 48. Those provisions have been considered in Beavan v The Earl of L
Oxford (1855) 6 De G. M. & G. 492 and Shaw v Neale [1858] 6 HL Cases
M M
581 which support BOC’s contentions.
N N
49. In Beavan the question related to the priority of three judgment
O O
creditors. Taylor’s judgment was registered on 27 January 1849 and
P re-registered within 5 years on 26 January 1854. Brockell’s judgment was P
registered on 19 August 1841, re-registered on 27 February 1847 and again
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after 5 years on 20 April 1852. Corfield’s judgment was registered on 5
R September 1848, and re-registered after 5 years on 28 November 1854. R
S 50. Brocknell and Corfield had in the year 1849 priority over Taylor S
and the question was whether they lost that priority by not having
T T
re-registered within 5 years.
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51. It was held that Brocknell and Corfield did not lose their priority
C to Taylor. C
D D
52. The Lord Chancellor said at page 498
E E
“ It was contended on behalf of Mr. Taylor that though when he
first registered his judgments, on the 27th of January 1849, Corfield
F whose judgment was registered in September 1848 and (subject to F
an observation I will presently advert to) Brockell whose judgment
was registered in February 1847 had by the statute precedence over
G G
him, yet that precedence was lost when within five years after the
27th of January 1849 they suffered more than five years to elapse
H from the dates of their respective registrations. The meaning of the H
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
I period to give priority to all judgment creditors then duly appearing I
on the registry. This is not the construction which I put on the Act.
J The object of the enactments was to give security to purchasers J
mortgagees and creditors by enabling them to ascertain whether the
lands of the person from whom they are purchasing or taking a
K mortgage or judgment are subject to any prior [499] judgment. If a K
judgment once registered were to bind a subsequent purchaser after
L
any lapse of time the search must be indefinite, and must necessarily L
occasion great and almost insuperable difficulties. To obviate this
the statute provides that no intended purchaser, mortgagee or
M creditor need search for more than five years, requiring at the end of M
that time re-registry in order to affect purchasers mortgagees or
creditors.
N N
The question is what is the effect of an omission to re-register in
its operation on previous purchasers mortgagees or creditors? I
O think it has no operation at all. When once a person has become a O
purchaser mortgagee or creditor with notice on the register of an
P existing judgment, he knows that such a charge exists and has no P
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
Q give him a chance of improving his title by the possible subsequent Q
neglect of a judgment creditor to re-register. Such neglect will of
course deprive the judgment creditor of his rights against subsequent
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purchasers mortgagees or creditors becoming so before any
re-registry has taken place, and so will operate as a protection to
S them; but there could be no object in protecting those who had S
thought fit to become purchasers, mortgagees or creditors in spite of
a judgment of which the register had already apprized
T T
them. ……………………………………………………………
……………………………………………………………………..…
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The sole object of registering and re-registering is to enable persons
C C
intending to become purchasers mortgagees or creditors to ascertain
how far it may be prudent in them to do so having regard to existing
D judgments. When once the transaction whether of purchase D
mortgage or loan has been completed, the necessity for a register has
to those interested in such completed transactions altogether ceased.
E My opinion therefore is that, treating Brockell and Corfield as being E
both duly on the register within five years prior to January 1849
F when Taylor first registered his judgment, they had a priority which F
was not affected by their subsequent omission to register at the end
of five years.”
G G
H
53. Section 4 of the Act 2 & 3 Vict. c. 11 [Judgments Act 1839] H
provided
I I
“ And be it enacted, That all judgments of any of the Superior
J
Courts, decrees or orders in any Court of Equity, rules of a Court J
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
K the reign of Her present Majesty have been registered under the K
provisions therein contained or which shall hereafter be so
registered, shall after the expiration of five years from the date of
L L
the entry thereof, be null and void against lands tenements and
other hereditaments as to purchasers mortgagees or creditors
M unless a like memorandum or minute as was required in the first M
instance is again left with the Senior Master of the said Court of
Common Pleas within five years before the execution of the
N conveyance settlement mortgage lease or other deed or instrument N
vesting or transferring the legal or equitable right title estate or
O interest in or to any such purchaser or mortgagee for valuable O
consideration, or as to creditors, within five years before the right
of such creditors accrued, and so, toties quoties, at the expiration
P of every succeeding five years, and the Senior Master shall P
forthwith re-enter the same in like manner as the same was
originally entered; and such officer shall be entitled for any such
Q Q
re-entry to the sum of one shilling.”
R R
54. When dealing with the question whether Taylor’s judgment was
S entitled to priority over the judgments of Brocknell and Corfield, Turner LJ S
said at page 505
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“ This question seems to me to depend wholly upon the
enactment contained in the statute 2 & 3 Vict. c. 11, s. 4, [505] for
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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
D circumstances under which re-registered judgments are to be D
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
E as follows :—(His Lordship read the section set out above.) E
The question now raised upon this section is, whether a
F F
judgment prior on the registry, but not duly re-registered, is, by the
section, made void against a subsequent judgment, which has been
G duly re-registered; for there is nothing to take away the priority of G
the antecedent judgment, unless this section has made it void
against the subsequent one. My opinion has fluctuated upon this
H H
point; but the conclusion, at which I have ultimately arrived, is,
that the enactment has no such operation. The section may well
I be divided into two parts—the first part enacting that registered I
judgments shall be void after the expiration of five years, unless
re-registered; the second part providing the means by which they
J may be kept on foot after that period has expired. It is clear that J
the words “purchasers,” “mortgagees” and “creditors,” as used in
K
this second part of the section, were meant to apply and can apply K
only to purchasers, mortgagees and creditors becoming so
subsequently to the date of the registered judgment; and I think
L that it would not be a sound construction of the statute to give a L
more extended construction to the same words as used in the first
part of the section. To read the words “purchasers,”
M M
“mortgagees” and “creditors” in the first part of the section as
extending both to antecedent and subsequent purchasers,
N mortgagees and creditors, when, in the latter part of the same N
section, they must be read as applying to subsequent purchasers,
mortgagees and creditors only, is in itself no little difficulty; but
O the case [506] presents a still further difficulty. We are here O
dealing with judgments, which are charges upon estates, and if this
P enactment makes an antecedent judgment not duly re-registered P
null and void against a subsequent judgment, its operation will be
not only to convert a right to foreclosure into a mere right to
Q redeem, but, if full effect be given to the words of the enactment, Q
absolutely to destroy the right of redemption; and surely a very
strong and clear expression of the intention of the Legislature must
R R
be required for such purposes.
S For these reasons, I think that the true meaning of this S
enactment is, that judgments not duly re-registered shall be void
against subsequent purchasers mortgagees and creditors; and this
T construction, as it seems to me, will work out the purposes of the T
Act. Each purchaser, mortgagee or creditor will be bound to
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search only for five years; and judgments not registered or
re-registered within that period will be void against him.”
C C
D 55. Beavan was approved by the House of Lords in Shaw. D
E 56. The Lord Chancellor said at page 605 E
F “ … the intention of the Legislature is clear and apparent, and that a F
sensible interpretation may be put upon the provision. I have no
G doubt whatever that what the Legislature intended was this, to give G
to a registered incumbrancer the benefit of that registration during
the five years in which it endured, and to render it a protection to
H him against any purchasers, mortgagees, or creditors, who might H
become so during the currency of the period of registration. And
so with respect to re-registration, and toties quoties at the end of
I I
every five years when registration is required; so that according to
my view of the construction of this provision, if, after the
J expiration of the first five years, the incumbrancer omitted to J
re-register, and in the intervening period before his re-registration
a person became a mortgagee or purchaser of the estate, that
K subsequent re-registration would not prevail against such mortgage K
or purchase, but that mortgage or purchase would have priority
L over the incumbrance which the party had failed to re-register L
within the term, and so advantage would be given to other parties
to intervene and to obtain the benefit as of prior security.”
M M
N
57. Lord Cranworth said at page 613 N
“ Now, my Lords, having looked carefully again at the case of Beavan
O O
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
P entirely adhere; and I think that a little light may be thrown upon it P
by just seeing what would be the construction of the statute if we do,
what in construing a doubtful instrument we very commonly do,
Q namely, transpose the different members of the sentence. Then it Q
seems to me that the matter is perfectly clear. The enactment is that
R all judgments which shall hereafter be registered in the mode pointed R
out “shall after the expiration of five years from the date of the entry
thereof, be null and void against lands, tenements, and other
S hereditaments, as to purchasers, mortgagees, or creditors, unless a S
like memorandum or minute as was required in the first instance is
T
again left with the Senior Master of the said Court of Common Pleas T
within five years before the execution of the conveyance, settlement,
mortgage, lease, or other deed.” The question is whether, if a like
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memorandum is not left within five years, the former register
becomes null and void against a previous purchaser, as to whom it
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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:
D That all judgments which are to be registered shall be null and void D
against lands, tenements, or hereditaments, and so, as to purchasers,
mortgagees, or creditors, after the expiration of five years from the
E date thereof. Now it is quite clear that although that is not the order E
in which the different members of the sentence occur, that is plainly
F what is meant, and what must have been meant; because otherwise F
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
G entered into the mind of any person framing a law, because the result G
would be, that the object of the statute being to take care that all
persons advancing money shall have the means of knowing whether
H H
there are prior charges or not, although a person has purchased
knowing that there is this prior charge, the subsequent default of a
I formal act, which, as to him, was a mere formal act, is to better his I
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
J affected by notice of prior judgments. The Legislature has very J
properly, I think, cut the knot and said there shall be no question of
K notice; the only notice available shall be notice upon the register. K
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;
L because when you have once had notice, you know that there is an L
incumbrance upon the property, and there it will remain until it is
M
paid off.” M
N 58. Section 17 of the 1844 Ordinance was amended in 1992 by the N
Land Registration (Amendment) Ordinance (Ord. No. 56 of 1992) to the
O O
current section 17 of the Ordinance. I agree with Ms Sit that the 1992
P amendments replaced the old language with modern terminology and the P
substantive parts of section 17 of the 1844 Ordinance have not been altered.
Q Q
R 59. Mr Pao submitted that the contentions of BOC should not be R
accepted as by the 1992 amendments the Legislature could have but did not
S S
adopt clear express language as it did when enacting section 36 of the Land
T Titles Ordinance (Cap. 585) which has not yet come into operation. T
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60. Section 36 of the Land Titles Ordinance provides
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“ (1) Subject to subsections (2), (3) and (4)—
D (a) the registration of a charging order shall cease to have D
effect immediately upon the expiration of 5 years
E from the date of registration of the order but the order E
may be re-registered from time to time and, if so
re-registered, the re-registration of the order shall
F have effect for another 5 years from the date of F
re-registration; and
G G
(b) if the re-registration of a charging order is made
before the expiration of a current period of
H registration or re-registration of the order, then the H
order shall retain its original priority.”
I I
61. In my view section 36 of the Land Titles Ordinance provides no
J J
assistance to HSBC. The reason why section 36 was so drafted can be found
K in the LC Paper No. CB(1)2501/02-03(03) which sets out the K
Administration’s response to Legco. In dealing with Clause 34 of the Bill it
L L
stated
M M
“ Clause 34 (Charging orders and lis pendens) – Paragraph 16 of List
of FUA
N N
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
O Registration Ordinance so as to ensure that the priority of a charging O
order will be retained upon its re-registration.
P P
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.
Q Case 581 (English Report Vol. 10 at p.1422) to the effect that if a Q
second encumbrance was registered within the 5 years’ validity of
the first encumbrance, then the first encumbrance is protected as
R against the second encumbrance even though there is no R
re-registration of the first encumbrance after the expiry of the 5
S years’ period. No relation-back provision is required for the S
current s.17 of LRO.
T 17. For the avoidance of doubt, the Administration proposes to T
make appropriate amendments to Clause 34 to state clearly that
re-registration of a charging order or lis pendens shall have a priority
U U
V V
由此
A - 17 - A
B B
relating back to its first registration.”
C C
62. Thus it is clear that the Administration and Legco considered
D D
that no relation back provision was required for section 17 of the Ordinance
E and that the provision in section 36 of the Land Titles Ordinance to state in E
clear express language that re-registration shall have a priority relating back
F F
to its first registration was purely for the avoidance of any doubt on the matter.
G I am unable to accept Mr Pao’s submission. G
H H
63. Mr Pao also relied on Ocean Rich Investment Co. Ltd v Leung
I Yiu Biu (HCMP 1903/1998, 6 May 1999) where Yeung J (as he then was ) I
said at page 7 of his judgment
J J
“ The charging orders registered in 1991 ceased to have effect by the
K lapse of time. They have not been re-registered. Even if they K
were to be re-registered they only start to have effect from the date
of re-registration.”
L L
M
64. In my view Ocean Rich does not provide any assistance to M
HSBC.
N N
65. Yeung J was dealing with a vendor and purchaser summons with
O O
the sole issue of whether the plaintiff had shown a good title to the property in
P that case. There was a charging order nisi imposed on the property in that P
case registered on 21 January 1991. It was made absolute on 19 February
Q Q
1991 and then registered. There was an attempt to re-register the charging
R order absolute on 19 February 1998 but the judge held that the attempt was R
unsuccessful and hence there was no re-registration.
S S
T 66. More than 8 years had elapsed since the registration of the T
charging orders and there was no successful re-registration. In those
U U
V V
由此
A - 18 - A
B B
circumstances it is not surprising that it was held that the charging orders had
C ceased to have effect by reason of section 17 of the Ordinance. C
D D
67. What Yeung J said as set out above was clearly obiter dictum.
E E
68. It is evident that the relevant English Acts and the cases of
F F
Beavan and Shaw were not considered by Yeung J as they were not referred
G
to in his judgment. G
H 69. I would also observe that at page 6 of his judgment Yeung J set H
out the effect of non-registration as provided in section 3(2) of the Ordinance.
I I
That being so, it is highly unlikely, in my view, that Yeung J was intending to
J express a view that the effect of section 17 was to cause a prior registered J
charge or incumbrance to lose priority to a charge or incumbrance registered
K K
later in time if it were re-registered from time to time under section 17. In
L my view he was neither dealing with nor expressing a view on the effect of L
re-registration on prior registered charges or incumbrances.
M M
N 70. Ocean Rich is clearly distinguishable and provides no assistance N
to HSBC.
O O
P
71. The contention of HSBC is that as the re-registration shall only P
take effect from the date of re-registration BOC’s charging order absolute has
Q Q
lost its priority to HSBC’s charging order absolute. Ms Sit submitted,
R
correctly in my view, that this contention leads to different answers to the R
question of priority depending on when the question is asked.
S S
T T
U U
V V
由此
A - 19 - A
B B
72. I set out the example given by Ms Sit where A registers in 2000,
C B registers in 2002 and C registers in 2004. A re-registers in 2005 before C
the expiry of 5 years.
D D
E 73. If the issue of priority has to be determined in 2006, on HSBC’s E
case, B would rank before C and C before A notwithstanding that A has fully
F F
complied with section 17 and had duly registered in time. The consequence
G of this is that whether A re-registers or not he loses his priority upon G
expiration of the 5 years in any event.
H H
I 74. If the issue of priority has to be determined in 2008 and in the I
meantime B re-registers in 2007, on HSBC’s case, C would rank in priority
J J
before A and A before B.
K K
75. I agree with Ms Sit that it cannot have been the intention of the
L Legislature to leave the matter uncertain for persons inspecting the register. L
Different answers may be given to the question of priority depending on
M M
when it falls to be considered. That would be absurd. The purpose of
N registration is to provide a system of registration so that those inspecting the N
register know with certainty the priority of registered instruments.
O O
P 76. In my judgment BOC’s charging order absolute has priority over P
HSBC’s charging order absolute.
Q Q
R
77. I make an order that the net sale proceeds of the property be R
applied in the following priority:
S S
(1) in discharge of what shall be due to BOC under BOC’s charging
T T
order absolute; and
U U
V V
由此
A - 20 - A
B B
(2) the balance if any, in discharge of what shall be due to HSBC
C under the HSBC charging order absolute. C
D D
78. I also make an order nisi that BOC’s costs of these proceedings
E be paid by HSBC such costs to be taxed if not agreed. E
F F
G G
H H
I I
(Arjan H Sakhrani)
J
Judge of the Court of First Instance J
K K
L Ms Eva Sit, instructed by Messrs Anthony Chiang & Partners, for the 1st L
Defendant
M M
N Mr Jin Pao, instructed by Messrs Mayer Brown JSM, for the 2nd Defendant N
O O
P P
Q Q
R R
S S
T T
U U
V V
